A federal appeals court has upheld a Kentucky tax on satellite TV which had been challenged by both DirecTV and EchoStar. The tax passed in 2005 is collected on both wired cable companies and the satellite companies, but the cable operators get to deduct local franchise fees from what they owe the state. The satellite companies had argued that the tax scheme unfairly benefited the cable companies, since the satellite companies had to pay the full amount, not having any local franchise fee payments to deduct. The federal appeals court ruled, though, that Kentucky had merely "substituted a uniform state taxation scheme" that prevented localities from unfairly penalizing cable companies.
