Wednesday, November 18, 2015

New Study Shows States Should Lower Wireless Tax Rates

On November 16, 2015, the Tax Foundation released a new study authored by Scott Mackey and Joseph Henchman showing that consumers are experiencing record high wireless taxes and fees in 2015. Federal, state, and local taxes and fees combined constitute nearly 18 percent of the average U.S. wireless customer’s monthly bill. And while the price of the average wireless bill has been decreasing over the past seven years, the nationwide average tax rate has been climbing quickly.
Among the individual states, Maryland has the 14th highest wireless tax rate and is significantly above the national average. Although Maryland’s ranking went down slightly from 2014, when it was 13th among states, nevertheless its combined state and local wireless tax rate went up from 12.37 percent to 12.67 percent. This increase likely will cost Maryland wireless consumers hundreds of thousands of dollars a year on top of the unreasonably high tax burden they already incur.
As I stated in an April 2015 blog, wireless taxes disproportionately impact poor families who rely on wireless devices as their main form of communication and Internet access. Roughly 56 percent of all poor American adults use wireless Internet service as their only connection, therefore high tax rates impose disproportionately burdensome costs on low-income consumers. Taxes on communications and Internet access should be kept as low as possible to push prices to an affordable level so every consumer can get online.
Florida led by example earlier this year and reduced its wireless tax rate. It is time for Maryland and other states, especially but not limited to those above the national average, to reduce taxes to alleviate this burden on wireless consumers.