The Tax Foundation recently issued a report on cell phone taxes and usage by the American consumer. The Foundation said last week that taxes, surcharges and fees tacked on to monthly cell phone bills will continue to soar and could become up to 40 percent of the total bill for a typical family in some locations.
The Foundation’s key findings are:
- A typical American household with four wireless phones paying $100 per month for wireless voice service can expect to pay about $221 per year in wireless taxes, fees, and surcharges – down from $223 in 2016.
- Nationwide, taxes make up 18.5 percent of the average U.S. customer’s wireless bill. Washington has the highest wireless tax rate in the country at 25.58 percent, followed closely by Nebraska at 25.10 percent, New York at 24.64 percent, Illinois at 24.59 percent, and Pennsylvania at 22.32 percent.
- Since 2008, average wireless monthly bills have dropped from just under $50 per month to $41.50 per month – a 17 percent reduction – while wireless taxes have increased from 15.1 percent to 18.5 percent – a 22 percent increase.
- Many states impose a much larger tax on wireless service than the sales tax imposed on the purchase of other goods and services. States with large disparities include Alaska (8.8 times) Nebraska (2.7 times), Pennsylvania (2.5 times), Maryland (2.2 times), South Dakota (2.2 times), Florida (2.2 times), New York (2.2 times), Rhode Island (2.2 times), and Illinois (2.1 times).
- Connecticut, Louisiana, Oklahoma, Utah, and West Virginia increased 911 fees in 2017. States are under pressure to fund upgrades to next-generation 911 (NG911) programs.
- In 2017, state Universal Service Fund (USF) rates increased in Alaska, Indiana, Kansas, New Mexico, Utah, and Wisconsin. South Carolina expanded the scope of its USF surcharge to include wireless service. California and Wyoming lowered the rates of their state USF surcharges.
- At the end of 2016, over 66 percent of all low income adults had only wireless service, and 51 percent of all adults were wireless only. Excessive taxes and fees, especially the regressive per-line taxes like those imposed in Chicago and Baltimore, impose a disproportionate burden on low-income consumers. Chicago’s per-line tax increases to $5 per month per line as of January 1, 2018.
December 11, 2017
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