The Leaflet: Wireless Taxes Are Twice as High as the Average Sales Tax

Published October 16, 2014

Wireless Taxes Are Twice as High as the Average Sales Tax

According to a report recently released by the Tax Foundation, Americans now pay an average of 17.05 percent in combined federal, state, and local tax and fees on wireless service. That’s twice the average sales tax rates that apply to most other taxable goods and services. The wireless rate is comprised of a 5.82 percent federal rate and an average 11.23 percent state-local tax rate.

According to the Tax Foundation, the five states with the highest state-local rates are Washington, Nevada, New York, Florida, and Illinois. The states with the lowest state-local rates are Oregon, Nevada, Idaho, Montana, and West Virginia. Residents of Baltimore, Chicago, New York City, and Omaha face effective tax rates in excess of 25 percent of their bill.

CTIA – The Wireless Association estimates 326 million wireless device connections exist in the U.S. today, including smartphones, tablets, and hotspots. At the end of 2013, according to surveys by the Centers for Disease Control, more than 56 percent of all impoverished adults had only wireless service, and nearly 40 percent of all adults were wireless only.

As wireless consumers continue to be burdened with excessive taxes, fees, and surcharges in many states and localities across the United States, Congress continues to punt on the Wireless Tax Fairness Act. The act would put a five-year moratorium on discriminatory state wireless phone and data service tax increases. In a recent post for The Heartland Institute’s Somewhat Reasonable blog, Senior Policy Analyst Matthew Glans writes, “A five-year freeze would slow the rate of tax increases while allowing more time to create a new taxing system for wireless that is more carefully developed, fair, and non-disruptive.”

While disproportionately affecting minority and low-income citizens, high wireless taxes burden consumers and the wireless market. A moratorium on these discriminatory tax rates would benefit the economy and consumers while allowing the industry to innovate and create jobs.


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