Cell Phone Taxes Increased in 2011

The Federal Universal Service Fund (USF) will increase from 12.9% to 15.5% effective January 1, 2011. All Cox Digital Telephone customers will be assessed a USF fee based on 15.5% of their interstate and international services, including the FCC Access fee. This change will result in an increase on the customers' bills and will vary depending on the customers' use of interstate and international services.

When:
The new rate is effective January 1, 2011.

Why:
All local and long distance telephone companies are required by the FCC to contribute to the Federal Universal Service Fund. The fund helps provide schools, library, community-based organizations and low-income customers with affordable telecommunications services. The increase corresponds with increased contribution factor as mandated by the FCC.

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10 States with Astronomical Cell Phone Taxes

February 23, 2011

MSN Money - Just how much do we love our cell phones? So much so that, in most places across the United States, we're willing to put up with astronomical taxes to stay connected.

An analysis of cell phone taxes by the Tax Foundation finds that the levies on the devices are significantly higher than many other common consumer items.

And while we tend to complain about the IRS, in this case the tax damage is more local.

The average U.S. wireless customer pays taxes and fees of 16.26%, says the Tax Foundation, with state-local charges accounting for 11.21% of that overall amount.

Worse, the Washington, D.C.-based tax research group found that state and local governments often hide or obscure the fees. In fact, my home state of Texas even sued Sprint because the company listed a state tax as a line-item in its bill, rather than hiding it from customers.

So where does your state rank on the cell phone tax list?

Nebraska is the biggest cell phone taxer. Its combined federal-state-local average tax rate is 23.69%. Four other states -- Florida, Illinois, New York and Washington -- have total cell phone tax rates of more than 20%.

The rest of the top 10 highest cell phone taxing states and localities are:

State	Average State & Local Cell Phone Tax Rate	Combined Federal, State & Local Cell Phone Tax Rate
Nebraska	18.64%	23.69%
Washington	17.95%	23.00%
New York	17.78%	22.83%
Florida	16.57%	21.62%
Illinois	15.85%	20.90%
Rhode Island	14.62%	19.67%
Missouri	14.23%	19.28%
Pennsylvania	14.08%	19.13%
Kansas	13.34%	18.39%
Texas	12.43%	17.48%

Overall, 23 states and the nation's capital have average state-local wireless taxes and fees in excess of 10 percent.

Locally, Baltimore, Md., imposes a $4 per line per month tax on wireless users. The Charm City assessment is on top of federal and state charges. The Washington, D.C., suburb of Montgomery County, Md., charges cell phone users a monthly $3.50 per line tax.

And where is making a mobile call not so costly? Head west, cell phone users.

Oregon's state and local tax rate is just 1.81%. Nevada's rate is 2.02%. In Idaho, cell phone users pay 2.20% in state and local taxes. From those three low-tax states, the cell phone state and local rates jump to 6.03% (that's in Montana) and just keep climbing.

You can find cell phone tax rates for the 50 states and the nation's capital on page 2 of the Tax Foundation's report (PDF format). There's also an online list where you can sort the cell phone tax data.

A confusing tax burden

"Cell phone users are overtaxed relative to consumers of other goods, and at risk of double taxation," writes study author and Tax Foundation Director of State Projects Joseph Henchman. "Additionally, the wide number of taxing authorities and the wide variety in rates makes tracking problematic and burdensome."

That burden is underscored by the ability of states to raise revenue with cell phone taxes in a relatively hidden way; note my earlier mention of sneaky and litigious Texas lawmakers.

Quick note to smartphone techie folks: I see plenty of apps for this and other state and local taxes.

Federal legislation has been regularly introduced in Congress to rein in the myriad cell phone taxes. It's usually entitled something along the lines of the Cell Phone Tax Moratorium Act. However, it's never moved very far in the legislative process.

If you have enough free minutes left on your cell phone plan, call your representative and senators and encourage them to finally do something about these taxes.

Consumer Cell Phone Taxes Are Three Times Higher Than Sales Taxes

Nebraska tops the list, with total taxes of 23.69%. Oregon has the lowest rate, 1.81%.

May 13, 2011

The American Consumer Institute - As state budget woes grow and politically viable solutions shrink, state legislators often turn to hidden taxes and fees for extra revenue. Nowhere is this as evident as it is in on your cell phone bill, especially if you live in Nebraska (18.64%), Washington (), New York (17.78%), or any of the other 23 states that now impose wireless taxes of greater than 10%.

The average wireless consumer faces taxes and fees amounting to more than 16% of their bill. These taxes are considered by most experts to be regressive information taxes, disproportionately affecting those in the greatest need. The out of control taxes on cell phone bills more than double the average tax on other taxable goods and services.

The Wireless Tax Fairness Act of 2011 – spearheaded by Reps. Zoe Lofgren (D-CA) and Trent Franks (R-AZ) and Sens. Ron Wyden (D-OR) and Olympia Snowe (R-ME) – promises a five-year “catch your breath” moratorium on state and local wireless taxation. The intent is to freeze the out-of-control taxation long enough to wait out the current fiscal crisis, taking away the crutch some states are using to fill their budget holes. The bill is the third such attempt in five years, but also marks the most robust and popular version.

In her remarks, Rep. Lofgren said:

“By freezing wireless taxes and fees, we hope to spur additional consumer driven development in wireless broadband and to increase access to advanced wireless networks. This legislation is about stabilizing the wireless and giving consumers the opportunity to choose services based on the merits and not on the changing rate of taxation.”

The state taxes in questions come in addition to (and often mirror) federal programs like the Universal Service Fund, which taxes all consumers cell phone bills and spends the money to increase access to the poor and rural areas. The problem is that the Universal Service Fund (and daughter programs in the states) loses in bureaucracy far more than it could gain in providing access. One study found that money spent from the federal Universal Service Fund saw less than 41 cents of every dollar actually used in building infrastructure, its intended use. The remaining 59 cents of every dollar were lost in bureaucracy and administrative costs.

A wireless association executive, CTIA’s Steve Largent, says that increased taxes are incomprehensible in a time of economic downturn:

“In light of today’s challenging economic conditions it is hard to understand why the average wireless consumer is being charged more than 16 percent in taxes and fees when other taxable goods and services are only 7.4 percent.”

As Largent goes on to illustrate, increased wireless taxes seem to completely contradict the espoused goals of policymakers looking to expand broadband Internet access to all Americans.

Wireless taxes are especially troublesome because of not only what they limit, but whom they limit it. As wireless Internet grows in popularity, it becomes for many the only portal to the Internet. Recent studies show that minorities and the impoverished are far more likely to depend on wireless service as both their primary method of communication and their primary method of Internet access.

It’s rare to see Washington politicians saving us from overreaching state governments, but this seems to be the case here. If Congress really wanted to get serious about spurring innovation, the adoption of wireless services and expand Internet access to everyone, they might consider lowering federal cell phone taxes while they’re at it. One miracle at a time.

The Wireless Tax Fairness Act is a fine start, but as Scott Mackey points out, much of the damage has already been done. Forty-seven states already levy taxes and fees on wireless customers greater than the average good or service. A moratorium on taxes gives consumers time to catch their collective breath, but it’s up to legislators to look at ways to cut these regressive taxes back down to size. Doing so will undoubtedly spur innovation in the fastest-growing sector of the economy and begin to make high-speed Internet accessible to everyone.

Cell Phone Taxes Increase

February 19, 2011

Chicagoist.com - Even if you stay under your minutes, your cell phone bill still seems astronomical. Cell phones are taxed higher than alcohol and cigarettes, and continue their upward trend. Oddly Illinois does not take the cake. Instead the Cornhusker State of Nebraska places first taxing users 23.69 percent.

The Tax Foundation released its list of wireless consumer taxes across the country. The average consumer pays 16.26 percent in taxes, but we know Illinois is not an average state.

We place fifth taxing users 20.90 percent, a slight increase since we last reported. Illinois taxes are comprised of the state telecommunication tax, municipal tax, a wireless 911 fee, plus sales tax and a federal Universal Service Fund tax.

But some states throw in odd ball taxes onto cell phone bills. Wisconsin taxes users 1.56 percent for a police and fire protection fee. Utah taxes users .15 percent to fund its poison control center.

The USF tax currently sits at 5.05 percent, despite changing over the years. In 2009 it raked in over $7 billion. It's used to fund projects establishing communication links to low income residents in underserved areas. The money raised will now be used to create broadband internet access in those underserved areas. The fund has been called "the most abused and obsolete pork programs," which should be terminated.