Have you ever wondered where that extra $10 at the end of your cell phone bill comes from?
It’s actually a federal tax, and it’s a surprisingly high one – 17.3%, on average, of your current phone bill.
This is probably news you didn’t want to hear.
What Am I Paying For?
When you pay your phone bill ¬– depending on the state you live in – you may also be funding local, state and federal governments, school districts and emergency services.
The high wireless tax started back in the days when cell phones were relatively new, and the government used the high tax money to pay for landline service for rural areas. Today, 5.82% of your wireless bill still goes to the Federal Universal Service Fund, which used to pay for those rural telephone services.
In a way, it functions a bit like “sin taxes,” where the government adds extra taxes onto the end of some “vice” item like liquor or cigarettes to generate extra income.
Do I HAVE to Pay That Much?
Yes, you do!
Different states have different wireless tax rates – Nebraska has the highest, and Oregon has the lowest. But you can’t “cheat the system” by buying a phone across the border in a state with lower taxes. Your cell phone must be billed to your “primary place of use,” thanks to the Mobile Telecommunications Sourcing Act of 2002.
One interesting thing about wireless taxes is – because they’re listed at the end of a long cell phone bill – a lot of consumers simply don’t notice them, so it’s an easy (and lazy) way for the government to generate more revenue without having to bring up the subject of raising more visible taxes.
It’s a little passive-aggressive, when you think about it.
And there’s no legislation limiting how much these taxes can rise, so it’s possible they could skyrocket even higher.
Unless, of course, the Wireless Tax Fairness Act is passed. You can learn more about that, or support it, here. This act wouldn’t actually lower cell phone taxes, but it would prevent them from spiking any higher.
And that, we can all agree, would be great news.
If you have any questions about wireless taxes – or any of your other taxes, of course – give us a call at 844-841-9857, or schedule a free consultation here.