The wireless industry is an amazing story of innovation, market dynamism, consumer choice, and economic and social gains. Wireless not only makes it easier for us all to stay connected, but it makes us more socially and economically efficient.
There’s just one sour note—taxes. Back in the bad old days of telephone monopolies, states and cities got into the habit of using telephone service as a source of revenue. Since the cities and states controlled telecom prices anyway, politicians didn’t mind piling a host of taxes and fees onto phone bills.
Today, the communications market has been totally transformed except for one thing—taxes! States have extended their communications tax grab onto all the new forms of communications, especially wireless service. Even states with reputations for low taxes like Texas and Florida are among the worst offenders in soaking wireless consumers with confiscatory tax rates.
The national average tax rate on wireless service is 17.2 percent (federal, state & local) compared with an average tax rate of 7.4 percent imposed on other general goods and services. That’s a pretty big discriminatory tax treatment for wireless.
And cities have gotten particularly bad at piling up taxes on wireless service. Consider:
There’s just one sour note—taxes. Back in the bad old days of telephone monopolies, states and cities got into the habit of using telephone service as a source of revenue. Since the cities and states controlled telecom prices anyway, politicians didn’t mind piling a host of taxes and fees onto phone bills.
Today, the communications market has been totally transformed except for one thing—taxes! States have extended their communications tax grab onto all the new forms of communications, especially wireless service. Even states with reputations for low taxes like Texas and Florida are among the worst offenders in soaking wireless consumers with confiscatory tax rates.
The national average tax rate on wireless service is 17.2 percent (federal, state & local) compared with an average tax rate of 7.4 percent imposed on other general goods and services. That’s a pretty big discriminatory tax treatment for wireless.
And cities have gotten particularly bad at piling up taxes on wireless service. Consider:
- Chicago, where wireless customers pay a total tax rate of 24.38 percent;
- Baltimore, where they pay 26.76 percent; and
- New York’s total tax rate of 20.43 percent.
But what’s truly astonishing is that politicians don’t think this is enough. In the past several years dozens of states and municipalities have attempted to even further increase taxes on wireless services.
Today, all communications companies, regardless of technology employed, are essentially in the “bit business.” Yet the tax treatment of communications services treats many differently, in onerous, inconsistent and discriminatory ways.
What’s needed is reform of communications taxes that lowers the overall tax burden on the communications industry and more closely levels the playing field. Some sort of “communications flat tax” such as has been tried in a couple of states.
In the meantime, the Wireless Tax Fairness Act, newly reintroduced this week, would put a five-year moratorium on any new state and local discriminatory wireless taxes. Smart states could use this time to do a complete rethink on the way they tax communications services. At the very least it would stop states from applying even more new discriminatory taxes on the crucial wireless industry.
Today, all communications companies, regardless of technology employed, are essentially in the “bit business.” Yet the tax treatment of communications services treats many differently, in onerous, inconsistent and discriminatory ways.
What’s needed is reform of communications taxes that lowers the overall tax burden on the communications industry and more closely levels the playing field. Some sort of “communications flat tax” such as has been tried in a couple of states.
In the meantime, the Wireless Tax Fairness Act, newly reintroduced this week, would put a five-year moratorium on any new state and local discriminatory wireless taxes. Smart states could use this time to do a complete rethink on the way they tax communications services. At the very least it would stop states from applying even more new discriminatory taxes on the crucial wireless industry.