The High (and Rising) Taxes Hiding in Your Phone Bill
A lot of people are hoping to get the latest and greatest smartphone for Christmas, and for good reason: the handheld devices are getting more powerful, with more capabilities, than ever before. But they are also getting more expensive to own, thanks to the layers of taxes added to each monthly phone bill.
And according to the Tax Foundation, the government’s take is only getting bigger:
A typical American household with four phones on a “family share” plan, paying $100 per month for taxable wireless service, can expect to pay about $270 per year in taxes, fees, and surcharges—up from $260 in 2019.
Nationally, these impositions make up about 22.6 percent of the average bill—the highest rate ever. Illinois has the highest wireless taxes in the country at 32.2 percent, followed by Arkansas at 30.0 percent, Washington at 29.7 percent, Nebraska at 29.1 percent, and New York at 28.6 percent.
Since 2008, average monthly wireless service bills per subscriber have dropped by 26 percent, from $50 per line to about $37 per line. However, wireless taxes have increased by 50 percent, from 15.1 percent to 22.6 percent of the average bill.
At the end of 2019, over 67 percent of low-income adults had wireless as their phone service, and 58 percent of all adults were wireless-only. Excessive taxes and fees, especially the very high per-line charges, impose a disproportionate burden on low-income consumers. In Chicago, a family with four lines of taxable wireless service paying $100 per month is subjected to over $500 per year in taxes and fees.
In other words, the taxes slapped on each wireless phone are big, regressive, and getting worse – even as the cost of phone service falls with greater competition. And all those taxes and fees could result in real harm, reducing future investments in faster, more stable, more available wireless networks.
Image Credit: By Jericho [CC BY 3.0 (http://creativecommons.org/licenses/by/3.0)], via Wikimedia Commons