Friday, February 18, 2011

USA - Citizen complaints about the level of taxes on mobile phones, comparable to tobacco

[] A couple of years ago Bob McIntyre bought his daughter a mobile phone. She was living in Oakland, Calif., at the time, and McIntyre lived in northern Virginia. He told her to buy the phone in Oakland and to send him the bill. With rebates and discounts the phone ended up costing about $25. But when McIntyre got the bill, he hit the roof.

McIntyre, I should point out, is director of Citizens for Tax Justice, a liberal nonprofit. CTJ has a well-established reputation for scrupulously honest research—McIntyre's been tutoring me about tax distribution tables for three decades—and the man doesn't waste a lot of time griping that our wallets have been picked clean by the gol-durned guv'mint. (That's Grover Norquist's racket.) But McIntyre was flabbergasted to receive a bill of nearly $60 for his daughter's cell phone, of which the majority was taxes. The city fathers of Oakland had calculated their tax based on the phone's sticker price of about $300. Consequently, McIntyre ended up paying more for the tax than he did for the phone.

Taxes on mobile phone use are so high that you might wonder whether the government considers their use a vice, like the consumption of alcohol or tobacco. A pack of smokes costs about $5, on top of which state tax will add, on average, $1.45. That's an average tax rate of 22 percent. In the states of Nebraska, Washington, or New York—where taxes on cellular service are highest—the combined state and local tax is 18 or 19 percent, which isn't too far behind. Nationwide, the average state-local tax burden on cell phone service is 11 percent, compared with an average general sales or use tax of only 7 percent.

Cellular Sin Taxes - Why are mobile phone taxes so ridiculously high?

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