A new bill, H.R. 2309, was introduced today in the House of Representatives by Rep. Zoe Lofgren (D-19-CA) and and Rep. Trent Franks (R-17-AZ) that, if passed, will place a five-year moratorium on discriminatory wireless taxes. Federal and state governments are using revenue from wireless taxes primarily to fund special interest projects and plug budget holes.
Digital Liberty and Americans for Tax Reform, under Grover Norquist, recently sent out a letter to Congress members encouraging them to support the Wireless Tax Fairness Act. It has gained 144 official cosponsors to date, up from 127 cosponsors when the letter was first sent out less than a week ago, as originally reported by Digital Liberty. The letter states that this freeze is a “pro-consumer, pro-business, anti-tax, and bipartisan” solution to a growing problem.
The letter asserts that taxes are not only excessively high, but also discriminatory and harmful to the advancement of broadband. Taxpayers currently pay an average of 16-17% tax on wireless services, with some states even charging up to 25%. This is about 2.5 times the average sales tax of 7.33% ("End Discriminatory Wireless Taxes!").
In addition, the letter points out that even though around 90% of Americans rely on cell phones and a vast majority utilize mobile broadband, wireless tax rates are much higher than those on regular sales in all but three states. This hinders expansion of wireless, as small business owners and low-income families struggle to afford these increasingly vital services.
Studies have even shown that for every $1 in taxes on wireless services, $2.75 is lost in additional uses (“CTIA 2013: Wireless Policy Hot Topics”). To put this into perspective, about $21 billion are collected annually from wireless taxes across the nation. Not only are users deterred from utilizing broadband, but overall economic growth is hindered as well.
Digital Liberty and Americans for Tax Reform urge members of Congress and readers to support the Wireless Tax Fairness Act. Freezing wireless taxes from further increases would not only maintain the current rates of broadband use and economic growth, but it may also pave the way for cutting excessive, discriminatory tax rates, allowing wireless services to become even more accessible and affordable to all Americans.
Find a copy of Americans for Tax Reform’s letter here
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