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NTU writes in support of H.R. 2309, the Wireless Tax Fairness Act of 2013

June 11, 2013

The Honorable Zoe Lofgren
United States House of Representatives
1401 Longworth House Office Building
Washington, DC 20515
The Honorable Trent Franks
United States House of Representatives
2435 Rayburn House Office Building
Washington, DC 20515

Dear Representatives Lofgren and Franks,

On behalf of the 362,000-member National Taxpayers Union (NTU), I write in support of H.R. 2309, the Wireless Tax Fairness Act of 2013. This bipartisan legislation would prevent any state or local jurisdiction from imposing a new discriminatory tax on mobile phone services for the five years following the bill’s enactment.

There is plenty of evidence that cell phone users have been hit hard with unfairly high tax rates, as states and localities have scrambled to add predatory levies on wireless phone service to pay for projects that have little to do with improving the communications network. According to a 2012 study by Scott Mackey of KSE Partners, LLP, the average nationwide tax burden on wireless service is a staggering 17.2 percent, including federal, state, and local taxes – rising 5.5 percent in just two years between 2010 and 2012. This is far out of line with the 7.4 percent average tax rate imposed on other goods and services.

Mackey’s study went on to explain that the average wireless customer pays approximately $8.07 per month in taxes and fees, rising steadily from $7.84 per month in 2010 and $5.89 in 2007. To make matters worse, research from the National Taxpayers Union’s educational affiliate has shown that the taxes heaped upon mobile service are among the worst of all the “hidden” levies not readily apparent to the people paying them. Further, costly wireless service taxes are regressive and disproportionately impact low-income consumers, for whom essential wireless services compromise a large part of their disposable income.

State and local governments should not discriminate among products or services by disadvantaging one with heavier taxes. H.R. 2309 would protect mobile phone customers from unfair tax policies, with which politicians pick marketplace winners and losers. A five-year moratorium on new discriminatory cell phone taxes is an eminently reasonable, pro-consumer goal that provides a window of time for government and the mobile phone services industry to pursue fundamental telecom tax reform.

This is an important opportunity for Congress to remove a stumbling block that prevents consumers from obtaining the technology necessary to fully participate in a modern economy. NTU is pleased to endorse the Wireless Tax Fairness Act of 2013; our members urge all Representatives to co-sponsor this legislation and work toward its enactment.

Nan Swift
Federal Affairs Manager