Here’s the advertisement text: “Get the best value with TV + Internet + Phone.”
It even has a name — “The Triple Play.”
Why should this matter?
Because it is the same Charter Communications that hopes to convince voters to support a ballot initiative, Initiative 172 (sponsored by a group called Big Sky Broadband for Lower Taxation) to lower its tax bill. It hopes to convince the public because it couldn’t persuade the Montana Supreme Court that it wasn’t a telecommunications services company, even though it offers in its own words — TV, Internet and phone.
The wonky, technical tax dispute centers on how to classify Charter, a newcomer to the Montana market after it bought Optimum. Montana taxes cable TV companies at a 3 percent rate, but telecommunications at 6 percent.
In 2008, the state’s department of revenue concluded that Bresnan (the precursor to Optimum which then became Charter) didn’t reflect the company’s actual use of its properties. It reasoned because the company offered all three services, it was not just a cable TV company. The Montana State Supreme Court agreed and ordered Charter to pay at the 6 percent rate. For Charter, it meant an increase from $1.7 million in taxes to $7.3 million in one year, or a 329 percent rate hike.
The tax hike is indeed steep, but look at the logic of the ruling. The Department of Revenue found the company was classifying itself incorrectly and because of that, not paying its fair share of taxes. In many places, Charter has little competition and enjoys the benefits, but wasn’t paying its fair share according to the ruling of the revenue department and the state Supreme Court.
Now, Charter wants Montanans at the polls to become complicit in this ruse. It wants Montanans to believe that it’s not a telecommunications company when it offers phone, Internet and television service, bundled together.
Groups are already starting to release a barrage of propaganda that ranges from sympathetic to threatening.
It would be easy to get sucked into the David-versus-Goliath plotline of a li’l ol’ business getting beaten up by the state’s taxmen. But the truth is: Charter gets the benefits of a fairly captive market in Montana. And, the state government is simply asking the telecommunications company to pay its fair share.
We sympathize with any person or business that would get slapped with a 329 percent tax increase. Yet, that increase isn’t due to some overly aggressive bureaucrat. It’s because Charter
didn’t use the correct tax classification. At its simplest analogy, it would be like not withholding enough on personal taxes. When that happens, you might end up owing the government.
That doesn’t feel good — and we get that. But not liking taxes does not mean that you should not have to pay.
Charter’s sabers continue to rattle as the company warns it’s just trying to protect its customers from pass-along tax increases.
But in that veiled threat, Charter has forgotten something very important: Its customers will still have a choice.
Undoubtedly, if Charter finds itself needing millions of extra dollars to pay taxes, it will not dig deeper into its own pockets. That means Charter will likely pass along the tax increase to its subscribers.
Yet customers then will have some recourse. Charter customers can choose whether to subscribe to broadband, phone or cable TV through the company. If the cost is too pricey, customers will still have control and can reject the pass-along tax increase by simply canceling service.
However, if the ballot measure is successful and Charter is able to overturn the Supreme Court’s decision, then that lost tax money, which is needed to fund classrooms and essential government services, will likely be passed along to every Montanan in the form of higher taxes, regardless of which residents subscribe to Charter.
Charter seems to think it’s the only business that hates paying taxes, or that feels like taxes are too high.
The solution to that problem shouldn’t be to make everyone pay more.
This editorial first appeared in the Billings Gazette.