Dear Member of Congress:
On behalf of the 362,000 members of the National TaxpayersUnion (NTU), I urge you to support the Wireless Tax Fairness Act of 2011. Thisbipartisan legislation, introduced as H.R. 1002 by Rep. Lofgren (D-CA) and S.543 by Sen. Wyden (D-OR), would prevent any state or local jurisdiction fromimposing a new discriminatory tax on mobile phone services for the five yearsfollowing the bill’s enactment.
Recent evidence suggests that cell phone users have beenunfairly targeted by states and localities scrambling to address their budgetgaps or pay for projects with little connection to improving the communicationsnetwork. Between 2003 and 2007, taxes on cell phone service increased fourtimes faster than those imposed on other goods and services. A report fromeconomist Scott Mackey, appearing in State Tax Notes earlier this year,indicated that after several years of relative stability this burden is growingheavier again. Wireless users now shoulder a combined federal, state and localtax and fee load of 16.3 percent, twice the rate of the average retail salestax and the highest wireless rate in six years.
These taxes have become attractive to legislators in largepart because they act as “hidden” levies that are not readily apparent to thepeople paying for them. Given that wireless technologies long ago made thetransition from a luxury good to a nearly ubiquitous necessity that provides alife-line for consumers of all income levels, legislators should not stand for thesepredatory tax hikes. By implementing a five-year moratorium only on additionaltaxes targeted toward mobile phones this bill would not take away existing revenuefor state or local governments, but would instead allow for a period ofstabilization that is needed to protect consumers.
Furthermore, the Wireless Tax Fairness Act would help to driveinnovation in the digital marketplace. Historically, governments were able tofleece the communications industry because they severely limited competitionand left customers with few options. Now telecommunications is a key driver ofthe economy that offers a wide range of services, including mobile banking andemail, with direct ties to increased productivity and convenience. Discriminatorytax rates have the potential to snuff out future growth and innovation. Infact, a study appearing in Virginia Tax Review, authored by J. Gregory Sidakand Allan T. Ingraham found that for every $1 reduction in wireless tax,national economic welfare would rise between $1.23 and $1.95.
While NTU would support efforts to reduce existing cellphone taxes and remove certain mandatory fees, this bill is a reasonable,pro-consumer piece of legislation whose urgency becomes more apparent with eachday. Roll call votes on the Wireless TaxFairness Act will be significantly weighted in our annual Rating ofCongress.
Sincerely,Brandon GreifeFederal Government Affairs Manager