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.
So the rapid growth of wireless, both as a consumer technology and an economic engine, seems to have made it an irresistible target for tax-hungry politicians. At latest count, 17 states - including the District of Columbia - levy wireless taxes and fees in excess of 15 percent. An unacceptable handful of these states are now imposing wireless taxes in excess of 20 percent. And those taxes rarely fund anything related to telecommunications. Instead, they often go to the general fund to try to balance budgets.
In many states and localities, cell phones now face a heavier tax burden than the so-called "sin products," such as cigarettes and alcohol. And wireless taxes are particularly unfair and regressive, hitting low-income people, fixed-budget families, minority communities and senior citizens the hardest.
Fortunately, Congress is considering bringing a sanity check to this out-of-control tax spiral. A bipartisan group of members of Congress led by Rep. Zoe Lofgren (D-Calif.) and Rep. Chris Cannon (R-Utah) have recently introduced H.R. 5793, the Cell Tax Fairness Act, which would provide a five-year timeout on all new discriminatory state and local wireless taxes. While this won't fix the current tax burden, it is a great start. And as a Democrat from tax-hungry California (on the top 10 list for worst wireless tax states), Rep. Lofgren should be commended for helping to lead the charge with Rep. Cannon, a "free market" conservative Republican.
According to Lofgren, the bill "does not take away any existing revenue for state and local governments, it simply calls for a period of tax stabilization that will help further innovation and access in the wireless world."
It is a bipartisan issue among those with economic sense. Out on the tense presidential campaign trail, Sen. John McCain (R-Ariz.) has called repeatedly for a ban on unfair new cell phone taxes.
Last year, this very same Congress extended the moratorium against discriminatory taxes on Internet access for seven years. Now it's time for Congress to stop tax hikes on wireless service, to protect millions of consumers and to promote continued innovation and economic growth.