Our friends at the Greater Boston Chamber of Commerce have issued, as part of their ongoing war on a fair tax code, a “fact sheet” that allegedly documents how tough things are for businesses here in MA.
Problem is, it’s full of garbage. The Patrick administration has issued an annotated version of the “fact sheet” pointing out some of the, well, crap that somehow made it past the GBCC’s fact-checking operation. It’s well worth a read.
Please share widely!
Where can I find the document you posted on the state website? Its on the BMG server?
You don’t trust business leaders, I don’t trust politicians…
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I don’t think this one can be resolved.
facts are facts. If you can show that the facts in the administration’s mark-up are wrong, we’d all be interested.
Boston Chamber of Commerce:
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Deval’s correction:
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The correction does not show what was stated is false but rather says something completely different, which may be true, but certanly does not negate the original statement.
is the key, right? To read the GBCC’s release, one would think that there’s been an 80% increase in how many taxes businesses pay in the last 4 years. But of course, that’s not true — it’s just what they want you to think. They’re talking about a specific tax, which is not synonymous with “tax burden.”
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Similarly, when we talk about individuals’ “tax burden,” we don’t mean just the income tax. We mean — or we should mean — the impact of the income tax, the property tax, and the sales tax, to name just the biggest players.
They explain what they mean:
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Any businessperson worth his or her salt is paying attention to the bottom line. If, at the end of the year, all things remaining equal, their net receipts drop by 3.8%, it’s not going to matter what you call it – an 80% increase in one tax that’s part of the whole-tax pie, or a 3.8% increase in the pie. All that matters is that you’ve got less money in your pocket.
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The GBCC is missing the larger picture. Time and again, businesses in Massachusetts have complained over the past two years about the talent that leaves the state, the educational system, adn the infrastructure that makes it hard to recruit new employees which, in turn, makes economic growth viable. So, the question isn’t “is it 80% or 3.8%,” the question IS “Is this new tax policy going to aid overall growth in the Massachusetts economy?”
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If they can ake the argument that it won’t, all the power to them. But don’t come at me with this 80% BS.
Maybe if an actual policy was articulated as opposed to
feeding gruel to the public“framing” the issue that he’s closing loopholes, the business community would be more receptive.<
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Fundamental inequity? That all poles should be taxed equally?
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How about poles owned by Harvard? Should Harvard pay tax on them, or is the charitable exemption they enjoy just another loophole?
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More to the point, Verizon, NStar, and National Grid are all for-profit corporations. Seems a bit odd that two of them pay taxes on their poles and the third doesn’t, wouldn’t you say? The question whether non-profits should pay property taxes isn’t really germane to that discussion.
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Not to mention that Harvard (and other non-profits) pays a pile of money in the form of payments-in-lieu-of-taxes for property that they own. Is it enough? I have no idea. But it’s not like they’re getting off scot free.
Of course. Harvard owns at least one pole.
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Do you really want to build a tax policy on the notion that all structures, similarly situated should bear equal tax, and that anything contrary is an evil loophole ?
;D
That like things should be treated in like ways?
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And that to the exted that things are treated in dislike ways the disparity should be justified in terms of differences (not just any difference, but differences that matter… for example: skin color, although a demonstrably differing characteristing among people, it isn’t an acceptable difference in the treatment of people under the law).
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If the goal is to make laws more fair, then this is exactly the kind of thing we should be looking for.
I pay tax on my house; GE pays tax on its building; the church pays tax on its building.
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Fair?
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p.s. The church down the street doesn’t pay tax on its building. Loophole!
would be fair if you can show that there are differnces in the status of the individual situations that are salient toward tax policy. I think I was clear the first time I said it.
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sigh.
Gratuitous sigh notwithstanding, why give charities a tax break?
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Also, shouldn’t we continue to encourage the build out of telephone lines including also cable telephone to all corners of the state?
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Sounds like some policy considerations.
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My only point: it’s not a loophole. The Governor is proposing a tax increase by removing a preferential rate from one group of taxpayers.
one way or another. I’m just pointing out that the issue of fairness is really an issue of justified or unjustified distinction in status. Thus any argument about taxes on charities would have to include the justification or lack-of same of their status in terms of distinction and the state’s interest in those distictions. Similarly the State’s interest in using tax code as incentives for behaviors such as encouraging the build out of telephone lines.
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Its only an increase if you thought the underlying rule was fair. Its the closing of a loophole if you thought the underlying rule was unfair. Thus the argument should be about backing up why or why not the rule was fair or not… and thus why the differences in status are justified or not and how the state’s interests interact with those differences.
Narrow
Column
Can’t
Breathe
what happens this far right on the page
looks like DP budget just cut the “indent” size
that you even believe the nonsense you’re posting.
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Verizon benefits from a 1915 exemption granted to promote the growth of them newfangled telephone companies. In an age of crossover between cable Internet telephony, cell phone networks, and DSL Web connections, explain to me again why Ma Bell needs special treatment that other businesses have to chip in to pay for?
I have no idea if the telephones need a break or not. Probably not. But, they were, through due process, given a break.
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If the governor and legislature believes they should not have a break, then the Government should take it away and raise the telecoms’ taxes.
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However, it is bullsh*t to call it a loophole. It’s not.
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If you an example of a loophole here was one–a statute that was incorrectly written with the unintended consequences of unfairly benefitting a few lucky taxpayers. Congress quickly fixed it as soon as it realized the error.
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Charities are usually exempt from real estate tax. They’re also exempt from the 5% sales tax on hotel rooms. It’s not a loophole, it’s an affirmative action the legislature took and meant to take to benefit 501(c)(3).
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Same with ‘combined reporting’. It’s not a loophole. It’s a reporting method that has been adopted by 16 or 17 states. It’s tax policy, not ‘loophole’ closing, and will for the near term, likely increase corporate tax in Mass. It’s also a dangerous policy to adopt because the door swings both way on combined reporting. Florida and Oregon adopted it, then quickly reversed course.
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Internet tax on Orbitz rooms. Also, not a loophole. It’s a tax increase that causes the fee charged by Orbitz to become subject to sales tax. Point of fact: Orbitz doesn’t sell personal property and under the current law, isn’s subject to sales tax.
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It’s blantantly lying to calling those items loopholes.
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The administration doesn’t want the public to believe he’s raising taxes.
that gives the exception legitimacy, then you must respect the due process that revokes it as well.
I even endorse it. It, being this particular tax increase.
then try it …
but that’s in the fine-ish print. The misleading — and there’s no doubt that it is misleading — “tax burden” language appears in CAPITALIZED BOLD ITALICS, and again in underline. If you haven’t either pulled your business out of MA or at least fired off an irate email after reading that far, the “fact sheet” has failed to deliver its message.
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Why do you think the piece is written the way it is?
It immediately proceeds from the statement in question. Is the piece trying to be persuasive? Of course, that’s how such things are written. Quite frankly, it appears that Deval is the one being misleading in flatly calling things “False” when they are not.
Most of us who post on Internet boards can read.
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You might try it elsewhere, though.
I was merely asking where the document originated? One of the things I liked about BMG as opposed to our different winged brethren at hubpolitics is that BMG never seemed to shill directly for anyone.
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I wanted to know where this came from that is all!
sorry for the confusion. When the comment threads get long, it’s hard to tell who is responding to which comment.
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My response to you is below: the document comes directly from the administration. They have distributed it to combat the misinformation in the GBCC document.
and the Administration “response” is pretty compelling, don’t you think?
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i’m not saying 4% increase in overall taxes is painless, it’s not. but the CofC “80% increase” meme is narrowly true but fairly misleading.
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props to DP staffer who got this out so quickly.
that the document has been posted on the state website. As I said, they’ve sent it around to correct some misinformation in the GBCC’s sheet, and I uploaded it to the BMG server. You can copy it from there.
Maybe the reason Mass. is behind in job creation isn’t because of an unfair business tax burden.
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Maybe it’s because so many of our business leaders suck pug ass.
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Boston is more widely known for backbiting than risk taking. A lot of the high-level executive meetings I’ve been oh-so-privileged to attend sound like outtakes from Heathers.
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Anyway, it’s funny how the people who talk most about personal responsibilty are the least likely to take it.
If an 80% increase in the business excise tax only yields a 3.8% overall tax increase, isn’t that a sign that the excise tax was too small to begin with?
after all, many (most?) states don’t have a business excise tax.
I must say that the AIM/Ernst & Young study is quite convincing, in that it examines a broader range of business indicators simply the business tax looked at by the Tax Foundation (plus, only the AIM-commissioned study properly takes into account the many business tax incentives available in MA, I believe).
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As David mentioned upthread, the key concern for businesses is the bottom line. The bottom line (if we are being honest with ourselves) is that MA has quality education and decent infrastructure as compared with other states, as well as an excellent workers’ comp system and generally low business taxes. Where we appear less competitive is on unemployment insurance, efficency (i.e. permitting and licensing takes forever), tax predictability, and (perhaps most critically) housing costs. All of these issues are worth debating, but spin aside that is pretty much where MA stands in relation to other states.
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Overall, it’s a pretty good picture structually. The key is to overturn the image of MA as a very business-unfriendly state (it isn’t) and focus on the fact that people (and businesses) are leaving much more because of housing costs than these other structural issues, in which MA actually is doing pretty well compared to other states.
who are willing to have honest discussions about these issues. The fact is, most of the impediments they face–other than the permitting process–have little to do with state government.
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Unemployment insurance. True. But Massachusetts is a high-cost, high-wage state compared to say, Alabama. In addition, its unemployment rate tends to swing more wildly than the national average. Far as I can tell, all of those factors are under the direct control of, um…business.
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Tax predictability. Businesses in Massachusetts have been steadily outsourcing their tax burden to employees, customers and property owners for thirty years. I am sure there were a couple of times when we did not bend over quite quickly enough for their taste, but we always do go down eventually.
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Housing costs. This is a tremendous disadvantage. But the state isn’t to blame. The housing bubble is a national–no, global–problem, caused by a global credit bubble. Sure, the state could make permitting a lot easier, so we could have quickly built more housing to be abandoned by all those people who lost their jobs and left the state during the last five years while housing prices skyrocketed. But the states that did encourage acres of just-add-water development–chiefly out West–are about to get a really up close and personal look at bankruptcy.
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Actually, what state government should have been doing–and should do now–is hold lots of public hearings looking into the subprime mortgage market. But, you know, we can’t criticize business.
There are a lot of college kids here. They are going to school, not working for businesses (yes, yes, internships and all – but not full time or permanant). When they graduate – they leave.
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Having hired and fired people, it seems our ADULT workforce is high-average compared with the rest of the nation when it comes to abiltiy. when it comes to a sense of entitlement, they are second to none.
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Frankly, our roads, water and sewer infrastructure are worse than surrounding states and regions, due largely to age. Tell me the last month you didn’t see a TV story about a horrible water main bursting soemwhere, or an electrocuted puppy from bad street wiring.
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Hoya – we rely too much on our soft advantage of an image as brainiacs – which is a little frayed around the edges – and not enough on HARD advantages like infrastructure and tax code.
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While the telecom piece has some merit – please think hard about this. Computer speed and infrastructure is crucial for all businesses – if we want to lure poeple here, is this REALLY the piece we should mess with?
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Let’s look at other things – like police details and reforming UI qualifications – as cost savings before we zip straight to the heart of the new economy.
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The Deval plan adds the tax on telephone polls, when maybe we should encourage the build out of cable and internet by exempting cable poles and related equipment.
you know, the ones for business… generally shouldn’t be on polls, they should be buried. Copper does OK, and small fiber installs (FTTH — fiber to the home) can be put on polls.
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But the big pipes — those needed by business — are buried whenever possible. Especially with the wind and ice in New England, fiber strung between polls kinks and snaps.
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So, try again. That ain’t it.
Massachusetts has one of the highest broadband penetrations in the nation, with streets full of exploding manholes, one on top of the other, thanks to Congress taking away cities’ rights to regulate their own blacktop–and you’re worried about telephone polls?
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The overbuilding of telecom capacity positively cratered business investment for the first half-decade of this century–and you’re worried about telephone polls?
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Is there some mysterious shortage of telephone polls? If you’re so concerned about technology investment, why not a property tax exemption for server sales offices? Or ISP parking lots?
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One can only imagine what rationale for this exemption you might have cooked up between 1915 and the dawn of the Internet. A pressing need for bat habitats, perhaps? Recreational facilities for pygmy marmosets?
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It’s like watching somebody limbo dance for rationalizations. How low can he go?
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Well, I guess you could go as low as Peter, who recommends balancing the budget by cutting income for laid-off workers.
if telephone polls cost their owners tax dollars, then their owners are more likely to bury the line in the streets, which looks a whole lot nicer, doesn’t require tree pruning, and doesn’t clutter up narrow sidewalks.
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Can you tell I’m a non-Boston city dweller? 🙂
is playing politics, not economics.
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The ranking (40th) in the resonse uses the statistical methods that the Chamber itself reccommends. So when the Chamber uses as differnt measures than the one they recommend in order to paint the doom-and-gloom picture they expose themselves as commiting acts of politics and not acts of economics. They’re not interested in a fair analysis in order to make fair evaluations of tax policy decisions, they’re interested in trolling for opinions (that employ methods they themselves wouldn’t recommend) that push thier political agenda.
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I’m sorry but our econimic problems are real and while you can have a right to your own agenda you don’t have a right to your own facts.
Federal Reserve Policy paper dated 8/20/2004. No link.
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“The article finds evidence that the adequacy of the Masachusetts corporate excise tax has diminished in recent years. Evidence concerning the fairness of this tax, as well as the fairness and adequacy of the Commonwealth’s business taxes in general, is inconclusive.”
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There ya go.
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When in doubt, raise the taxes.
When in debt, raise the taxes.
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Unless you have a specific line item you propose cutting?
(which is cited in the Chaber’s Document)
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“Good state tax systems levy low, flat rates on the
broadest bases possible, and they treat all taxpayers
the same.”
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I think that is the spirit behind closing loopholes.
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http://www.taxfounda…
the rest of the paragraph also backs Patrick’s philosophy.
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“Good state tax systems levy low, flat rates on the roadest bases possible, and they treat all taxpayers the same. Variation in the tax treatment of different industries favors one economic activity or decision over another. The more riddled a tax system is with politically motivated preferences the less likely it is that business decisions will be made in response to market forces. The SBTCI rewards those states that apply these principles in five important areas of taxation: major business taxes, individual income taxes, sales taxes, unemployment insurance taxes and property taxes.”
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Then the ‘circuit breaker’ is another loophole?
its a loophole if you disagree with the mechanisms that define the policy.
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The distinctions that set the breaker (income, marraige status, property value) are either salient to a state interest and salient to the policy in question or they are not.
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So if you really want to critisize it, rather than just call it a loophole, please explain how Patrick has made a mistake in assessing state interest and policy.
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(While I don’t know for cetain, I’m pretty sure the breaker doesn’t even applies to businesses since they are not “individuals”, “heads of housholds”, “married couples”. If so then this doesn’t have anything to do with the Tax Foundation’s statement, since that was talking about the efect of business tax policy.
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Believe me, I can identify with disagreeing about who/what should get tax breaks. But the productive way of discussing them is to indicate the ‘whys’ of their fairness/unfairness.
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So, if you think 5.3% is too low, then raising the tax to say 6% is “closing a loophole”?
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On that we agree. I actually agree with most of the tax proposals.
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I don’t agree with the Governor casting some substantive policy changes as ‘fixing loopholes’. It’s cheap and dishonest.
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Look at the biggest loophole: combined reporting.
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In the 80s, California adopted “unitary”. (Similar to “combined reporting”) A California auditor shared with me the state of California’s fiscal affairs after adopting unitary. Depending on the particular year, it actually costs the state tax revenue. States with booming economies tend to suffer tax revenues when adopting “combined reporting”. Plus, if your neighbors don’t adopt combined reporting, there tends to be business flight.
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Some loophole. Sound like substantive policy to you?
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If not, don’t you find it odd that of the 17 states that have adopted it, only 1 has adopted it in the last 20 years? 2 un-adopted it because they (Florida and Oregon) found it reduced business tax revenue.
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Yet Patrick continues: loophole, clever accountants, unfair….. Sell over substance.
It’s T-1 lines, microwave capacity, etc. that we need from Verizon and other providers now. And as they put them up, they will be calculating the pass-through on them as they will now be taxed. To businesses.
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Stevie, I suggested an asset test before expanding an entitlement like the circuit breaker to the genral populace, as well as bringing UI in line with the rest of the nation.
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As I said before, they can vote with their feet.
…seems to be doing a pretty good job of upgrading its network, at least here in the western suburbs. Fiber Optics is widely available. When we changed our service back in November, they wouldn’t let us go to DSL (which is what I originally wanted), they required that we go directly to fiber optics–and I can understand why. The service is fantastic.
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It isn’t quite as convenient as ISDN (we have that in our house in Germany, and it allows up to eight telephone numbers on the same set of wires), but a combination of fiber optics and ISDN multiplexing would be nice.
I’ve been writing poll and looking at it funny, knowing it probably wasn’t right but my brain blocking.
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Now, allow me to correct you on something: only FTTH (fiber to the home) can be strung on poles, and that’s a fairly recent (Korean?) advancement. Any fiber denser than that — including fiber connecting a bunch of homes together, and certainly fiber for businesses bigger than “mom and pop” — must be buried. The cables simply can’t be built with enough protection from getting tweaked to be strung on poles. It’s got to be buried.
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This “investment in infrastructure” argument is a red herring. Tax laws on poles vary across the country, and you’ve not demonstrated any correlation between pole tax and fiber investment. Why? Because there is none. Fiber gets buried.
IMO, a tax levied now upon the poles which are decades old will simply inhibit the creation of new buried cables. Maybe I wan’t clear – it’s not about the poles per se, it’s about a new tax which has to be weighed against the profitablilty of future infrastructure enhancement – regardless of type. Burying it is merely another piece of the expense puzzle, which must be justified by the profits to be made – and a pole tax will make it a skosh harder.
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I’m hoping for the elimination of calble entirely in favor of Wi-Fi. But the company may not invest in that if it gets a new tax – and it will consider if the state may levy a future tax as well based on past performance.