Grover Norquist and Americans for Tax Reform sent a letter urging senators to support S. 1235, the Wireless Tax Fairness Act, which was recently introduced in the Senate by Senators Pat Toomey (R-PA) and Ron Wyden (D-OR). This bipartisan bill would place a five-year moratorium on both state and local attempts to raise discriminatory wireless taxes. Revenues from these taxes are primarily used to fund special interest projects and to plug budget holes; raising taxes on wireless services only results in more wasteful spending.
The Senate’s Wireless Tax Fairness Act serves as a companion to H.R. 2309, a bill introduced to the House a few weeks ago by Rep. Zoe Lofgren (D-19-CA) and Rep. Trent Franks (R-17-AZ). Americans for Tax Reform also encouraged House members to support the bill, and it has successfully gained 162 cosponsors already. Digital Liberty and Americans for Tax Reform urge senators to support its companion S.1235.
Taxes on wireless services 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!").
Wireless tax rates are generally much higher than general sales tax. As a result, the much needed expansion of wireless is hindered, in part due to the fact that small businesses and low-income families struggle to afford simple but increasingly vital Internet connectivity.
Not only are users deterred from utilizing broadband, but overall economic growth is slowed down as well. 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”).
The federal government must get involved to stop further tax hikes. As Norquist states in the letter, this five-year freeze on wireless tax increases is just the beginning of a “pro-consumer, pro-business, anti-tax, and bipartisan solution” to the growing discriminatory wireless tax problem.
Digital Liberty and Americans for Tax Reform encourage members of the Senate and readers to support the Wireless Tax Fairness Act. Freezing wireless taxes 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.
Read the letter here.