The WasteWatcher: The Staff Blog of Citizens Against Government Waste

Halting Wireless Tax Increases

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


The June 2013 early release report on wireless substitution by the Centers for Disease Control (CDC) indicates that the percentage of adults and children living in households with wireless only telephone service has been on a steady increase since 2003.  The data in the report indicates that wireless-only population is now about 36.5 percent and overall household adoption of wireless is now set at 89 percent of the population in the U.S. as of the end of 2012.

According to a survey by the Pew Internet and American Life Project, nearly 85 percent of American adults own a cell phone, and these wireless devices now play a key role in many aspects of their daily living.  The survey found that 67 percent of cell phone owners regularly check their phones for messages, 44 percent have slept with their phones beside their beds to make sure they don’t miss an important call, and 29 percent describe their phones as “something they can’t imagine living without.”

This growth in use and dependence on wireless services make the taxation of these services by state and local governments increasingly attractive, as they seek new avenues to pay for budget shortfalls.  According to Carl Gipson, an economic policy analyst at the Washington Policy Center, some of the fees and taxes paid by wireless consumers are reaching levels normally preserved for what are known as “sin” taxes in some states, which in his state of Washington are 50 percent for a carton of cigarettes, and 40 percent for alcohol.

As an example of the increases in wireless taxes, in May 2010, the City of Baltimore sought to increase taxes on telephone subscribers (including wireless phones) in order to increase revenues to their coffers.  Including state and local taxes, Baltimore city residents now pay 27.7 percent in taxes for their wireless services.  Other states and localities have also looked toward increasing taxes on wireless services as a means to increase revenues.

On Wednesday, June 26, 2013, Senators Ron Wyden (D-Ore.) and Pat Toomey (R-Penn.) introduced S. 1235, the Wireless Tax Fairness Act, bi-partisan legislation which would provide protection from the ever increasing taxes currently being imposed on wireless consumers.  Senator Toomey stated,

Our bill will protect consumers from tax increases on wireless products and services.  We need to let the Internet economy thrive without being subject to a tax that is not imposed on other products or services.”

S. 1235 and its House companion bill (H.R. 2309) would place a five-year freeze on attempts by state and local governments to raise taxes on wireless services, including mobile services, mobile service providers, or mobile service property.  As Senator Wyden put it in the press release announcing the introduction of the bill,

Mobile voice and data services are not the luxury items they may have once been considered.” Wyden continued, “They are ubiquitous technologies that are more and more the primary way consumers access the Internet.  Excessively taxing these goods and services stands in the way of innovation within the digital economy.  There is no reason wireless tax rates should be on par with vice taxes like tobacco and alcohol.  It is time to protect wireless services from unfair and excessive taxes.”

Consumers should not be penalized for using new and innovative technologies to communicate with one another.

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