Wednesday, May 11, 2005 - The Progress & Freedom Foundation Blog

Mobile Phone Service is Getting Hit with Heavy Taxes

This story from USA Today comes with a handy chart detailing average taxation of mobile telephone services on a state by state basis. The national average of combined state and federal tax rates exceeds 15 percent and the combined rate is below 10 percent in only four states (using statewide averages). The low tax states: Idaho (8.24 percent), Nevada (7.16 percent), Oregon (8.28 percent) and West Virginia (9.05 percent). The story also does a good job of implicitly warning the reader about statewide averages. Baltimore recently added a $3.50 month tax. Presumably the effective rate is much higher there than in the rest of Maryland. About 160 of California's local jurisdictions have these taxes, including 10 percent in L.A. and 7.5 percent in San Francisco.

What's behind the move toward new taxes? The story is replete with quotes from public officials blaming the decline of wireline. A once steady and near invisible tax base is eroding because of consumer migration toward other technologies and service offerings. Sounds a lot like an argument for competitive markets.

posted by @ 1:23 PM | State Policy , Wireless