Slaughter wants tax law change to hamper Verizon merger

Rep. Louise M. Slaughter (D-N.Y.) is trying to change a tax law in order to help protect phone service for consumers in 14 states.

In a press release, Slaughter said she is concerned that some big phone companies, including Verizon, could try to use an obscure tax provision to make a profit on their phone lines by selling them to small companies that are unable to maintain and run the lines.

Verizon is currently trying to sell its rural lines in 14 states to Frontier, a smaller firm.

Slaughter said the tax loophole, known as the "Reverse Morris Trust," is under scrutiny by other members of Congress. She sent a letter to Ways and Means Committee Chairman Charles Rangel asking him to "renew his effort" to limit transactions under the provision.

"This tax avoidance loophole does nothing to help people in rural communities who rely on traditional landlines for their phone service," Slaughter said. "If these transactions are allowed to go forward, Verizon may drop landlines in 14 different states, a development that would mean a loss of jobs for workers and poor quality phone service for millions of Americans."