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Monday, May 19, 2008
Jack Kemp :: Townhall.com Columnist
Take a Timeout On Unfair Cell Phone Taxes
by Jack Kemp
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It's no secret that these are uncertain economic times. With the cost of food and energy rising almost daily, one might expect politicians to work overtime to keep taxes on other consumer goods from adding to the cost of living. Unfortunately, some are contemplating doing just the opposite.

There's an opportunity to show concern for these issues with a little gadget we all know, love and depend on - the cell phone. More than 85 percent of Americans use some sort of wireless device. Almost everybody has one, and now every level of government is looking at your cell phone as a revenue stream. And they want a drink.

But wireless taxes are already a virtual flood. The typical wireless consumer pays a whopping 15 percent in taxes, fees and surcharges. This is more than double the average of taxes you pay on other goods and services - about 7 percent, according to economist Scott Mackey in the journal State Tax Notes.

In fact, from January 2003 to July 2007, the effective tax rate on wireless devices increased four times faster than the rate on other goods and services. According to the national consumer group MyWireless.org, wireless consumers now pay a total of about $21 billion annually. It's no surprise, then, that a recent poll taken by the group showed 84 percent of wireless consumers favored a break from these unfair new taxes on wireless use.

Just look at the litany of taxes and fees on your most recent cell phone bill. How did all those taxes get there? Cell phone taxes generate a lot of revenue quickly, and they are easy to slip by consumers until they suddenly appear on monthly wireless bills.

According to the CTIA - the Wireless Association, roughly 259 million Americans now use cell phones, and they send about 1.6 billion text messages per day. People of every race, age and economic status use cell phones. Hispanics and young adults lead the way with hand-held devices, with 84 percent of English-speaking Hispanics using cell phones, compared to 74 percent of white Americans, according to the Pew Internet and American Life Project.

Beyond the individual benefits of wireless, the wireless industry has become an increasingly important source of economic growth. In 2004, the wireless industry accounted for $92 billion of U.S. gross domestic product, and today it grows at about 15 percent. If those upward trends continue over the next five years, the wireless sector could become a bigger component of the U.S. economy than both the automobile and agricultural sectors combined.

Wireless today is also driving the deployment of high-speed broadband Internet connections: According to the Federal Communications Commission, 70 percent of the growth in high-speed lines between June 2006 and June 2007 was attributable to mobile wireless. That is a staggering number when you consider the rate at which many rural and underserved areas of our country are catching up technologically. Continued...

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About The Author
Jack Kemp is Founder and Chairman of Kemp Partners and a contributing columnist to Townhall.com.
 
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Help dial 911
I agree that cell phone tax is a drag as taxes always are but i thought I'd share something I read in response to what Pirate was talking about: "Hence, instead of taxing cell phones, we should be SUBSIDIZING them." There are a lot of Americans that don't have access to any form of telecommunications at all which is a massive problem when it comes to calling 911. Imagine not being able to call for help in an emergency, I'd rather pay a 911 tax. Anyway, I read about Tracfone and the government giving cell phones to people of the low income bracket that qualify as a way to enable everyone to call for help. I think that is really cool and if I have to pay cell phone tax I hope some of it goes to that project.

CVN65
The only way to get rid of these taxes is to get rid of the service. I dropped my hardwired phone. it still gets 911, LOL.
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