If you think you pay too much for your cell phone each month, you shouldn’t necessarily blame your provider. Instead, first look closely at your bill, then your public officials.
The average American family paying for four cell phones and service costing $100 per month will also pay about $221 each year in wireless taxes, fees, and surcharges, according to a recent study by the Tax Foundation. This means Americans as a whole will pay $17.1 billion in taxes and fees across all levels of government for wireless service in 2017. These taxes and fees make up 18.5% of the average American’s wireless bill, so a significant chunk of your bill each month goes not to your provider, but to Big Brother.
Over the years, phone companies have significantly reduced their prices for services that are much improved because of competition. The problem is that consumers can hardly see these cost improvements, because they are offset for the most part by upward-creeping government taxes and fees. According to the Tax Foundation, “[s]ince 2008, average wireless monthly bills have dropped from just under $50 per month to $41.50 per month — a 17 percent reduction – while wireless taxes have increased from 15.1 percent to 18.5 percent — a 22 percent increase.”
Government taking advantage of lower prices in the market to pass on fees to consumers only stagnates the spread of these innovative goods across society, making it tough for the people least able to cover the costs of a cell phone. This means they are either stuck with out-of-date technology or sacrificing more of their income just to be connected.
A majority of Americans have only a cell phone, rather than a landline, as a means of communication today, so lowering these fees will save a substantial amount of money for a majority of hardworking Americans. In addition, these fees are of greater significance to poorer Americans who struggle with the costs of paying for a cellphone in the first place.
Rather than just subsidizing phones for people, which has shown to be wildly fraudulent, all levels of government could make it easier for everyday Americans to have wireless capability just by getting out of the way and cutting their excessive wireless taxes and fees.
While not discussed as widely as now-infamous soda taxes, both are types of regressive fees meant to generate as much money for the state as possible, even though the tax burden disproportionately comes at the expense of low-income consumers. These kinds of regressive taxes, fees, and surcharges are attractive for legislators because they don’t get paid on tax forms in April, but on a monthly cell phone bill, so they are easy to pass onto consumers in order to plug budget shortfalls.
This tax strategy is not limited to just red or blue states in particular either, as Washington, Nebraska, New York, Illinois and Pennsylvania have the highest wireless taxes, fees and surcharges. These regulations are a bipartisan feature of government doing all it can to raise revenue.
While big spending states can be more upfront about the point of these costs, it is also a means for politicians in states more inclined toward limited government to nickel and dime their way to more revenue, with lower chances of being held accountable by voters. Freezing and curbing these taxes and fees should be a high priority for public officials looking to truly limit government’s size and to help the less fortunate in society.
With debate over the Tax Cuts and Jobs Act getting substantial coverage in the news lately, it is important to remember the variety of ways that all levels of government overtax their citizens. If there is a true desire to stop the growth of government and to help low-income citizens gain access to the latest technology, reducing taxes and fees on wireless would be a great place for public officials to start.
Bret Baker is an Associate with Americans for Tax Reform
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.