Jack Kemp

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.


Jack Kemp

Jack Kemp is Founder and Chairman of Kemp Partners and a contributing columnist to Townhall.com.
 
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