“Accessing new sources of information on our mobile devices may be getting easier, but paying cell phone taxes is not,” said Tax Foundation Vice President for Legal & State Projects Joseph Henchman. “State and local governments should not single out one product for stealth tax increases as they are doing with wireless services.”
Included in the report, which uses recent data from a study by Scott Mackey of KSE Partners, are the following findings:
- The average
wireless consumer pays taxes and fees of 17.18 percent, of which state-local charges average 11.36 percent. U.S.
- 26 states have average state-local wireless taxes and fees in excess of 10 percent; with federal taxes, some cell phone subscribers pay more than 20 percent in taxes.
- States favor the taxes because they can raise revenue in a relatively hidden way. For example,
sued Sprint because the company listed a state tax as a line-item in its bill, rather than hiding it from customers. Texas
- Cell phones are taxed at a much higher level than other consumer items, even as much as or more than alcohol or cigarettes. The highest sales tax in the country (combined state and average local rates) is 9.43 percent in
– the highest state and local rates for cell phone service are almost twice as high. Tennessee
- Among local jurisdictions,
imposes a $4 per line per month tax on wireless users, on top of federal and state charges. Nearby Baltimore, Maryland imposes a $3.50 per line per month tax. These per line charges are especially burdensome on low-priced “family share” plans. Montgomery County, Maryland
“Scholars from across the political spectrum have criticized telecom taxes as burdensome, regressive, and stifling consumer choice,” said Tax Foundation economist Scott Drenkard. “In response to this problem, legislation entitled the Wireless Tax Fairness Act, which would restrict excessive state and local wireless taxes, has been regularly introduced in Congress.”
The Tax Foundation is a nonpartisan research organization that has monitored fiscal policy at the federal, state, and local levels since 1937. To schedule an interview, please contact Richard Morrison, the Tax Foundation’s Manager of Communications, at 202-464-5102 or email@example.com.