Rumor has it that the Wireless Tax Fairness Act may be up for a vote this month in the US House of Representatives. The Act would stop the states, or local taxing jurisdictions, for five years from slathering more taxes onto the wireless industry than they already have done. It does not prohibit new taxes being applied across services or industries, only taxes which target the wireless industry.
Across the country mobile devices are taxed at obscene levels—higher taxes than states place on pornography, alcohol or gambling winnings. But why? Are phones a special drain on the public infrastructure? No. The answer is easy: politicians and tax collectors can. As the hangover from the government-spending binge continues in state capitols, revenue is needed to feed the politicians’ desires, so taxes are popped like aspirin the morning after an all-night party. Given the ubiquity of mobile phones they are easy targets.
It would be hard to imagine an industry today that is more “dynamic” than the wireless industry. In a relatively short time a “cell phone” has become a necessity to virtually everyone. Every few months one company or another introduces a new, feature-rich handset or other device such as the iPad, which consumers eagerly gobble up.
At the same time, service providers compete fiercely for customers, continually upgrading their networks to provide better and faster service, even subsidizing consumers’ purchase of sophisticated handsets.
And in the very near future most people will gain access to the Internet almost completely via a wireless device and at broadband speeds.
This is one industry that has succeeded in pleasing consumers, delivering innovation, creating high-paying jobs, and funneling tax revenue to virtually every level of government. You’d think government would be pleased, yet the tax plundering continues and grows.
Some will balk at the federal government interceding here, and they are not wrong to think carefully in this case. But if politicians mean what they say, that innovation access is a key to our future, and that truly interstate issues do have a place in federal purview, then something must be done to stop the local taxing authorities’ banditry on the mobile interstate Internet highway.
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Today's TechByte was written by Bartlett D. Cleland, Policy Counsel with the Institute for Policy Innovation.