What is your State’s Monthly Wireless Tax Burden on Consumers? New Report Highlights Need for Communications Tax Reform

Do you have any idea what are you paying in taxes and fees on your wireless bill? Don’t worry if you don’t know, as I’m sure you’re not alone. But a new report is out that looks at the level of monthly tax and fee rates on wireless consumers in cities and states across the country, and the numbers might surprise you. National tax policy expert and former chief economist with the National Conference of State Legislators (NCSL), Scott Mackey today released the report, A Growing Burden: Taxes and Fees on Wireless Service PDF, and what Mackey has discovered is that an already bad situation for consumers is getting worse. The report indicates a growing trend among U.S. cities and states for tacking on additional taxes and fees on consumers – many times at the city council level, and without a public vote – in challenging economic times as they seek to fill budget gaps and economic shortfalls.

Mackey’s study found that consumers in 47 states – and the District of Columbia – currently pay a monthly wireless tax, fee and government charge rate that exceeds the general rates on retail sales taxes for other goods and services. It also shows that consumers in nearly half of the states are paying at least DOUBLE the general sales tax rate. The piling on of state, local and federal wireless taxes is anti-consumer, pure and simple, and we should all be outraged and state and federal legislators need to act now.

In this technology-driven era where nearly every policymaker agrees that broadband deployment and job growth is a national priority, how can our broadband goals marry with:

  • Tax and fee rates on wireless consumers that eclipse 23 percent in Nebraska;
  • State raids of E 911 funds contributed by wireless consumers that exceeded $100 million in 2009;
  • Twelve separate state and local tax and fee line items on wireless consumers in New York state;
  • Montgomery County, Maryland ($3.50 per month) and Baltimore City ($4.00 per month) competing to see who can have the highest local tax in the country;
  • Wireless impositions that have increased about three times faster than broad-based consumption taxes.

Here is a look at the Top Ten ranked states (for highest monthly wireless taxes and fees) –

Rank                             State-        State             Federal         Combined
State                             Local         Sales Tax    USF                Fed-State-Local

  1. Nebraska          18.64%      7.00%           5.05%            23.69%
  2. Washington     17.95%       9.00%           5.05%            23.00%
  3. New York         17.78%       8.25%           5.05%            22.83%
  4. Florida              16.57%       7.25%           5.05%            21.62%
  5. Illinois               15.85%       9.00%           5.05%            20.90%
  6. Rhode Island  14.62%       7.00%           5.05%            19.67%
  7. Missouri            14.23%      7.23%            5.05%           19.28%
  8. Pennsylvania   14.08%      7.00%           5.05%             19.13%
  9. Kansas             13.34%       8.13%           5.05%            18.39%
  10. Texas                 12.43%       8.25%           5.05%            17.48%

*For more, please see Table 2 in the full report PDF from the February 14, 2011 State Tax Notes publication.*

More than eleven years after the National Governors Association (NGA) and the National Conference of State Legislatures (NCSL) called for states to reform and modernize their telecommunications taxes, most states have not enacted meaningful reform that would benefit wireless consumers. There is no time better than the present for an overhaul of a communications tax system that is excessive, discriminatory, regressive and counter to job growth and broadband adoption.

The time is now to make this a priority.

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  1. avatar Kim