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1 Scott Mackey & Joseph Henchman, Record High Taxes and Fees on Wireless Consumers in 2015 1 (2015)

handle is hein.taxfoundation/rchtxwirc0001 and id is 1 raw text is: TAX FOUNDATION FISCAL FACT Nov. 2015 No. 490 The Tax Foundation is a 501(c)(3) non-partisan, non-profit research institution founded in 1937 to educate the public on tax policy. Based in Washington, D.C., our economic and policy analysis is guided bythe principles of sound tax policy: simplicity, neutrality, transparency, and stability. ©2015 Tax Foundation Distributed under Creative Commons CC BY NC 4.0 Editor, Melodie Bowler Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 202.464.6200 taxfoundation.org Record High Taxes and Fees on Wireless Consumers in 2015 By Scott Mackey & Joseph Henchman Managing Partner, Vice President of State KSE FOCUS LLP & Legal Projects Executive Summary Increases in federal, state, and local fees drove the national average wireless tax and fee burden to its highest level ever - nearly 18 percent of the average U.S. wireless customer's bill. This is an increase of nearly one percentage point over 2014 levels and is almost two and one half times higher than the general sales tax rate imposed on most other taxable goods and services. Wireless industry competition has led to significant reductions in average monthly bills even as consumers get new and expanded wireless plans. However, the consumer benefits of lower wireless prices have been partially offset by increases in government taxes and fees. The average monthly wireless bill dropped from just under $49.94 in 2008 to $46.64 in 2015, a price decrease of nearly 7 percent. At the same time, the tax rate increased from 15.5 percent to nearly 18 percent. Consumers in Washington State pay over 25 percent of their bills in taxes and fees, while consumers in eight other states - Nebraska, NewYork, Illinois, Missouri, Rhode Island, Florida, Arkansas, and Pennsylvania - pay total taxes and fees in excess of 20 percent of their bills. Consumers in Oregon and Nevada continue to enjoy the lowest wireless taxes in the country. Wireless consumers pay about $5.8 billion annually in excessive state and local taxes and fees, defined as taxes and fees in excess of the normal state and local sales taxes imposed on the purchase of other goods and services. In addition, wireless consumers pay about $5 billion in Federal Universal Service Fund surcharges. Florida was the only state to buck the trend toward higher wireless taxes between 2014 and 2015. The governor and the legislature reduced the state Communications Services Tax from 9.17 percent to 7.44 percent, which will provide over $100 million in tax relief for Florida wireless consumers and businesses. This tax cut, along with a reduction in the 911 fee, drops Florida out of the top five states with the highest wireless taxes.

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