The WasteWatcher: The Staff Blog of Citizens Against Government Waste

The High Taxation of Wireless Service

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 adoption of wireless communications has grown from 48.7 million subscribers in 1997 to 321.7 million subscribers in 2012.  Despite the increased use of this innovative technology, the wireless industry is one of the most heavily taxed in the nation.  The U.S. average state and local sales tax for most goods and services is currently 7.33 percent.  However, the average tax burden on wireless consumers is 17.18 percent.  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.

An October 2012 report by Scott Mackey demonstrated hard high these taxes have become.  According to the report, Nebraska has the highest combined wireless tax rate at 24.49 percent and Oregon has the lowest combined tax rate at 7.67 percent for wireless services.  Rounding out the top five highest wireless tax states are Washington (24.44 percent), New York (23.67 percent), Florida (22.41 percent), and Illinois (21.76 percent).  According to the report, the average burden from wireless taxes and fees on consumers has increased from 16.26 percent in July 2010 to 17.18 percent in July 2012.

These taxes and fees include the federal Universal Service Fund (USF) fee, state USF fees, and 911 service fees, as well as state and local wireless taxes and other fees.  Local governments, under tighter budgets also see wireless services for the cash cow that it could become.  For example, in May 2010, the city of Baltimore, Maryland 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.

On June 11, 2013, H.R. 2309, the Wireless Tax Fairness Act, H.R. 2309 was reintroduced.  This bi-partisan legislation 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.   The ability to communicate efficiently and effectively by using new and innovative technologies such as wireless broadband, cell phones, and Smartphone devices is on the rise.  But consumers should not be penalized for reaching out and using these new advancements with onerous tax hikes.

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