State and local taxes and fees average more than 17% of consumers’ wireless bills. That’s double the rate of ordinary sales taxes. Loopholes in the tax rules for digital goods and services also can expose consumers to duplicative taxes by multiple jurisdictions. These regressive policies hit working families hardest. They also mirror tax policy aimed at discouraging use (eg. cigarettes and alcohol). Our tax policies should be fair and encourage widespread mobile adoption and usage given the jobs and many other societal benefits that broad public use of mobile broadband can offer.
Why We Care
- Wireless bills are unfairly taxed at higher rates. Everyone who owns a mobile device—more than 90% of Americans—is subject to this tax inequity.
- The digital economy is key to our nation’s growth and prosperity. The widespread embrace of mobile connectivity is creating jobs and advancing our innovation economy. Tax policies should encourage mobile adoption and usage. That means prohibiting new discriminatory taxes.
- Regressive taxes harm consumers. Today, more than 40% of American adults live in wireless-only households and they pay federal, state, and local wireless taxes that are more than double the average state sales tax. These discriminatory taxes hit low-income families hardest.
- Mobile broadband can help close the digital divide. According to the Pew Internet and American Life Project, African American and Hispanic adoption of smartphones are ahead of the national curve. Wireless can help our country become a truly connected nation, but tax policies should not put mobile technologies out of reach.
- Excessive taxation could deter innovation. The rush to over-tax mobile consumers could affect wireless broadband’s continued growth and potentially slowed consumer adoption or usage could discourage mobile innovators from investing in the next great mobile advances.
Our Bottom Line
Wireless users already pay more than their share in taxes. Officials should work to ease this burden rather than add to it. It’s time to have wireless tax policies that are consistent with the broad goal of connecting all Americans to mobile broadband.