When I write about the dangers to innovation, competition, and price discovery from the FCC's decision to regulate the Internet into Ma Bell, supporters of net neutering are quick to point out that the FCC promised to only use a fraction of the power it is giving itself.
Ha! When has this happened, ever, with the government? If they have the power, they are going to use it. In fact, to call the FCC as somehow careful about staying within bounds of their power is a joke anyway, since this entire regulation likely exceeds their legislative mandate. Even if the current commissioners are honest that they will never use all this new power, how can they possibly bind future commissioners?
I am reminded of the income tax, which was sold to the country with the promise that it would only ever apply to the top few percent of earners. In other words, they were asking for the power to tax everyone but promised only to use a fraction of that power
when initially imposed, the income tax, despite its progressive rates, appeared rather straightforward and not all that burdensome—almost benign. Of course, appearances can be deceiving.
There were, of course, warnings about the dangers of a progressive tax structure. But people supported the income tax because it was originally meant to impose only very low tax rates on only the highest incomes. Proponents argued that the 16th amendment to the U.S. Constitution would force the so-called “robber barons” to pay taxes. It was not supposed to provide a mechanism for Washington to reach into most Americans’ pockets.
The original income tax was obviously not meant to be paid by most citizens, nor were rates high enough to significantly undermine the spirit of enterprise. For example, under this system single taxpayers today would pay no tax on any earnings up to almost $45,000 and married couples on earnings up to almost $60,000. A one percent tax rate would be in effect on incomes up to about $300,000. The top rate of 7 percent would not take hold until earnings hit almost $7.5 million.
* "Net Neutrality" is an Orwellian term that bears no relationship to what is actually going on. I will use "net neutering" going forward.