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Letter


NTU Supports Senate Bill to Protect Taxpayers from Targeted Wireless Taxes

January 10, 2007

The Honorable John McCain and the Honorable Jim DeMint
United States Senate
Washington, DC 20510

Dear Senator McCain and Senator DeMint:

On behalf of the 350,000 members of the National Taxpayers Union (NTU), I write to offer our wholehearted and active support for your legislation to establish a three-year ban on states and localities from levying new discriminatory taxes on wireless communications.

As you know, NTU strongly backed the 1998 Internet Tax Freedom Act (ITFA) as well as its legislative successors, all of which have helped to nurture and sustain one of the most important developments of the Information Age. Your current proposal would apply several of ITFA's principles toward another high-tech service that Americans depend upon to conduct business and connect with their families: mobile phones.

Although the bill would not address the question of existing policy against mobile phones, it would offer consumers protection from predatory taxes on their bills in the near-term future. Such a safeguard would be most welcome at a time when the total wireless tax and fee burden can exceed 20 percent in some areas - a higher effective tax rate than the typical middle-class consumer pays on a 1040 federal income tax return.

The fact is, all too many officials in states and localities have been oblivious, and often contemptuous, toward this miserable situation. The City of Corvallis, Oregon provides but one example of where elected leaders resorted to a noxious tax scheme to make wireless services far less affordable. Voters demolished this proposal when it was referred to them last fall, but this laudable outcome entailed extraordinary efforts on the part of local residents (including our own members) to beat back the tax hike. Until citizen activists can establish comprehensive tax limitation and reduction measures in their communities, it is perfectly reasonable for Congress to set some sensible boundaries under federal law (just as it did with the ITFA).

Indeed, it is those same sensible traits which recommend your legislation's bipartisan passage, just as the Senate Commerce Committee voted 21-1 to include similar language in last year's telecommunications reform legislation. The bill excludes from the moratorium any wireless-specific fees that fund a related benefit or service, including emergency services. It also applies only to future acts, and therefore has no impact on current revenues. Moreover, taxes that are charged uniformly against other businesses, goods, or services could still be applied to wireless phones. Finally, local government coffers are already (and will likely continue to be) brimming with revenues from property taxes. State and local officials who would still stand in the way of this non-controversial legislation would be doing their citizens a tremendous disservice.

As a stand-alone bill, your proposal deserves expedited enactment, and our members across America are ready to assist you in doing so. Any roll call votes on your legislation to protect taxpayers from targeted wireless taxes will be heavily weighted in NTU's annual Rating of Congress. If you have any questions, please contact NTU Vice President for Communications Pete Sepp at 703-683-5700 or pressguy@ntu.org.

Sincerely,

John Berthoud
President