The Gore Tax -- Taxation Without Representation 90s-Style
By Sara McPeak
October 1998

I'm a rural midwesterner, born and raised in the heart of the beef empire amid federally subsidized cornfields which aggravated my asthma and sinuses, the Rural Electric Association which electrocuted two of my small classmates at an early age, and the CCC camp which built a bridge over dry land -- never mind the river was never diverted beneath. These were all programs funded by the federal government and the only person I ever saw benefit from these federal programs was a rich lawyer in our town who had some swamp land down by the Boyer ("Booyer") River in the soil bank. Eventually I left that town and became a Republican.

Today, thanks to Al Gore and the Federal Communications Commission, you and I are being besieged by yet another federal government program called E-rate. America's schools and rural health care institutions will supposedly be the beneficiaries of this one, which offers them Internet access. Well, I have a grandson about to enter school and a mother in a nursing home, so I have no axe to grind -- I could only benefit from this if there were really a benefit to be had. But I am as negative in regard to this one as Al Gore is positive. In fact, he is so in favor of the E-rate program, that he refers to it as the Gore Tax.

It's not surprising, considering this administration's credibility gap, that the first and foremost dispute concerning the E-rate is its illegitimate conception. It is seen as an Internet commerce tax secondarily levied on individuals' long distance service and yet it was born in the Federal Communications Commission, which does not have the authority to tax.

According to Steve Forbes in an editorial dated August 10, 1998, as Americans we ought to be disturbed and distraught with this concept of taxation without representation. Even worse, it is really the long distance carriers who are secondarily levying this tax on their customers -- due to the fact that the FCC levied the telephone companies in order to create the E-rate Fund. For decades the FCC has administered the Universal Service Fund, ensuring phone service for all members of the public. With the arrival of Clinton and Gore, Washington resounded with the call for less government intervention and less welfare dependence and yet, lo and behold, the administration is backing a new federal program to be funded by the already overtaxed middle class. This month's Algor(e)ithm = "the exception proves the rule was made to be broken."

The administration of this E-rate Fund is also troubling. The FCC directed the National Exchange Carriers Association to create two corporations to administer the E-rate Fund. These were the Schools and Libraries Corporation and the Rural Health Care Corporation. In a "Statement of John E. Berthoud, Ph.D., President of the National Taxpayers Union before the U.S. House of Representatives . . . February 26, 1998", Berthoud quotes the General Counsel of the General Accounting Office as follows:
"The Commission exceeded its authority when it directed the National Exchange Carriers Association, Inc. (NECA) to create the Schools and Libraries Corporation and the Rural Health Care Corporation. The government Corporate Control Act specifies that "[a]n agency may establish or acquire a corporation to act as an agency only by or under a law of the United States specifically authorizing the action," 31 U.S.C. 9102.
These entities act as the agents of the Commission and, therefore, could only be created pursuant to specific statutory authority. Because the Commission has not been provided such authority, creation of the two corporations violated the Government Corporation Control Act.

As if the fact that the very existence of these corporations violates a government act were not enough, the Chief Executive of the Schools and Libraries Corporation, Ira Fishman (who has since resigned his post amid the controversy surrounding the legitimacy of E-rate) was a former fund-raiser for Al Gore, and as Chief Executive of the SLC, Fishman earned $200,000, more than any federal employee other than the President. And now, realizing all the concerns surrounding the mere existence of this E-rate Fund, add to this the outstretched hands of 32,000 institutions which have applied for this funding. Are we to penalize the middle class taxpayer yet again and filter a few Internet ties to our children and elderly while lining the pockets of chief executives who happened to be in the right place at the right time?

Following is Al Gore's defense for the E-rate as reported on the Gore Tax website:
"Incredibly enough, there are those who would destroy the program and pick the money from the pockets of our poorest schools. I'd like to say to them, loudly and clearly, that your effort to block the e-rate is an effort to ration information and ration education and it would darken the future of some of our brightest students. We will not let you do it." (quoted in the San Jose Mercury News, February 26, 1998)
Gore's lofty idealism is undermined by his even more obvious duplicity.

This article copyright © 1998 by Sara McPeak, and may not be reproduced in any form without the express written consent of its author. All rights reserved.