Is it a fee, or a tax, or is the fee a tax?

[jimnyc]

Government created corporations being funded by private enterprise; who then pass on part of the cost in the form of fees-- does or doesn't constitute a tax from an economic POV.

The above bold statement is what is to be debated. Whether or not fees collected by certain companies rise to the level of a "tax".

There will be 10 replies apiece, or until both participants agree the debate has been completed. No flaming is allowed. No one other than RSR and Logroller is allowed to reply in this thread. Anyone doing so will be thread banned from this area.

When the debate has concluded, I will then attach a poll to the thread and allow friendly voting to take place. Voters are free to vote however they like, but when I created this debate section, here are a few indicators I had come up with:


Civility/Maturity
Well spoken (grammar, punctuation & spelling too!)
Links/Sources - biased? factual?
Content - One word answers or well developed responses

It appears it has been decided that Logroller would open up the debate. Log, you are free to go right into it however you like, but I assume some sort of opening statement would be in order...

[logroller]

The exchange of services is integral into what constitutes a fee. For example, were I to visit a National Park, I pay an entrance charge to drive my car into the park. The revenue generated by this activity is used specifically to maintain the roads for my use. This is a fee. National Parks also receive tax revenues, but entrance fees are not placed into the general fund; fees cover the cost of providing the service.

The Universal Service Fund is dedicated for the explicit purpose broadening communications and the spread of information. To fulfill this purpose, contributed funds are vested in the Universal Service Administrative Company (USAC).

Another example, very similar to the USAC, is the US Postal Service. Like USAC, the USPS is a government created corporation. When I buy a stamp, I am paying a fee; because I have engaged in a transaction in anticipation of some service provided, and the fee is equal to, or lesser than, the cost of providing that service.

When I pay my phone bill the cost of providing universal service is passed through as a surcharge, or additional fee. To reduce circularity, regulators limit the amount of the pass-through surcharge. Circularity is a macroeconomic concept related to the money multiplier function. In this case, the fee is put back into the telecom industry; as such, the potential exists for inflating the price and, accordingly, reducing the point of technical efficiency and quantity demanded—undermining the intent of the fee.

[red states rule]

LR, it be called a "fee", or a "service charge", or a "enterence fee" - it is still a tax. The government has learned it has to call something other then what is it so they can sell the folks on paying it without raising too much of a fuss

It odes not matter if the money is collected by a middleman or a go between - they are picking the pockets of the producers for more money

I am looking over a couple of recent utility bills and I see the following taxes listed as something other then a tax

Generation Charge
Transmission Charge
Customer Distribution Charge
Distribution Charge
Electric Universal Fee
Energy Cost Adjustment
Cogeneration PURPA Surcharge
EMPower MD Surcharge
MD Eviromental Surcharge

on another bill I see these taxes (but they are not called a tax)

Federal Universal Service Charge
Regulatory Cost Recovery Charge
State Gross Reciepts Surcharge
911 Service Fee

Do you disagee these are all taxes LR?

Bottom line is LR, we are bieng nickle and dimed so many different ways, and some do not think twice about it

Meanwhile the politcians (and they are on both sides) and laughing their asses off

[logroller]

LR, it be called a "fee", or a "service charge", or a "enterence fee" - it is still a tax. The government has learned it has to call something other then what is it so they can sell the folks on paying it without raising too much of a fuss

It odes not matter if the money is collected by a middleman or a go between - they are picking the pockets of the producers for more money

I am looking over a couple of recent utility bills and I see the following taxes listed as something other then a tax

Generation Charge
Transmission Charge
Customer Distribution Charge
Distribution Charge
Electric Universal Fee
Energy Cost Adjustment
Cogeneration PURPA Surcharge
EMPower MD Surcharge
MD Eviromental Surcharge

on another bill I see these taxes (but they are not called a tax)

Federal Universal Service Charge
Regulatory Cost Recovery Charge
State Gross Reciepts Surcharge
911 Service Fee

Do you disagee these are all taxes LR?

Bottom line is LR, we are bieng nickle and dimed so many different ways, and some do not think twice about it

Meanwhile the politcians (and they are on both sides) and laughing their asses off

Yes, I disagree. Those aren't all taxes. You see, you benefit from those charges. I'm not merely drawing a distinction on political nomenclature. There exist a difference in purpose and function of taxes and fees/charges/surcharges. Plus, economically they have different effects on the market equilibrium. Truth is, and I've said this to you privately, you could be right; but I want you to tell me what defines a tax from an economic perspective and, specifically, why the universal service charge has the same effect as a tax.

Its not merely government getting the money; its whether the benefit received outweighs the cost of the service provided in return (i.e. consumer surplus). As I mentioned, postage stamps are paid to a government corp to provide postage service; and as you're well aware, the USPS runs at a deficit-- meaning the postage paid is less than the cost of providing that service; ergo, not a tax. The gov't outlays covering the difference come from taxes, but that doesn't make the postage count as a tax. The first post master of the United States, Benjamin Franklin had a famous quote regarding taxes--
In this world nothing can be said to be certain, except death and taxes.
BENJAMIN FRANKLIN, letter to Jean Baptiste Le Roy, Nov. 13, 1789

Now if taxes are a certainty, then they cannot be avoided. If phone service was of lesser benefit than the cost, you would avoid those costs and fees by not having a phone. This ability to avoid fees, combined with the direct benefit received from paying them, indicates the universal service charge is not a tax.

[jimnyc]

It seems this debate went into overtime before it really got off the ground... But we'll vote on what we have seen...