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Febru y 18, 2011
No. 259
States Target Cell Phones for Stealth,
Burdensome Taxes
Nebraska Consumers Face Highest Rates, Average Consumer Pays
16% in Cell Taxes and Fees
By
Joseph Henchman
The number of U.S. cell phone subscribers has grown significantly in recent years, from 55 million
in 1997 to 292 million in 2010. That period has also seen a fall in landline telephones (there are now
50 million), and 2007 marked the first year that Americans spent more on cell phones than on
landlines.2 This trend toward cell phones has not gone unnoticed by state and local governments,
which have targeted wireless services for higher taxes.
The average U.S. wireless consumer pays taxes and fees of 16.26 percent, of which state-local
charges average 11.21 percent, according to a newly released study that identifies and calculates
wireless taxes and fees) Twenty-three states have average state-local wireless taxes and fees in excess
of 10 percent, and taking into account the infamous federal telephone excise tax (dating to the
Spanish-American War and partly repealed in 2006), some cell phone subscribers pay more than 20
percent in taxes. (See Table 1 for a full list.)
Joseph Henchman is tax counsel and director of state projects at the Tax Foundation.
THE \WORLD F-wiBOOK (2010).
2 Cell phone spending surpasses land lines in U.S., Associated Press (Dec. 18, 2007),
.. art (] e s. n e ,;c.e.p..a1 ......rn n), / 1n CellPhone . ada s esm . i ,and[aesi i x. Smee also
Spending on Cell Phone Services Rapidly Approaching That of Residential Phone Services, U.S. Department of Labor
Bureau of Labor Statistics, at http: //ww.bts.gov cex cetlpLphones./-tm (Dec. 13, 2007);
3 Scott Mackey, A Growing Burden: Taxes and Fees on Wireless Service, KSE Partners LLP (Feb. 14, 2011).
http:/ /www.ksefocus.com/wordpress-content/uploads/2011/02/2010-Tax-Study-Final-Tax-Notes-PDF.pdf
Data is provided from FCC studies and the wireless industry and a methodology developed by the Council on State Taxation is
used to calculate averages.](ViewImageLocal?handle=hein.taxfoundation/ffcfjxz0001&div=1&collection=&method=preview&ext=.png&size=3)