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Municipalities make higher "payments in lieu of taxes" and don't get taxbreaks. Some opponents of municipal broadband have argued that municipal utilities have an advantage over private sector providers when offering broadband because municipalities don't have to pay taxes. The truth is, municipal utilities make "payments in lieu of taxes" to local governments that are usually much higher than the local taxes that private entities pay. Municipal entities do not pay income taxes, but that is because they are non-profit organizations that do not make profits. At the same time, municipalities are not eligible for the billions of dollars of investment tax credits, accelerated depreciation, and other tax write-offs that often bring the effective income tax rates of private entities down to zero or less.

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