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Newspapers tell lawmakers they need tax break

Facing declining ad revenues, newspapers should be allowed to recoup taxes paid on profits earlier this decade to help offset some current losses, an industry representative says.
/ Source: The Associated Press

Facing declining advertising revenues, U.S. newspapers should be allowed to recoup taxes they paid on profits earlier this decade to help offset some of their current losses, an industry representative told a joint committee of Congress on Thursday.

While saying his industry does not want a government handout or subsidy, John Sturm, the Newspaper Association of America's president and chief executive, said the tax break and letting companies spread out the required contributions to their employee pension plans are ways Congress could help struggling papers.

"Newspapers need cash now to preserve jobs next year," he said. "It's really that simple."

Sturm told the Joint Economic Committee that direct government financial assistance wouldn't be appropriate for an industry "whose core mission is news gathering, analysis and dissemination often involving that very same government."

Rep. Carolyn Maloney, the committee's chairwoman, conducted the hearing to look at the future of newspapers and their impact on the nation's economy and democracy. Maloney, a Democrat, is sponsoring legislation that would streamline the process for newspapers to convert to nonprofits similar to public broadcasting stations. Under the bill, advertising and subscription revenue would be tax-exempt and contributions for support would be tax-deductible.

She cited figures from the Bureau of Labor Statistics showing that newspapers cut nearly 50,000 jobs — roughly 15 percent of the industry's work force — between June 2008 and June 2009.

"I think that the government can help foster solutions for this industry in ways which protect the independence of newspapers and enable their objective reporting to thrive in a new economic and media climate," she said.

Sen. Benjamin Cardin, D-Md., has introduced the legislation in the Senate.

Sturm said the nonprofit status could work in certain situations, but he added it's not a comprehensive solution to the industry's problems.

Sturm suggested that, for tax purposes, newspapers should be allowed to use current losses to offset the profits they accumulated in the previous five years. They would essentially get tax refunds from the taxes they paid in those years.

Current law allows many businesses, including newspapers, to carry back those losses for two years. But some newspapers haven't posted any profits in the past two years.

Paul Starr, a communications and public affairs professor at Princeton University, said the government helped the press in the country's earliest days in the form of cheap postal rates.

"In the United States, the press has not been regarded — and it should not be regarded — as just another industry," Starr said. "Its democratic political system just can't function without diverse, free and independent sources of news."