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Which explains nicely why tax "loopholes" are much better at achieving the desired result than tax "breaks." In the former, the tax burden is reduced in exchan

Which explains nicely why tax "loopholes" are much better at achieving the desired result than tax "breaks." In the former, the tax burden is reduced in exchange for specific actions by the taxpayer. For example you give AT&T the option to file for a reduction in their taxes in proportion to their investment in new fiber, or in proportion to the number of "hard hat" jobs they create. In the latter, you simply cut their taxes and take their word for it that the result will achieve your policy goals because they said it might. The over arching message, that cutting taxes as a way of putting more money into the working man's hands, is false on its face remains true. Even the folks who invented trickle down economics say that.[1] [1] https://www.washingtonpost.com/news/posteverything/wp/2017/09/28/i-helped-create-the-gop-tax-myth-trump-is-wrong-tax-cuts-dont-equal-growth/?utm_term=.1bcdd986d865 https://www.washingtonpost.com/news/posteverything/wp/2017/0...

rayiner 8y ago
I think that's true. But the purpose of the 1996 deregulation was not to have companies build fiber specifically. The goal was to increase private investment in telecom generally. In that regard, deregulation was wildly successful. (It should also be noted that telecom deregulation was part of an overall long-term strategy of deregulation that included airline, trucking, freight, energy, etc., deregulation, all of which are widely regarded as successful. So successful that European countries pretty much uniformly followed suit. While there are differences here and there, European telecom, energy, etc., markets look a lot like the American ones, and quite different than what those markets looked like in Europe or the U.S. before.)
- mindslight 8y ago
  Deregulation itself wasn't successful. Rather it was only the first step of forced unbundling that spurred investment. The second step was then removing the restrictions on the public networks after they'd been privatized - national telcom policy being redeclared such that "competition" between incumbent phone and incumbent cable was good enough. The CLECs all but disappeared. Twenty years ago, basic phone service from Verizon was $15/mo. Now it's $75. The only success is for the investors that successfully looted the public networks. Competition with Comcast only came to town when the municipal electric company decided to build out fiber. When the only source of competition is the local de jure government, one is hard pressed to claim that is a functional market.
  - RcouF1uZ4gsC 8y ago
    The $15/month was just local service. You had to pay per minute for long distance calls. That $75/month now included unlimited calling as well as texts and probably has some data as well.
    - mindslight 8y ago
      I was comparing copper. AFAIK you can't text over copper. The $15/mo was metered service for even local calls, which I would happily go back to. Cell ($10/mo) and VOIP (effectively free) manage the bulk of calling just fine. Obviously the plan is to move off the copper, to stop getting robbed. But that isn't a justification of the robbers. I'll note that the involvement here is mainly due to my older father, which is the demographic really meant to be squeezed by this rent extraction.
      - ChuckMcM 8y ago
        I think the general thrust of your argument has validity but it is weakened a bit by a poor example. None of the things that have happened, post deregulation, were impossible to do before, but there was no incentive to do them. A copper line, using either ADSL or SDSL signaling can do anything a wireless signal can, text, data, voice, all at the same time. What deregulation did was two fold, first it forced the legacy phone company (Bell Telephone, and then the broken up "baby" Bells) to provide access on demand to the copper line, and it allowed private companies to then provide services over that line. New companies were created like Copper Mountain which, under the new options of deregulation, converted "POTS"[1] lines into DSL lines with additional features. The "baby" bells, had to upgrade their networks in order to compete. As part of that upgrade, they needed much more network capacity between their central offices (one copper pair could now host 3 or 4 voice calls, be sending video for example) and much of the late 90's saw miles and miles of new fiber optic networks laid in across the country. Deregulation also gave phone companies the option of raising their rates without the strict controls of the regulatory infrastructure of "pubic" monopolies, and they sought to recoup their investments in creating new infrastructure by raising rates. [1] "Plain Old Telephone Service" - aka a switched, voice only network with one channel per line.
- ChuckMcM 8y ago
  Oh absolutely, and one of my biggest customers in 1999 was one of those "private phone companies" that was made possible by deregulation. They also allowed me to experience having a customer file for Chapter 7 in the bankruptcy code :-). But the article that is linked, and which we are commenting on, was specifically calling out AT&T which lobbied strongly for the 2018 Trump "tax cuts" which cut corporate taxes specifically. AT&T argued in favor suggesting that the money they saved in taxes they would invest in building out their fiber and creating "hard hat jobs". The union argues this never happened. I doubt anyone here was surprised that corporations, receiving a large chunk of cash to the bottom line with a reduced tax burden, did not turn around and dole that out into either infrastructure development nor worker salaries. Rather, it has largely been used to pay one time bonuses to executives or returned through dividend to investors, or just sat upon as these companies are all too willing to do. I was pointing out that giving someone money and suggesting uses for it that you would like, is less successful than holding on to the money and giving it to them after they show they have done something you would like and then "rewarding" them for that. For example, adding a corporate tax that would add 1% to the corporations general obligation for each multiple of 100 difference in pay between the executive staff and the non-executive staff, would "reward" them for more equal pay and penalize them for less equal pay.
vonmoltke 8y ago
> Which explains nicely why tax "loopholes" are much better at achieving the desired result than tax "breaks." > In the former, the tax burden is reduced in exchange for specific actions by the taxpayer. Then you would just have people misrepresent the "loopholes" as "breaks", like they did in the Amazon NYC fiasco.

rayiner 8y ago

I think that's true. But the purpose of the 1996 deregulation was not to have companies build fiber specifically. The goal was to increase private investment in telecom generally. In that regard, deregulation was wildly successful. (It should also be noted that telecom deregulation was part of an overall long-term strategy of deregulation that included airline, trucking, freight, energy, etc., deregulation, all of which are widely regarded as successful. So successful that European countries pretty much uniformly followed suit. While there are differences here and there, European telecom, energy, etc., markets look a lot like the American ones, and quite different than what those markets looked like in Europe or the U.S. before.)

mindslight 8y ago
Deregulation itself wasn't successful. Rather it was only the first step of forced unbundling that spurred investment. The second step was then removing the restrictions on the public networks after they'd been privatized - national telcom policy being redeclared such that "competition" between incumbent phone and incumbent cable was good enough. The CLECs all but disappeared. Twenty years ago, basic phone service from Verizon was $15/mo. Now it's $75. The only success is for the investors that successfully looted the public networks. Competition with Comcast only came to town when the municipal electric company decided to build out fiber. When the only source of competition is the local de jure government, one is hard pressed to claim that is a functional market.
- RcouF1uZ4gsC 8y ago
  The $15/month was just local service. You had to pay per minute for long distance calls. That $75/month now included unlimited calling as well as texts and probably has some data as well.
  - mindslight 8y ago
    I was comparing copper. AFAIK you can't text over copper. The $15/mo was metered service for even local calls, which I would happily go back to. Cell ($10/mo) and VOIP (effectively free) manage the bulk of calling just fine. Obviously the plan is to move off the copper, to stop getting robbed. But that isn't a justification of the robbers. I'll note that the involvement here is mainly due to my older father, which is the demographic really meant to be squeezed by this rent extraction.
    - ChuckMcM 8y ago
      I think the general thrust of your argument has validity but it is weakened a bit by a poor example. None of the things that have happened, post deregulation, were impossible to do before, but there was no incentive to do them. A copper line, using either ADSL or SDSL signaling can do anything a wireless signal can, text, data, voice, all at the same time. What deregulation did was two fold, first it forced the legacy phone company (Bell Telephone, and then the broken up "baby" Bells) to provide access on demand to the copper line, and it allowed private companies to then provide services over that line. New companies were created like Copper Mountain which, under the new options of deregulation, converted "POTS"[1] lines into DSL lines with additional features. The "baby" bells, had to upgrade their networks in order to compete. As part of that upgrade, they needed much more network capacity between their central offices (one copper pair could now host 3 or 4 voice calls, be sending video for example) and much of the late 90's saw miles and miles of new fiber optic networks laid in across the country. Deregulation also gave phone companies the option of raising their rates without the strict controls of the regulatory infrastructure of "pubic" monopolies, and they sought to recoup their investments in creating new infrastructure by raising rates. [1] "Plain Old Telephone Service" - aka a switched, voice only network with one channel per line.
ChuckMcM 8y ago
Oh absolutely, and one of my biggest customers in 1999 was one of those "private phone companies" that was made possible by deregulation. They also allowed me to experience having a customer file for Chapter 7 in the bankruptcy code :-). But the article that is linked, and which we are commenting on, was specifically calling out AT&T which lobbied strongly for the 2018 Trump "tax cuts" which cut corporate taxes specifically. AT&T argued in favor suggesting that the money they saved in taxes they would invest in building out their fiber and creating "hard hat jobs". The union argues this never happened. I doubt anyone here was surprised that corporations, receiving a large chunk of cash to the bottom line with a reduced tax burden, did not turn around and dole that out into either infrastructure development nor worker salaries. Rather, it has largely been used to pay one time bonuses to executives or returned through dividend to investors, or just sat upon as these companies are all too willing to do. I was pointing out that giving someone money and suggesting uses for it that you would like, is less successful than holding on to the money and giving it to them after they show they have done something you would like and then "rewarding" them for that. For example, adding a corporate tax that would add 1% to the corporations general obligation for each multiple of 100 difference in pay between the executive staff and the non-executive staff, would "reward" them for more equal pay and penalize them for less equal pay.

vonmoltke 8y ago

> Which explains nicely why tax "loopholes" are much better at achieving the desired result than tax "breaks." > In the former, the tax burden is reduced in exchange for specific actions by the taxpayer. Then you would just have people misrepresent the "loopholes" as "breaks", like they did in the Amazon NYC fiasco.