Advertising Deductibility: For the Sake of Speech

 The “Tax Cuts and Jobs Act,” introduced amid great fanfare on Nov. 2, has now been passed by the U.S. House of Representatives along an essentially party-line vote. The Senate’s version, introduced Nov. 9, is still undergoing intense scrutiny as groups from every quarter weigh the bill’s proposed cuts in tax rates versus the elimination of certain deductions, credits, and other tax breaks.

As ideas for reforming the tax code were tossed around in recent months and even years, one proposal – or some variation of it – would surface from time to time. This was the idea that the tax deduction for business advertising expenses should be eliminated.

This has always been an ill-considered idea (as we shall discuss below), and thus we were relieved that it did not find its way into the new tax bills of either the House or Senate. But since these bills are only the opening salvos in the difficult battle to revise the tax code, it would be worthwhile to examine why this ad-related provision should not be a part of the measure that finally reaches the president’s desk.

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Repealing Media Ownership Regulations: It’s About Time

FCC Chairman Ajit Pai has proposed the most reasonable of actions: repealing or revising 40-year-old media ownership rules that long ago outlived any marginal usefulness they might’ve once had.

This should be a no-brainer. But, Washington being what it is, entrenched interests and politicians bent on maintaining the status quo for their own purposes have pilloried Pai for trying to do something that should’ve been done decades ago.

First, the facts. On Oct. 26, Chairman Pai released an Order on Reconsideration and Notice of Proposed Rulemaking. This proceeding seeks to accomplish the following:

  • Eliminate the Newspaper/Broadcast Cross-Ownership Rule;
  • Eliminate the Radio/Television Cross-Ownership Rule; and
  • Revise the Local Television Rule to eliminate the Eight-Voices Test and to incorporate a case-by-case review provision in the Top Four Prohibition.

The proceeding would also seek to eliminate the attribution rule for television Joint Sales Agreements; retain the disclosure requirement for commercial television Shared Services Agreements; keep the Local Radio Ownership Rule; and create an incubator program to encourage new and diverse voices in the broadcast industry.

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Free Speech Week: Much To Celebrate

Free Speech Week is upon us. Or, as the headline of a story about the week written by Amy Mclean in Cablefax puts it: “What a Time for Free Speech Week.” What a time, indeed.

Just last week we saw the president raising the specter of whether the government should revoke television licenses based on the content of televised news coverage. The same president has wondered aloud (via Twitter, of course) whether the National Football League should have federal tax benefits revoked if owners continue to allow players to kneel during the National Anthem.

Speech on college campuses continues to be stifled in a variety of ways, from disinviting controversial guest speakers to relegating the expression of opinions by individuals to out-of-the-way “free speech zones.” On some campuses, students are supposed to be warned by professors before controversial topics are discussed in class, lest the students be traumatized. Continue reading “Free Speech Week: Much To Celebrate”

Sunshine Week: A Timely Celebration

Sunshine Week, a nationwide event taking place this week (March 12-18), is an annual reminder that access to government information is not something we can take for granted. In fact, prior to July 4, 1967, when the Freedom of Information Act (FOIA) took effect, access to federal government information was not a given at all. It took an act of Congress to counteract the tendency of government bureaucrats to over-classify, obfuscate, and procrastinate when it came to making even innocuous information available to the public.

Sunshine Week was created by the American Society of News Editors in 2005 and is now coordinated by that group in partnership with the Reporters Committee for Freedom of the Press. With these groups heading the effort, it would be easy to think of Sunshine Week as something primarily by and for journalists. Of course having access to public information is of great interest to journalists. That kind of access is essential if the press is to perform its role as a watchdog of government at all levels in this great democracy.

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Electronic Privacy Needs ICPA Update

Privacy advocates won an important victory in July when a federal appeals court ruled to limit the access of the U.S. government to individuals’ e-mail accounts.

The U.S. Court of Appeals for the Second Circuit said the federal government did not have the authority to issue search warrants for persons’ e-mails stored on servers outside the United States.  The case was brought by Microsoft Corp. in response to a warrant that would’ve compelled Microsoft to turn over customer e-mails stored on a server it maintained in Ireland.  The court affirmed that the Stored Communications Act (part of the broader Electronic Communications Privacy Act of 1986) did not give the government such powers outside U.S. territory.

This was a key judicial ruling to be sure. But it points up the increasingly urgent need for Congress to update that 1986 ECPA legislation to reflect the realities of today’s global digital environment.

Such legislative efforts have been initiated in recent years, only to languish in committee.  The most notable example was the Law Enforcement Access to Data Stored Abroad (or “LEADS”) Act, introduced in February 2015.

Writing about the LEADS Act when it was introduced, attorney Kurt Wimmer noted in an issue paper for The Media Institute that “cloud computing” as we know it today did not exist when the ECPA was enacted in 1986.  “Our current storage habits for digital records are precisely the opposite of the habits that existed in 1986, when ECPA was adopted,” he wrote.  And so it remains today.

However, there is new hope on the horizon.  On May 25, Reps. Tom Marino (R-Pa.) and Suzan DelBene (D-Wash.) introduced the International Communications Privacy Act (ICPA).  Senators Orrin Hatch (R-Utah), Chris Coons (D- Del.), and Dean Heller (R-Nev.) introduced identical legislation in the Senate.  These bills (H.R. 5323 and S. 2986) follow in the footstep of the LEADS Act in seeking to establish a rule of law for lawful access to data in the global environment.

Reps. Marino and DelBene (who had also introduced the LEADS Act) said in a statement:

“We were pleased that the LEADS Act gained such widespread support with more than 130 cosponsors in the House.  ICPA improves upon this effort by broadening industry recognition, and we believe it will earn an even greater backing from our colleagues in Congress.  This bill guarantees that users of technology have confidence that their privacy rights will be protected by due process while simultaneously ensuring law enforcement agencies have necessary access to information through a clear, legal framework to keep us safe.”

The bill stipulates that U.S. law enforcement could obtain warrants for the electronic information of U.S. persons physically located in the United States, or nationals of foreign countries that have a Law Enforcement Cooperation Agreement with the United States, provided the country does not object to the disclosure.  Thus, the ICPA would maintain the sovereignty of nations in protecting information stored within their borders.

By clarifying the rules surrounding the release of electronic information, the ICPA would not only protect individual privacy but would also improve the competitive posture of American companies doing business in the global digital economy.  Cloud computing will continue to revolutionize everything from newsgathering and financial transactions to the Internet of Things as the future of business migrates ever more rapidly to the cloud.  The rules governing privacy and the protection of information in that space need to be clear.

Updating the ECPA with the International Communications Privacy Act would reflect today’s reality of cloud computing and provide the legal framework needed to protect the privacy of individuals, support law enforcement, and promote a competitive environment for American companies.  Congress can’t afford to let this one languish.

Free Speech Week: Time To Celebrate, Time To Reflect

As Free Speech Week gets underway today, it’s a good time to celebrate this fundamental freedom (as the week is intended to do) – but it’s also a good time to reflect on the state of free speech in America today.  Even the most cursory reflection, however, is sure to give one pause.

Freedom of speech remains under assault on many fronts.  And most people, when they think of free speech, think of the First Amendment. But it’s important to draw a distinction here.  The First Amendment only protects speech that is threatened by government control, and thus laws and regulations seeking to limit speech can be subjected to First Amendment challenges in the courts.

Paradoxically, however, the gravest threats to free speech today aren’t coming from government lawmakers and regulators, but from non-government groups and individuals who want to stifle the speech of others.  That type of speech suppression is, in its own way, even more insidious because there is no fail-safe defense against it like the First Amendment.

Media Institute President Patrick Maines has written numerous columns in this space decrying all manner of attempts to suppress free expression.  One of the most onerous threats is the political correctness (or “PC”) movement, whereby the “politically correct” try to stifle the speech of those with whom they disagree.  Nowhere is this more evident than on college campuses, which should be the ultimate marketplaces of ideas.

Examples abound of campus activist groups pushing to “disinvite” guest lecturers or even commencement speakers whose views they dislike – often with the tacit or overt support of university officials.  High-profile incidents at Fordham, Brown, and Brandeis universities have captured media attention, but they were hardly isolated occurrences.  In fact, an organization called the Foundation for Individual Rights in Education (FIRE) exists solely to fight these and other types of PC attacks on campus.

Speech suppression beyond the reach of the First Amendment takes other forms as well.  Activist groups and their “speech police” routinely try to intimidate speakers, especially through social media.  And even some journalists and editors in the mainstream media are prone to political correctness, though here the approach might be more subtle – a story presenting a PC point of view uncritically, or a story about a contrarian viewpoint never written at all.

Free Speech Week, then, offers the chance to celebrate the First Amendment as the protector of our speech (or the vast majority of it) from government interference.  The week also invites us to celebrate free expression in the broader sense.  Yet as we applaud freedom of speech generally, we need to be aware of the threats that continue to render this a fragile freedom.  There is a vocal opposition to these threats out there, including The Media Institute, FIRE, and others – but the voices challenging these threats and supporting truly free speech need to be more widespread.  We can indeed celebrate during Free Speech Week – but we can’t afford to be complacent.

Free Speech Week (FSW) is taking place Oct. 19 to Oct. 25.  You can learn more about how to get involved here: www.freespeechweek.org.

DOL Reportedly Postponing New ‘Lock-up’ Policy

Published reports suggest that the Department of Labor is poised to delay implementation of a policy announced in April that would require reporters working in the DOL’s “lock-up” room to use government computers and transmission lines when writing stories about DOL reports and data as they’re released.  The proposed policy caused a flurry of criticism from media outlets and prompted a June 6 hearing by the House Oversight and Government Reform Committee.  DOL will announce a new start date this week, according to reports quoting an e-mail from DOL media specialist Carl Fillichio.

We’re glad to see that DOL is at least planning to postpone the policy.  Media Institute President Patrick Maines was an early and outspoken critic of this bureaucratic folly, questioning the wisdom of such a move in his May 7 post.

Let’s hope that any delay becomes permanent, and that this attempt to extend the government’s hand into reporters’ notebooks is forever banished to the dust heap of bad ideas. 

                              

The opinions expressed above are those of the writer and not of The Media Institute, its Board, contributors, or advisory councils. 

Free Speech: It’s Catching On

This week, Oct. 18 to 24, is National Freedom of Speech Week (NFSW).  The Media Institute created NFSW in 2005 in cooperation with the National Association of Broadcasters Education Foundation as a chance for groups and individuals to celebrate the free speech and press that we enjoy thanks to the First Amendment, which protects most speech from government censorship.

The event has grown every year as more organizations have joined the celebration.  This year, however, we have seen a real spike in participation.  Much of this has come from colleges and universities, where professors of communications and law, in particular, see NFSW as an opportunity to host debates and discussions on freedom of speech.

We’re also seeing a big jump in persons writing about National Freedom of Speech Week, and free speech generally.  Much of this is happening in blogs and tweets, as opposed to traditional news stories, by all sorts of people with all sorts of interests who have at least two things in common: They take full advantage of their ability to speak freely, and they generally do so through digital means of communication.

And this is precisely what National Freedom of Speech Week is meant to celebrate.  We are all speakers, and we all have the ability to speak our minds without fear of government censorship.  Many of our large Partnering Organizations are conducting innovative programs, contests, and activities to raise awareness of free speech.  We salute them – and we will do our best to compile a list of their activities to document NFSW 2010.  

In the meantime, we tip our First Amendment hat to the bloggers and tweeters who are using their digital devices to create a new and exciting dialogue about freedom of speech and the First Amendment.  Their free speech is truly the language of America.

The National Freedom of Speech Week website is at freespeechweek.org.   

Net Neutrality: Whose First Amendment?

It shouldn’t come as any great revelation that when the government proposes regulations affecting the media, there very well might be implications for the First Amendment.  Raising such concerns, and then examining their validity, is a normal part of the regulatory process.

Kyle McSlarrow did just that last Wednesday in a speech to a Media Institute luncheon audience.  As president and CEO of the National Cable & Telecommunications Association,  McSlarrow was rightly concerned that the FCC’s proposed regulatory enforcement of “net neutrality” would impair the First Amendment rights of Internet service providers, especially to the extent that they offer other types of programming services apart from Internet access.  He also noted that such rules could impair the free speech of start-up content providers who are willing to pay extra for priority distribution of their content to better compete with established entities, and for others who use the Internet.  

The response to McSlarrow’s speech by many proponents of net neutrality regulation was nothing short of remarkable for its rancor.

The underlying assumption of this net neutrality crowd and their ilk was the tired old mantra: Big media are bad.  Corporations are bad.  Corporations don’t deserve First Amendment rights.  The bloggers from this camp (including a former Free Press lawyer) seemed at once incredulous and offended that anyone (except maybe Washington lobbyists) could assert with a straight face that media companies are speakers with First Amendment rights.  

The other underlying assumption involves the revisionist view that the First Amendment is a tool the government has an obligation to use affirmatively to promote diversity of speech, rather than what it was created to be: a protection against government censorship of speech.

It would be bad enough if the reactions to McSlarrow’s speech suffered only from flawed assumptions like these.  That wouldn’t even be so terrible, because one can always challenge another’s assumptions and hope to engage in something resembling a serious debate.

It’s possible to do that, for example, with the response offered by the ACLU, which noted that ISPs do have First Amendment rights when they’re providing their own content, but should function as common carriers (like phone companies) when they’re carrying the content of others.  Whether tiered pricing for different levels of service amounts to discrimination and implicates free speech is at least something that can be debated.    

But the level of vitriol is running so high among many in the net neutrality crowd that some writers are totally twisting what McSlarrow said, and attributing to him words he never uttered and positions he never (and I believe would never) take.  For example, blogger Marvin Ammori (with the Free Press connections) wrote: “According to the NCTA’s Kyle McSlarrow … Americans (like you) don’t have rights to access or upload content on the Internet.”  FALSE.  McSlarrow never said any such thing.  Ammori calls McSlarrow’s reasoning “silly” and “offensive.”  But if anything is silly and offensive, it is Ammori’s fabrications.  

One is reminded of the Cold War, when the Soviet propaganda machine excelled at “disinformation” – false information which, if repeated enough and eventually picked up by a credible outlet, would be regarded as true.  Ordinarily I wouldn’t bother commenting on the more egregious responses to McSlarrow’s speech, because they’re just not worthy of serious comment.  But I’m taking the time because so much of what has been written needs to be identified for what it is – disinformation – that will only stifle meaningful debate and do a disservice to the First Amendment.   

And while we’re talking about this constitutional guarantee, let’s not forget the big picture, which can easily become obscured by the details (and heat) of the moment.  Do we really want the FCC regulating a whole new realm – the Internet – which heretofore has been a safe haven for free speech?  Virtually everyone in the net neutrality camp seems to think this is a great idea.  I do not.  In fact, I think it’s a terrible idea.  For speech to be truly free, government regulators should be kept as far away as possible, whatever the medium.  Maybe this is where the real debate over net neutrality and the First Amendment should focus.       

Dueling Philosophies on Minority Ownership

What happens when you invite the FCC’s two veteran commissioners to speak about the media at a Rainbow PUSH Coalition symposium?  When one of the commissioners is Michael Copps, and the other is Robert McDowell, you get two very different views of where things stand and how they could be improved, as we saw on Nov. 20.

Copps, a Democrat, is a long-time foe of large media companies.  So he uses phrases like “excessive media consolidation,” “big media run awry,” “tsunami of consolidation,” and the punchline: “Minorities have suffered greatly because of consolidation.”  

One of his proposals to “put some justice back into our ownership policies” would involve a “public interest licensing system for broadcasters.”  Copps would like the Commission to “go back to having some guidelines to make sure stations are consulting with their audiences on what kinds of programming people would like.”  But wait, I think we already have such a system.  It’s called “ratings.”

Copps also favors something called a “full file review,” which would have the Commission award certain broadcast licenses by considering an applicant’s “experiences in overcoming disadvantages,” including race and gender discrimination.  (This sounds like a lawsuit waiting to be filed, but that’s another story.)  In other words, Copps views the FCC as the referee in a fight between “big media” and the little guy, where the solution is a tight rein on ownership regulations.
    
Robert McDowell sees things differently.  For minorities to get ahead in broadcasting and other media, Republican McDowell is quite clear about what is needed: access to capital.  “An important priority for me in my three-and-a-half years on the Commission has been to help create a competitive environment that allows minority entrepreneurs and other new entrants a real opportunity to build viable communications businesses,” he told the Rainbow PUSH group.
    
McDowell noted that he enthusiastically supported the Commission’s 2007 Diversity Order, which contained nine measures to help small entrepreneurs acquire capital or use their financial resources more efficiently.  He has also called for a tax certificate program to help disadvantaged businesses.  
    
At the same time, McDowell is keenly aware of the unintended and hurtful consequences of regulations (of the sort favored by Copps) aimed at helping small, local media owners  – like a “localism” proposal to reinstate a 20-year-old rule requiring stations to be manned throughout their broadcast day (technology notwithstanding), or onerous “enhanced disclosure” requirements so complex that they could require the hiring of additional employees.   
    
In short: On the question of disadvantaged minorities, Copps sees the culprit as large media companies.  From his perspective, the FCC must be a strict regulator of media ownership.  McDowell sees the culprit as the lack of access to capital.  He would envision the FCC as a facilitator, creating policies to generate financial opportunities for entrepreneurs.
    
Whose view is more accurate and whose solution is more likely to succeed?  On both counts, my money is on McDowell.