How To Calculate Cell Phone Taxes And Fees In New York State
Central Findings
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A typical American household with four phones on a "family share" programme, paying $100 per calendar month for taxable wireless service, tin expect to pay nigh $270 per year in taxes, fees, and surcharges—up from $260 in 2019.
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Nationally, these impositions brand up about 22.6 percentage of the average beak—the highest rate ever. Illinois has the highest wireless taxes in the country at 32.ii percentage, followed past Arkansas at thirty.0 percentage, Washington at 29.seven pct, Nebraska at 29.1 percent, and New York at 28.half dozen percent.
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Since 2008, boilerplate monthly wireless service bills per subscriber have dropped by 26 percentage, from $50 per line to well-nigh $37 per line. However, wireless taxes accept increased by 50 percent, from 15.one percent to 22.half-dozen percent of the average nib.
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At the stop of 2019, over 67 percent of low-income adults had wireless every bit their phone service, and 58 percentage of all adults were wireless-only. Excessive taxes and fees, especially the very high per-line charges, impose a disproportionate burden on low-income consumers. In Chicago, a family unit with iv lines of taxable wireless service paying $100 per month is subjected to over $500 per twelvemonth in taxes and fees.
Introduction
Taxes, fees, and government surcharges on wireless consumers increased again in 2020, jumping from 21.7 percent to 22.6 percent of a customer's beak.[1] An American household with four wireless phones paying $100 per month for wireless voice service tin look to pay well-nigh $270 per year in wireless taxes, fees, and surcharges—up from $260 in 2019.
Country and local taxes on wireless services increased slightly, from 12.7 percentage to 12.8 percent, the seventh consecutive increase. The Federal Universal Service Fund (FUSF) surcharge increased from 9.i percent to 9.eight percent of the typical wireless voice bill—a nine percent increase in 2020, following a 36 pct increment in 2019.
Fortunately for wireless consumers, price competition continues to push down the average monthly per-line cost of wireless voice service. Boilerplate revenue per subscriber brutal for the fourth sequent twelvemonth, from $41.50 per month in 2017 to $36.86 per month in 2020. Unfortunately, consumers were not able to fully enjoy this price reduction because taxes, fees, and surcharges increased again.
Wireless consumers will pay an estimated $17.v billion in taxes, fees, and regime surcharges to federal, state, and local governments in 2020 based on the tax rates calculated in this study. These taxes, fees, and surcharges break down as follows:
- $5.half dozen billion in sales taxes and other non-discriminatory consumption taxes
- $6.3 billion in FUSF surcharges
- $3.five billion in 911 fees, a category that includes hundreds of millions of dollars that are not actually used for 911 purposes in some states
- $2.1 billion in other industry-specific land and local taxes and fees
Consumers in Illinois go on to pay the highest wireless taxes in the state. This year, thank you to large increases in the 911 fee and other land charges, Arkansas now has the second highest wireless taxes in the country. Wireless users in Idaho, Oregon, and Nevada pay the lowest wireless taxes.
Wireless service is increasingly the sole means of communications and connectivity for many Americans, particularly immature people, and those with lower incomes. At the end of 2019, according to the Centers for Affliction Command and Prevention, near 67 percentage of all low-income adults lived in wireless-just households and 58 percent of adults of all incomes lived in wireless-but households.[2] These excessive taxes and fees—especially those that impose loftier per-line taxes and fees—impose a asymmetric tax burden on those least able to afford them.
Wireless Taxes and Fees Increase in 2020
This is the eleventh in a series of reports that examine trends in taxes, fees, and authorities surcharges imposed on wireless voice service by federal, state, and local governments since 2003. The methodology, originally adult by the Council on State Tax in a 1999 report, is detailed in Appendix A.
Table 1 shows national trends in tax rates imposed by all levels of government on taxable wireless service between 2003 and 2020. Between 2005 and 2006, wireless taxes decreased subsequently the federal courts forced the IRS to end the imposition of the iii percent federal excise tax on wireless service. After that courtroom conclusion, wireless tax rates dropped to a depression of 14.1 percent. Since and so, however, wireless tax rates take climbed steadily to their current rate of 22.half dozen percent.
| Weighted Average | |||||
|---|---|---|---|---|---|
| Wireless: State & Local revenue enhancement & fee | Wireless: Federal taxation & fee | Wireless: Federal/State/Local tax & fee | Full general Sales/Use Tax | Disparity — Wireless Tax Over General Sales Taxation | |
| 1/ane/2003 | 10.20% | 5.07% | 15.27% | vi.87% | 3.33% |
| 4/1/2004 | 10.74% | five.48% | sixteen.22% | 6.93% | three.81% |
| 7/1/2005 | 10.94% | v.91% | 16.85% | 6.94% | iv.00% |
| 7/1/2006 | xi.xiv% | 2.99% | 14.13% | 7.04% | four.10% |
| 7/1/2007 | eleven.00% | four.nineteen% | 15.19% | seven.07% | 3.93% |
| vii/1/2008 | 10.86% | 4.23% | fifteen.09% | 7.11% | 3.75% |
| 7/1/2009 | 10.74% | iv.79% | 15.53% | 7.26% | iii.48% |
| 7/1/2010 | xi.21% | 5.05% | sixteen.26% | 7.42% | 3.79% |
| 7/1/2012 | 11.36% | 5.82% | 17.eighteen% | 7.33% | 4.03% |
| 7/1/2014 | 11.23% | 5.82% | 17.05% | vii.51% | 3.72% |
| 7/i/2015 | eleven.50% | 6.46% | 17.96% | seven.57% | three.93% |
| 7/1/2016 | 11.93% | 6.64% | 18.57% | seven.61% | 4.32% |
| 7/i/2017 | 12.xi% | half dozen.34% | 18.46% | 7.65% | four.46% |
| 7/one/2018 | 12.46% | half dozen.64% | nineteen.10% | 7.65% | 4.81% |
| vii/1/2019 | 12.65% | 9.05% | 21.70% | 7.74% | iv.91% |
| 7/1/2020 | 12.82% | 9.83% | 22.65% | vii.75% | 5.07% |
| Notation: Federal includes three percent federal excise tax (until May 2006) and Federal Universal Service Fund (FUSF) charge, which is ready by the FCC and varies quarterly. FUSF accuse as of July 1, 2020 is calculated by 37.ane percent interstate safe harbor times 26.v percent contribution factor, which equals a nine.83 percent effective tax rate, http://www.usac.org/cont/tools/contribution-factors.aspx. Source: Methodology derived from Committee on State Revenue enhancement, "50-State Written report and Report on Telecommunication Taxation," May 2005; updated July 2020 from state statutes, FCC data, and local ordinances by Scott Mackey, Leonine Public Diplomacy LLP, Montpelier, VT. | |||||
Table 1 also separates the affect of federal taxes and surcharges from land and local government taxes, fees, and surcharges. Throughout the period, state and local taxes have been trending upward steadily, from x.20 percent in 2003 to their current level of 12.82 percent in 2020.
The FUSF surcharge has also increased throughout the menses, but with dramatic increases since 2018. In merely two years, the effective charge per unit of the FUSF surcharge increased by 48 percent, from six.64 pct to 9.83 percent of the boilerplate wireless nib. For a detailed explanation of the FUSF accuse and how it is imposed, meet Appendix B.Table i also separates the touch on of federal taxes and surcharges from state and local government taxes, fees, and surcharges. Throughout the period, land and local taxes accept been trending upwards steadily, from 10.20 pct in 2003 to their current level of 12.82 percent in 2020.
Table 1 also shows the general trends in average revenue enhancement rates of the sales and employ revenue enhancement, which is the primary broad-based consumption revenue enhancement imposed past 45 states, the District of Columbia, and Puerto Rico. Since 2003, the average state-local sales tax rate has increased by 0.88 percentage points—from 6.87 percent to vii.75 percent. During that same catamenia, wireless taxes increased by two.62 percent points—from x.20 pct to 12.82 percentage. Average wireless tax rates increased 3 times faster than average sales taxation rates.
Wireless industry contest has led to meaning reductions in average monthly bills since 2008, a trend that accelerated between 2016 and 2020. Since 2008, average wireless monthly bills have decreased from just under $50 per calendar month to $36.86 per month—a 26 pct reduction—while wireless taxes have increased from 15.1 percent to 22.six percent—a l percent increment. Unfortunately, consumers have not enjoyed the full benefits of wireless cost competition because taxes, fees, and government surcharges continue to increase.
Tabular array 2 shows wireless taxation, fee, and regime surcharge rates as of July 2020. Column ane shows the average combined land-local tax rate in the largest urban center and the majuscule city in each state, while column 2 shows the effective rate of the FUSF surcharge. In 2020, Illinois retained its ranking as the state with the highest wireless revenue enhancement brunt. Arkansas moved upward from the sixth highest taxes in 2019 to the second highest in 2020, followed past Washington, Nebraska, and New York.
| State Rankings | 2020 Wireless State-Local Charge per unit | 2019 Federal USF Rate | 2020 Combined Federal/State/Local Rate | |
|---|---|---|---|---|
| 1 | Illinois | 22.37% | 9.83% | 32.20% |
| 2 | Arkansas | 20.21% | 9.83% | 30.04% |
| 3 | Washington | 19.83% | 9.83% | 29.66% |
| 4 | Nebraska | 19.30% | 9.83% | 29.xiii% |
| 5 | New York | eighteen.75% | nine.83% | 28.59% |
| 6 | Kansas | 16.68% | 9.83% | 26.51% |
| seven | Utah | 16.64% | 9.83% | 26.47% |
| 8 | Pennsylvania | 16.48% | 9.83% | 26.31% |
| 9 | Rhode Island | 15.39% | 9.83% | 25.22% |
| 10 | North Dakota | 15.26% | 9.83% | 25.09% |
| xi | Maryland | 14.95% | 9.83% | 24.78% |
| 12 | Missouri | xiv.91% | 9.83% | 24.74% |
| 13 | Florida | 14.89% | 9.83% | 24.72% |
| fourteen | Oklahoma | 14.56% | 9.83% | 24.39% |
| fifteen | S Dakota | fourteen.39% | 9.83% | 24.22% |
| 16 | Alaska | xiv.32% | 9.83% | 24.16% |
| 17 | Puerto Rico | 13.73% | 9.83% | 23.56% |
| 18 | California | thirteen.39% | ix.83% | 23.22% |
| nineteen | Tennessee | 12.65% | nine.83% | 22.48% |
| 20 | Arizona | 12.64% | ix.83% | 22.47% |
| 21 | S Carolina | 12.63% | 9.83% | 22.47% |
| 22 | New Mexico | 12.13% | 9.83% | 21.97% |
| 23 | Georgia | 12.09% | ix.83% | 21.92% |
| 24 | District of Columbia | 12.06% | 9.83% | 21.89% |
| 25 | Colorado | eleven.98% | 9.83% | 21.81% |
| 26 | Indiana | 11.96% | nine.83% | 21.79% |
| 27 | Texas | 11.84% | 9.83% | 21.68% |
| 28 | Alabama | 11.05% | 9.83% | 20.88% |
| 29 | Kentucky | 10.97% | 9.83% | 20.80% |
| thirty | Minnesota | 10.72% | 9.83% | twenty.55% |
| 31 | West Virginia | ten.42% | nine.83% | 20.25% |
| 32 | Massachusetts | 10.32% | 9.83% | 20.15% |
| 33 | Michigan | 10.18% | ix.83% | xx.01% |
| 34 | Mississippi | nine.85% | nine.83% | 19.68% |
| 35 | Louisiana | 9.80% | 9.83% | 19.63% |
| 36 | Iowa | 9.79% | 9.83% | 19.63% |
| 37 | New Bailiwick of jersey | 9.07% | 9.83% | 18.xc% |
| 38 | New Hampshire | ix.03% | 9.83% | 18.87% |
| 39 | North Carolina | viii.98% | 9.83% | 18.81% |
| 40 | Vermont | viii.90% | nine.83% | 18.73% |
| 41 | Maine | eight.71% | ix.83% | eighteen.54% |
| 42 | Ohio | 8.52% | 9.83% | 18.35% |
| 43 | Wyoming | 8.47% | 9.83% | xviii.30% |
| 44 | Connecticut | 7.92% | 9.83% | 17.76% |
| 45 | Hawaii | 7.83% | 9.83% | 17.66% |
| 46 | Wisconsin | 7.72% | nine.83% | 17.55% |
| 47 | Virginia | 7.03% | 9.83% | xvi.87% |
| 48 | Montana | half-dozen.73% | nine.83% | xvi.57% |
| 49 | Delaware | 6.68% | 9.83% | 16.51% |
| 50 | Nevada | three.46% | 9.83% | 13.29% |
| 51 | Oregon | 2.98% | ix.83% | 12.82% |
| 52 | Idaho | ii.71% | nine.83% | 12.54% |
| Weighted Avg. | 12.82% | 9.83% | 22.65% | |
| Simple Avg. | 11.81% | 9.83% | 21.64% | |
| Source: Methodology from COST, "fifty-State Written report and Report on Telecommunications Revenue enhancement," May 2005. Updated July 2020 using state statutes, FCC data, and local ordinances. | ||||
Figure two shows the states by boilerplate state-local rates, without including the FUSF imposition. Other than the cluster of depression-tax states in the western United States, there does non appear to be whatever strong regional patterns to the distribution of high-taxation and depression-revenue enhancement states. The New England states tend to accept lower wireless tax rates, while the high-tax states are scattered throughout the country.
Ane of the longstanding arguments for reform of wireless revenue enhancement is the disparity in taxation burdens on wireless every bit compared to broad-based consumption taxes imposed on other appurtenances and taxable services subject to sales and use taxes. Wireless and other telecommunications services are 1 of the few services that are consistently bailiwick to sales and utilise taxes past states with both narrow and broad sales tax bases. Furthermore, states like Delaware, Montana, and New Hampshire that do not impose a full general sales taxation have specific taxes on wireless and other communications services.
Table 3 ranks the states by comparing the disparity betwixt the tax rates imposed on wireless service to the combined state and local sales tax rate in each state. Illinois leads all states in this regard, imposing wireless taxes that are more than twice as high as sales taxes—22.1 pct versus ten.0 pct. Other states with large disparities include Nebraska, Alaska, Arkansas, New York, and Washington. New Hampshire, Delaware, and Montana—all states that practise not take general sales taxes but impose taxes on wireless service—rank relatively high on the disparity index even though their overall wireless tax rates are relatively low by national standards. Table iii also shows that two states—Idaho and Nevada—impose lower taxes on wireless service than on other appurtenances and services subject to the general sales tax.
Total Taxes Paid
Wireless consumers pay near $11.9 billion in taxes and fees that are specifically levied on telecommunications services only not on other taxable appurtenances and services. This total includes approximately $6.3 billion in FUSF surcharges, $3.5 billion in 911 fees, and another $2.1 billion in other discriminatory state and local taxes, fees, and government surcharges. The remaining $5.vi billion in taxes on wireless service are not-discriminatory sales and use taxes that are imposed on other taxable goods and services.[3]
| State-Local Sales Revenue enhancement Charge per unit | State-Local Wireless Tax Rate | Wireless Over/Under Sales Tax Rate | Disparity Multiple | |
|---|---|---|---|---|
| Illinois | 10.00% | 22.37% | 12.37% | 2.24 |
| Nebraska | vii.13% | 19.30% | 12.17% | 2.71 |
| Alaska | ii.50% | xiv.32% | eleven.82% | v.73 |
| Arkansas | 9.50% | 20.21% | x.71% | two.thirteen |
| New York | 8.44% | 18.75% | ten.31% | two.22 |
| Washington | ix.75% | 19.83% | 10.08% | 2.03 |
| Pennsylvania | seven.00% | 16.48% | nine.48% | 2.35 |
| Utah | vii.l% | 16.64% | 9.14% | 2.22 |
| New Hampshire | 0.00% | 9.03% | nine.03% | NA |
| Maryland | vi.00% | 14.95% | 8.95% | 2.49 |
| Rhode Island | seven.00% | 15.39% | eight.39% | two.20 |
| Kansas | 8.33% | 16.68% | eight.35% | ii.00 |
| North Dakota | seven.25% | 15.26% | 8.01% | ii.ten |
| South Dakota | half dozen.50% | 14.39% | 7.89% | 2.21 |
| Florida | 7.25% | 14.89% | 7.64% | 2.05 |
| Montana | 0.00% | half-dozen.73% | half dozen.73% | NA |
| Delaware | 0.00% | 6.68% | 6.68% | NA |
| Missouri | 8.41% | 14.91% | half-dozen.fifty% | 1.77 |
| District of Columbia | 6.00% | 12.06% | 6.06% | 2.01 |
| Oklahoma | viii.57% | xiv.56% | 5.99% | 1.70 |
| Kentucky | six.00% | 10.97% | 4.97% | 1.83 |
| Indiana | seven.00% | xi.96% | 4.96% | 1.71 |
| California | 9.13% | 13.39% | iv.27% | 1.47 |
| Michigan | 6.00% | 10.eighteen% | iv.xviii% | 1.lxx |
| S Carolina | viii.l% | 12.63% | 4.13% | 1.49 |
| Massachusetts | six.25% | 10.32% | 4.07% | 1.65 |
| Arizona | eight.65% | 12.64% | three.99% | 1.46 |
| New Mexico | 8.16% | 12.xiii% | 3.97% | 1.49 |
| Hawaii | iv.00% | vii.83% | 3.83% | one.96 |
| Colorado | 8.28% | 11.98% | iii.70% | 1.45 |
| Georgia | 8.45% | 12.09% | 3.64% | 1.43 |
| Texas | 8.25% | 11.84% | 3.59% | 1.44 |
| West Virginia | 7.00% | 10.42% | 3.42% | 1.49 |
| Maine | 5.50% | eight.71% | 3.21% | 1.58 |
| Tennessee | ix.l% | 12.65% | iii.xv% | 1.33 |
| Oregon | 0.00% | two.98% | two.98% | NA |
| Wyoming | 5.50% | 8.47% | 2.97% | 1.54 |
| Iowa | 7.00% | 9.79% | 2.79% | 1.40 |
| Minnesota | 7.96% | 10.72% | 2.76% | ane.35 |
| New Jersey | 6.63% | nine.07% | 2.44% | 1.37 |
| Vermont | 6.50% | 8.90% | 2.40% | 1.37 |
| Mississippi | vii.50% | 9.85% | 2.35% | 1.31 |
| Puerto Rico | eleven.50% | 13.73% | 2.23% | 1.19 |
| Wisconsin | five.50% | seven.72% | 2.22% | 1.xl |
| Northward Carolina | seven.25% | eight.98% | i.73% | 1.24 |
| Connecticut | 6.35% | 7.92% | 1.57% | i.25 |
| Virginia | five.65% | 7.03% | i.38% | 1.25 |
| Alabama | 10.00% | xi.05% | one.05% | i.10 |
| Ohio | 7.75% | 8.52% | 0.77% | 1.10 |
| Louisiana | 9.seventy% | 9.80% | 0.10% | 1.01 |
| Idaho | 6.00% | two.71% | -3.29% | 0.45 |
| Nevada | vii.99% | three.46% | -four.53% | 0.43 |
| US Weighted Average | 7.75% | 12.82% | 5.07% | ane.65 |
| Source: Methodology from COST, "50-State Study and Report on Telecommunications Tax," May 2005. Updated July 2020 using state statutes, FCC data, and local ordinances. | ||||
Appendix C provides a detailed breakup of the specific taxes, fees, and regime surcharges imposed in each state, including the respective rates of each. To facilitate interstate comparisons, local rates imposed in the virtually populated metropolis and the upper-case letter urban center in each state are averaged into a unmarried rate. In the case of taxes and fees that are imposed on a flat per-line ground—for instance, $ane.00 per calendar month per line—the tax is converted from a apartment amount to a per centum past dividing the flat amount by the industry average acquirement per line of $36.86 per month. For a detailed description of the methodology in this report, please come across Appendix A.
Trends in Wireless Taxes and Fees
911 Fees
Most states impose 911 fees to fund upper-case letter expenses associated with the 911 organisation, and in some states these fees fund operations as well. Wireless 911 fees vary greatly by country, from a low of zero in Missouri[4] to a high of $5.00 per line per calendar month in the City of Chicago.
In 2020, Arkansas doubled the state 911 fee from $.65 per line per month to $1.30 per line per calendar month. Oregon increased the 911 fee from $0.75 per line per month to $one.00 per line per month. Maine reduced the 911 fee from $0.45 per line per month to $0.35 per line per calendar month.
Unfortunately, co-ordinate to the Federal Communications Commission (FCC), some states and localities routinely divert 911 fees for other purposes.[five] For example, the City of Chicago used the authority granted by the legislature to increase its monthly 911 fee from $3.90 per line to $5.00 per line, constructive January 1, 2018. Media reports suggested that the 911 fee increment was intended to comprehend a shortfall in city pension obligations.[6] The FCC written report identified other states that routinely divert 911 fees paid by wireless consumers to other purposes: Nevada, New Jersey, New York, Rhode Isle, and West Virginia.
Land Universal Service Funds
Some states take their own universal service funds (USF) that provide subsidies for many of the same purposes equally the FUSF. State USF surcharges are imposed on intrastate revenues, while the FUSF is imposed on interstate revenues. In states like Arkansas, Alaska, Kansas, Nebraska, and California, high state USF surcharge rates add significantly to the overall brunt on wireless consumers. For example, the USF charge per unit in Arkansas is eleven.25 pct of all intrastate charges. Table B1 in Appendix B lists the rates in the 20 states that impose a country USF charge.
In 2020, state USF rates were increased in Arkansas, Kansas, Michigan, and Southward Carolina and were reduced in Nevada, New Mexico, and Wyoming.
Country-Level Wireless Taxes
In addition to 911 fees and country USF charges, 14 states impose taxes on wireless service that are either in add-on to state sales taxes or in lieu of sales taxes but imposed at a higher rate than the state sales tax. Table four lists these states. No states increased or decreased these discriminatory state wireless taxes in 2020.
| State Gross Receipts Taxation in Add-on to Sales Taxation | Higher State Tax Rate in Lieu of Sales Tax | Wireless Taxation just No State Sales Taxation |
|---|---|---|
| Indiana | Commune of Columbia | Delaware |
| Kentucky | Florida | Montana |
| New York | Illinois | New Hampshire |
| North Dakota | Maine | |
| Pennsylvania | ||
| Rhode Island | ||
| South Dakota | ||
| Source:State Statutes | ||
Local Wireless Taxes
Many local governments too impose discriminatory taxes on wireless consumers. Many of these are legacy taxes and fees that were established during the regulated telephone monopoly era that existed prior to the late 1980s. Local governments in some states have longstanding authority to impose "right-of-mode" (ROW) fees on phone companies for placing poles, wires, and other landline infrastructure on public belongings. In other states, localities have the authority to impose franchise or license fees on telephone companies in exchange for an exclusive franchise agreement to provide service within the municipality.
In the late 1990s and early 2000s, when wireless service began to displace landline service, localities became concerned about losing taxes and fees from landline phone services and sought to extend these taxes and fees to wireless services. This occurred even though wireless providers typically did non utilise the public correct-of-way to place equipment or, when they did use public belongings like buildings, the usage was de minimis and paid for through negotiated rental agreements.
Local governments in thirteen states currently impose some type of revenue enhancement or fee on wireless service over and in a higher place any broad-based local sales tax. In nigh of these states, the local wireless tax is in add-on to country taxes. California is the exception—wireless service is not field of study to sales taxes just is subject to local Utility User Taxes (UUT) at rates as high as 11 per centum. Table 5 provides a breakdown of the types of local wireless taxes.
| Privilege, License, or User Taxes | Land-Authorized Telecom Taxes | School District and Other Special District Taxes |
|---|---|---|
| Arizona | Florida | Kentucky |
| California | Illinois | New York |
| Maryland | Maryland | |
| Missouri | New York | |
| Nebraska | Utah | |
| Nevada | ||
| South Carolina | ||
| Washington | ||
| Note: Excludes local general sales taxes. Source: Land statutes. | ||
Local government taxes take a significant affect on the overall revenue enhancement brunt on wireless consumers in many of the states that rank high in the overall wireless tax and fee burden. In most of the top 10 states shown in Table ii with the highest wireless taxes, local taxes play a prominent role. Nebraska allows local concern license taxes with rates as high as half dozen.25 percent. Washington allows municipal governments to impose "utility franchise taxes" with rates as high as 9 percent. New York allows New York Urban center, other selected cities, school districts, and certain transit districts to levy various wireless taxes in addition to canton 911 fees. Finally, Florida and Illinois have special state communications taxes with a local add-on that result in rates typically two times higher than the general sales revenue enhancement rates.
Table 6 illustrates the impact of taxes and fees on consumers in selected large cities around the land. Wireless service is increasingly becoming the sole means of communication and connectivity for many Americans, especially those struggling to overcome poverty. Equally noted previously, at the end of 2019, more than than 67 percent of all low-income adults had wireless-only service, and 58 percent of all adults were wireless-just. Excessive local taxes and fees, especially the very loftier per line charges like those imposed in Chicago and Baltimore, impose a disproportionate burden on low-income consumers. In Chicago, the taxes on a family with four lines of taxable wireless service paying $100 per month are more than $500 per year—about 43 percent of their monthly pecker.
| City | Tax on four-line vox plan at $100 per month | Effective Tax Rate |
|---|---|---|
| Chicago, IL | $43.83 | 43.83% |
| Baltimore, Physician | $37.03 | 37.03% |
| Omaha, NE | $32.00 | 32.00% |
| Little Stone, AR | $31.27 | 31.27% |
| New York, NY | $30.30 | 30.xxx% |
| Seattle, WA | $29.73 | 29.73% |
| Philadelphia, PA | $29.43 | 29.43% |
| Salt Lake City, UT | $29.40 | 29.xl% |
| Providence, RI | $26.83 | 26.83% |
| Tallahassee, FL | $25.77 | 25.77% |
| City | Tax on Single Line Voice Plan Costing $36.86 per moth | Effective Tax Charge per unit |
| Chicago, IL | $xiii.78 | 37.39% |
| Baltimore, MD | $11.13 | 30.21% |
| Piddling Rock, AR | $10.89 | 29.55% |
| Omaha, NE | $10.74 | 29.thirteen% |
| Seattle, WA | $10.51 | 28.51% |
| New York, NY | $10.46 | 28.37% |
| Philadelphia, PA | $10.07 | 27.31% |
| Common salt Lake Urban center, UT | $ix.85 | 26.72% |
| Tallahassee, FL | $9.31 | 25.26% |
| Providence, RI | $nine.thirty | 25.22% |
| Source: Author's calculations, using state statutes and local ordinances. | ||
The Touch of Excessive Wireless Taxes
The popularity of wireless service, and the explosive growth in the number of wireless subscribers, has led some to question whether wireless taxes matter to wireless consumers and the wireless industry. All the same, there are two compelling reasons why policymakers should be cautious about expanding wireless taxes, fees, and surcharges. Start, every bit discussed in a higher place, wireless taxes and fees are regressive and have a asymmetric bear upon on depression-income citizens. Excessive taxes and fees increase the cost of access to wireless service for low-income consumers at a time when citizens are relying on wireless service for teaching and remote piece of work during the coronavirus pandemic. Second, discriminatory taxes may slow investment in wireless infrastructure. Ample evidence exists that investments in wireless networks provide economical benefits to the broader economic system because so many sectors—transportation, health care, energy, education, even government—utilize wireless networks to boost productivity and efficiency. These economic benefits are especially important during the current pandemic considering they assist employees piece of work remotely and allow students to go along their studies remotely.
Network investment is important non simply to consumers and businesses that apply these networks but too to the entire American economy. A written report by the International Bedchamber of Commerce (ICC) in Paris surveyed the evidence not just from the Us and Europe but from the developing world besides.[7] Economists that have examined the link betwixt investments in communications and information technology infrastructure and economic growth have consistently found a strong link. Simply put, wireless infrastructure investment enables an unabridged entrepreneurial civilization to focus on creating applications and devices to make businesses more productive and to improve the lives of consumers. These tools in turn make businesses more productive and assisting and so that they tin can create new jobs that generate economic activity and tax revenues for governments.
While virtually infrastructure investments create these types of multiplier effects, the multiplier effects for telecommunications infrastructure are higher than other industries because communications and information technology are so deeply embedded in business organisation processes. These infrastructure investments besides benefit the regime and nonprofit sectors in ways that do not necessarily evidence up directly in economical statistics, but nonetheless make these sectors more efficient and enable them to lower the cost of providing government services.
As noted in the ICC study, "Remedying the discriminatory revenue enhancement treatment of telecom appurtenances and services may reduce taxation receipts in the curt-term, merely the longer-term increase in the use of advanced capability devices, service need, and network deployment resulting from these tax reductions is likely to counteract this loss of revenue over time."[8] Policymakers demand to counterbalance the trade-offs between the curt-term revenue benefits of excessive wireless taxes versus the long-term economical impact on the state from reduced infrastructure investment.
Decision
Wireless consumers proceed to be encumbered with high taxes, fees, and surcharges in many states and localities across the The states. While state and local authorities taxes and fees were relatively stable between 2019 and 2020, significant increases in the FUSF over the last two years accept pushed taxes on wireless service to tape-high levels. Excessive taxes on wireless consumers unduly impact depression-income families and may have ramifications for long-term state economic development and growth. Higher taxes on wireless service, coupled with increased taxes on wireless investments, may atomic number 82 to slower deployment of wireless network infrastructure, including fifth generation (5G) wireless broadband technologies.
States should study their existing communications taxation structure and consider policies that transition their tax systems abroad from narrowly-based wireless taxes and toward wide-based taxation sources that practise not distort consumer purchasing decisions and practice not slow investment in critical infrastructure like wireless broadband.
Appendix A
Methodology
The methodology used in this report to calculate wireless taxes compares the applicable federal, state, and local rates on wireless voice service in the capital letter city and the nearly populated city in each land. This methodology was developed by the Committee on Country Taxation (COST) in its landmark "50-State Study and Report on Telecommunications Taxation," first published in 2000.
The use of a consistent methodology allows for accurate time-series comparisons across states and over time. However, changes in consumer demand for wireless services pose challenges when measuring the touch of wireless taxes on consumer bills. Ii trends in the industry are significantly impacting the corporeality of taxes that wireless consumers pay on their monthly bills.
First, a growing share of wireless consumer purchases is for internet admission. U.Due south. Demography Bureau data from 2018 suggests that about 49.seven pct of total wireless service revenues (which excludes sales and rental of equipment and other non-service operating acquirement) for the manufacture every bit a whole are from the sale of internet access.[nine] This percentage continues to grow equally wireless consumers utilize more internet admission and less voice telephone service each twelvemonth.
Under federal law, as of July 1, 2020, all states are precluded from imposing taxes on internet access. This suggests that of the "typical" consumer'due south monthly expenditure of $36.86 per calendar month, approximately $18.32 is for non-taxable internet admission and $18.54 is for taxable wireless service. A consumer applying the tax rates in this report to their total bill volition find that the effective taxation rate overstates their actual revenue enhancement paid if their calling plan includes both taxable voice service and exempt internet access.
Second, the written report's methodology understates the revenue enhancement rate touch on of apartment rate taxes and fees—those that are imposed as a set dollar amount per line. Under the report's methodology, a $1.00 per calendar month per line taxation is converted to a percent amount past dividing $1.00 past the $36.86 average monthly neb, resulting in a tax charge per unit of 2.7 percent in this example. Notwithstanding, these flat rate taxes and fees are only permitted to exist imposed on the portion of the wireless pecker that is not net access. In this aforementioned example, if the $1.00 per month were divided by the taxable portion of the bill ($eighteen.54), the revenue enhancement charge per unit would be five.4 pct.
Still these methodological challenges, the authors accept determined that the benefits of retaining the current methodology—consistent measurement of trends in tax rates over time—outweigh the benefits of changing the methodology to suit to recent trends. This is particularly true since the Demography Bureau has just been tracking the percentage of wireless expenditures on internet access since 2012, and so it would not be possible to get back and retroactively arrange information prior to 2012.
Appendix B
What Are Universal Service Funds?
The Federal Universal Service Fund
The Federal Universal Service Fund (FUSF) is administered past the FCC under open-ended authority from Congress. The program subsidizes telecommunications services for schools, libraries, hospitals, low-income people, and rural telephone companies operating in high-cost areas. The FCC has as well recently decided to use funds to subsidize broadband deployment.
The FCC has authority to ready spending for these programs outside of the normal congressional appropriations process. After deciding what to spend on the various programs, the FCC sets the quarterly "contribution factor" or surcharge rate that telecommunications providers must remit to the FUSF to generate sufficient revenues to fund the expenditure commitments. Providers may elect to surcharge these "contributions" on their customer bills.
FUSF surcharges apply merely to revenues from interstate telecommunications services. They currently do not apply to internet access service, information services, and intrastate telecommunications services.
Wireless carriers generally sell plans that include either unlimited vocalism minutes or a fixed number of vocalisation minutes for a ready corporeality. Since these plans include both interstate calls (subject to the FUSF) and intrastate calls (not field of study to FUSF), the FCC allows providers to allocate the fixed monthly plans to interstate and intrastate calls by one of two methods. Carriers may employ "traffic studies" to prove the actual split betwixt interstate and interstate calls for all subscribers and use the FUSF to the aggregated interstate portion of subscriber calls.
Alternatively, carriers may use a single uniform national "safe harbor" percentage to its stock-still monthly plans. The FCC currently sets this safe harbor at 37.1 percent of the stock-still monthly charge. For example, when determining the FUSF, a $fifty monthly wireless voice calling plan is accounted to include $eighteen.55 in interstate calls and $31.45 in intrastate calls. If a carrier elects to utilize the safe harbor, the FUSF charge per unit would exist applied to $18.55 of the beak each month.
The FUSF rate is fix by the FCC each quarter. For the menstruum beginning July 1, 2020, the rate is 26.five percent. Thus, the FUSF rate applied on assessable wireless revenues using the FCC rubber harbor corporeality is nine.83 percentage (26.5 percent times 37.one percent).[10] Effigy B1 highlights the significant growth in the FCC contribution rate since 2003.
Figure B1
Despite the growing burden on wireless consumers, Congress has shown lilliputian interest in restricting or otherwise limiting the growth of the programs funded through the FSUF.
State Universal Service Funds
States besides have the dominance to supplement the programs funded through the FUSF with their ain programs funded through state universal service funds. The country programs are funded past surcharges applied to the intrastate portion of telephone charges. In this report, the changed of the FUSF rubber harbor is used to summate the rates of the land USF in all states except Vermont, which imposes its state USF on both interstate and intrastate charges. Every bit in the previous case, if a consumer has a $50 monthly wireless voice programme, 62.nine percent of that charge ($31.45) is deemed to be an intrastate service subject to the state USF charge and $xviii.55 is an interstate service not subject to state USF charges.
Like the FUSF, state universal service fund charges exercise not utilise to internet access. State USF charges are a key gene in the high wireless tax brunt in states like Arkansas, Alaska, Kansas, Nebraska, and California.
| State | Effective Rate | Calculation |
|---|---|---|
| Arkansas | vii.08% | xi.25% times FCC safety harbor |
| Alaska | vi.29% | 10.0% times FCC Intrastate safe harbor |
| Kansas | 5.91% | nine.4% x FCC safe harbor |
| Nebraska | 4.75% | $1.75 per line per calendar month |
| California | 4.37% | 7.28% times FCC Intrastate safe harbor |
| Oklahoma | 3.95% | 6.28% times FCC safe harbor |
| Louisiana | 3.50% | Carrier rates assigned by Public Service Committee |
| Vermont | 2.40% | Funds 911 and other programs |
| New Mexico | 2.39% | $0.88 per line per calendar month |
| Texas | two.08% | three.3% times FCC safe harbor |
| Colorado | 1.64% | ii.vi% times FCC safe harbor |
| Utah | 1.63% | $0.60 per line per month |
| South Carolina | ane.37% | 2.18% times FCC prophylactic harbor |
| Maine | i.19% | $0.44 per line |
| Puerto Rico | 0.87% | ane.39% times FCC safe harbor |
| Wyoming | 0.69% | one.one% times FCC safe harbor |
| Indiana | 0.69% | 1.09% times FCC safe harbor |
| Kentucky | 0.19% | $.07 per calendar month |
| Wisconsin | 0.xviii% | 0.29% times FCC safe harbor |
| Maryland | 0.14% | $0.05 per calendar month per line |
| Nevada | 0.11% | 0.17% times FCC Safe Harbor |
| Source: Author's calculation from country statutes and state utility commisions. | ||
Appendix C
| State | Type of Taxation | Rate | Comments |
|---|---|---|---|
| Alabama | |||
| AL Jail cell Service Tax | 6.00% | Admission, interstate, and intrastate | |
| E911 | 5.05% | $1.86 per month | |
| TOTAL TRANSACTION TAX | xi.05% | ||
| Alaska | |||
| Local Sales Taxation | 2.50% | Avg. of Juneau (5%) and Anchorage (0%) | |
| Local E911 | 5.29% | Anchorage: $2.00 and Juneau: $1.90 | |
| State USF | six.29% | 10.0% times FCC safe harbor | |
| TRS fee | 0.24% | $0.09 per line | |
| TOTAL TRANSACTION TAX | 14.32% | ||
| Arizona | |||
| State sales (transaction priv.) | five.60% | Intrastate telecommunications service | |
| County sales (transaction priv.) | 0.threescore% | Avg. of Phoenix (Maricopa) (0.7%) and Tucson (Pima) (0.5%) | |
| Metropolis telecommunications | 5.90% | Avg. Phoenix (four.seven%) and Tucson (7.1%) | |
| 911 | 0.54% | $0.20 per calendar month | |
| TOTAL TRANSACTION TAX | 12.64% | ||
| Arkansas | |||
| State sales tax | half dozen.50% | ||
| Local sales taxes | 3.00% | Avg. Lilliputian Rock (two.5%) and Fayetteville (3.5%) | |
| State High Cost Fund | 7.08% | 11.25% times FCC safe harbor | |
| Wireless 911 | iii.53% | $i.30 per calendar month statewide. | |
| TRS service & TRS equipment | 0.eleven% | $0.04 per line per month | |
| Total TRANSACTION TAX | 20.21% | ||
| California | |||
| Local Utility User Tax | viii.00% | Avg. of LA (9%) and Sacramento (7%) | |
| State 911 | 0.81% | $0.30 per line per month | |
| PUC fee | 0.21% | 0.34% times FCC safe harbor | |
| ULTS (lifeline) | 2.99% | 4.75% times FCC safe harbor | |
| Deaf/CRS | 0.31% | 0.5% times FCC prophylactic harbor | |
| High Cost Funds A & B | 0.22% | 0.35% times FCC condom harbor | |
| Teleconnect Fund | 0.49% | 0.78% times FCC safe harbor | |
| CASF – advanced services fund | 0.35% | 0.56% times FCC safe harbor | |
| TOTAL TRANSACTION TAX | thirteen.39% | ||
| Colorado | |||
| Land Sales Tax | 2.90% | Access and intrastate | |
| Local Sales Revenue enhancement — City/County | three.82% | Avg. of Denver (5.41%) and Colorado Springs (two.23%) | |
| 911 | 3.46% | Denver: $1.twenty and Colorado Springs: $one.35 | |
| USF | ane.64% | 2.six% times FCC safe harbor | |
| TDD Tax | 0.16% | $0.06 per month | |
| Total TRANSACTION TAX | eleven.98% | ||
| Connecticut | |||
| Land sales tax | 6.35% | Access, interstate, and intrastate | |
| 911 | ane.57% | $0.58 per line | |
| Total TRANSACTION TAX | 7.92% | ||
| Delaware | |||
| Public Utility Gross Receipts Tax | 5.00% | Access and intrastate | |
| Local 911 tax | 1.63% | $0.lx per month | |
| TRS fee | 0.05% | $0.02 per line per month | |
| TOTAL TRANSACTION Revenue enhancement | 6.68% | ||
| District of Columbia | |||
| Telecommunication Privilege Revenue enhancement | 10.00% | Monthly gross charge; | |
| 911 | two.06% | $0.76 per calendar month | |
| TOTAL TRANSACTION Taxation | 12.06% | ||
| Florida | |||
| State Communications services | 7.44% | Access, interstate, and intrastate | |
| Local Communications services | half-dozen.36% | Jacksonville (5.82%) and Tallahassee (6.9%) | |
| 911 | ane.09% | $0.xl per month statewide | |
| Full TRANSACTION TAX | 14.89% | ||
| Georgia | |||
| State sales tax | three.80% | 4% of "access charge" — assume $35 | |
| Local sales taxation | 4.23% | Avg. rate Atlanta (iv.9%) and Augusta (4%) | |
| Local 911 | 4.07% | $1.fifty per line statewide | |
| Full TRANSACTION TAX | 12.09% | ||
| Hawaii | |||
| Public service visitor tax | iv.00% | ||
| Boosted county revenue enhancement | one.89% | ||
| PUC Fee | 0.xvi% | 0.25% of intrastate charges | |
| Wireless 911 fee | 1.79% | $0.66 per month | |
| Total TRANSACTION Revenue enhancement | 7.83% | ||
| Idaho | |||
| Telephone service assistance program | 0.00% | Set annually by PUC (currently zero) | |
| Statewide wireless 911 | 2.71% | Boise: $1.00 per month | |
| TOTAL TRANSACTION Tax | 2.71% | ||
| Illinois | |||
| State telecom excise taxation | vii.00% | Access, interstate, and intrastate | |
| Simplified municipal revenue enhancement | 6.50% | Avg. of Chicago (7%) and Springfield (6%) | |
| Wireless 911 | 8.82% | Chicago: $5 per month and others: $one.fifty per month | |
| TRS fee | 0.05% | $0.02 per line per calendar month | |
| Full TRANSACTION TAX | 22.37% | ||
| Indiana | |||
| State sales tax | 7.00% | Admission and intrastate | |
| Utility receipts taxation | one.40% | Aforementioned base as sales taxation | |
| Wireless 911 | ii.71% | $i.00 per month | |
| Land USF | 0.69% | 1.09% times FCC safe harbor | |
| PUC fee | 0.08% | 0.xiii% times FCC safe harbor | |
| TRS fee | 0.08% | $0.03 per line per month | |
| Full TRANSACTION TAX | 11.96% | ||
| Iowa | |||
| Country sales tax | half-dozen.00% | ||
| Local option sales taxes | 1.00% | Avg. of Cedar Rapids (1%) and Des Moines (ane%) | |
| Wireless 911 | 2.71% | $1.00 per month | |
| Dual Party Relay Service fee | 0.08% | $0.03 per month | |
| TOTAL TRANSACTION TAX | 9.79% | ||
| Kansas | |||
| State sales tax | half-dozen.50% | Intrastate and interstate | |
| Local option sales taxes | one.83% | Avg. of Wichita (1.0%) and Topeka (2.65%) | |
| USF | 5.91% | 9.4% times FCC rubber harbor | |
| Wireless 911 | 2.44% | $0.90 per month per line | |
| Total TRANSACTION Taxation | 16.68% | ||
| Kentucky | |||
| State sales taxation | vi.00% | Access, interstate, and intrastate | |
| Schoolhouse utility gross receipts | 1.50% | Avg. of Frankfort (3%) and Lousiville (0%) | |
| Kentucky USF | 0.19% | $0.07 per month | |
| Kentucky TAP & TRS | 0.08% | TAP: $0.02 and TRS: $0.01 | |
| Wireless 911 | 1.90% | $0.seventy per month | |
| Communications gross receipts tax | 1.30% | Admission, interstate, and intrastate | |
| TOTAL TRANSACTION TAX | ten.97% | ||
| Louisiana | |||
| Land sales tax | iii.45% | Intrastate charge per unit | |
| Wireless 911 | 2.85% | New Orleans: $ane.25 per month and Baton Rouge: $0.85 per month | |
| Land USF | three.50% | May vary past carrier | |
| TRS fee | 0.fourteen% | $0.05 per line per month | |
| TOTAL TRANSACTION Revenue enhancement | nine.80% | ||
| Maine | |||
| Land service provider revenue enhancement | 6.00% | ||
| 911 fee | 0.95% | $0.35 per month | |
| Maine USF | 1.nineteen% | $0.44 per line | |
| MTEAF | 0.57% | $0.21 per line per month | |
| TOTAL TRANSACTION TAX | eight.71% | ||
| Maryland | |||
| Land sales tax | 6.00% | ||
| Local telecom excise | 5.43% | Baltimore: $4.00 per month and Annapolis: $0.00 | |
| Country 911 | 1.36% | $0.50 per month per line | |
| County 911 | two.03% | Currently $0.75 per month in all counties | |
| State USF | 0.14% | $0.05 per account | |
| Full TRANSACTION Taxation | fourteen.95% | ||
| Massachusetts | |||
| State sales taxation | vi.25% | Interstate and intrastate | |
| Wireless 911 | 4.07% | $1.50 per month | |
| Total TRANSACTION Revenue enhancement | ten.32% | ||
| Michigan | |||
| State sales tax | 6.00% | Interstate and intrastate | |
| State wireless 911 | 0.68% | $0.25 per calendar month | |
| County wireless 911 | 3.01% | Detroit: $0.42 and Lansing: $1.80 | |
| Intrastate cost assessment | 0.49% | 0.78% of intrastate charges | |
| TOTAL TRANSACTION TAX | ten.18% | ||
| Minnesota | |||
| Country sales tax | 6.88% | Interstate and intrastate | |
| Local sales tax | one.08% | Avg. of Minneapolis (1.15%) and St. Paul (i.0%) | |
| 911 | 2.58% | $0.95 per calendar month | |
| Telecom access MN fund | 0.nineteen% | $0.07 per line per month | |
| Full TRANSACTION TAX | ten.72% | ||
| Mississippi | |||
| State sales tax | 7.00% | Access, interstate, and intrastate | |
| Wireless 911 & 911 training fee | ii.85% | $1.05 per month per line | |
| TOTAL TRANSACTION Taxation | 9.85% | ||
| Missouri | |||
| State sales tax | 4.23% | Admission and intrastate | |
| Local sales taxes | 4.xix% | Avg. Jefferson City (3.five%) and Kansas City (iv.875%) | |
| Local business license tax | 6.l% | Avg. of Jefferson City (7%) and Kansas Metropolis (half-dozen% residential) | |
| Total TRANSACTION TAX | fourteen.91% | ||
| Montana | |||
| Telecom excise taxation | 3.75% | Access, interstate, and intrastate | |
| 911 & E911 tax | 2.71% | $1.00 per number per month | |
| TDD taxation | 0.27% | $0.10 per number per month | |
| TOTAL TRANSACTION Revenue enhancement | half-dozen.73% | ||
| Nebraska | |||
| State sales taxation | 5.l% | Access and intrastate | |
| Local sales tax | one.63% | Avg. of Lincoln (ane.75%) and Omaha (1.v%) | |
| Urban center business organisation and occupation revenue enhancement | six.thirteen% | Avg. of Omaha (6.25%) and Lincoln (6.0%) | |
| State USF | four.75% | $one.75 per line per month | |
| Wireless 911 | 1.22% | $0.45 per month | |
| TRS | 0.08% | $0.03 per month | |
| Full TRANSACTION Taxation | nineteen.thirty% | ||
| Nevada | |||
| Local franchise / gross receipts | 2.03% | 5% of first $15 intrastate revenues | |
| Local 911 taxation | 1.fifteen% | Washoe Canton: $0.85 per calendar month and Clark County: $0.00 | |
| State deaf relay charge | 0.16% | $0.06 per access line | |
| Nevada USF | 0.eleven% | 0.17% times FCC Safe Harbor | |
| Total TRANSACTION TAX | 3.46% | ||
| New Hampshire | |||
| Advice services tax | vii.00% | Access, interstate, and intrastate | |
| 911 tax | two.03% | $0.75 per month | |
| TOTAL TRANSACTION TAX | ix.03% | ||
| New Jersey | |||
| Land sales tax | 6.63% | ||
| Wireless 911 | ii.44% | $0.90 per month | |
| Full TRANSACTION TAX | 9.07% | ||
| New United mexican states | |||
| Land gross receipts (sales) revenue enhancement | 5.thirteen% | Intrastate: 5.125% and interstate: four.25% | |
| City and county gross receipts tax | 3.03% | Avg. Santa Fe (3.3125%) and Albuquerque (ii.75%) | |
| Wireless 911 | 1.38% | $0.51 per calendar month | |
| TRS surcharge | 0.21% | 0.33% times FCC safe harbor | |
| State USF | 2.39% | $0.88 per line per month | |
| Total TRANSACTION Tax | 12.thirteen% | ||
| New York | |||
| Land sales tax | 4.00% | Intrastate and monthly access | |
| Local sales taxes | 4.25% | Avg. of NYC (iv.5%) and Albany (4%) | |
| MCTD sales tax | 0.19% | Avg. of NYC (0.375%); and Albany (0%) | |
| State excise tax (186e) | two.90% | Mobile telecom service — includes interstate | |
| MCTD excise/surcharge (186c) | 0.36% | NYC & surrounding counties: Avg. of 0.72% and Albany 0% | |
| Local utility gross receipts taxation | ane.49% | Avg of. NYC (84% of 2.35%) and Albany (1%) | |
| Country wireless 911 | iii.26% | $i.20 per month | |
| Local wireless 911 | 0.81% | $0.30 per month — NYC & most counties | |
| Schoolhouse district utility sales tax | ane.fifty% | Albany: 3% and NYC: 0% | |
| TOTAL TRANSACTION TAX | eighteen.75% | ||
| North Carolina | |||
| State and loccal sales tax | 7.00% | Statewide combined rate includes local rates | |
| Wireless 911 | i.76% | $0.65 per month | |
| TRS Charge | 0.22% | $0.08 per month | |
| TOTAL TRANSACTION TAX | 8.98% | ||
| North Dakota | |||
| Country sales taxation | 5.00% | Access and intrastate | |
| Local sales taxes | 2.25% | Avg Fargo (2.v%) and Bismarck (2.0%) | |
| Land gross receipts revenue enhancement | 2.l% | Interstate and intrastate | |
| Statewide Interoperable Radio Network Tax | 1.36% | $0.l per line per month | |
| Local 911 tax | 4.07% | Bismarck: $1.50 and Fargo: $ane.50 | |
| TRS | 0.08% | Upwardly to $0.11 per month (currently $0.03) | |
| TOTAL TRANSACTION TAX | 15.26% | ||
| Ohio | |||
| Land sales tax | v.75% | Access, interstate, and intrastate | |
| Local sales taxes | 2.00% | Avg. of Columbus (i.75%) and Cleveland (2.25%) | |
| Regulatory fee | 0.09% | 0.139% of intrastate revenues | |
| Land/local wireless 911 | 0.68% | $0.25 per month per phone number | |
| TOTAL TRANSACTION TAX | eight.52% | ||
| Oklahoma | |||
| State sales taxation | 4.50% | Access, interstate, and intrastate | |
| Local sales taxes | 4.07% | Avg. of OK City (4.125%) and Tulsa (4.017%) | |
| Local 911 | two.03% | $0.75 per calendar month in OK Metropolis and Tulsa | |
| USF | 3.95% | 6.28% times FCC condom harbor | |
| Full TRANSACTION Taxation | fourteen.56% | ||
| Oregon | |||
| Local utililty tax | 0.00% | No taxation on wireless in Portland or Salem | |
| 911 tax | 2.71% | $1.00 per calendar month | |
| RSPF Surcharge | 0.27% | $0.x per calendar month | |
| TOTAL TRANSACTION Tax | 2.98% | ||
| Pennsylvania | |||
| State sales revenue enhancement | vi.00% | Admission, interstate, and intrastate | |
| State gross receipts tax | 5.00% | Access, interstate, and intrastate | |
| Local sales revenue enhancement | 1.00% | Avg. of Philadephia (two%) and Harrisburg (0%) | |
| Statewide wireless 911 | 4.48% | $i.65 per month | |
| TOTAL TRANSACTION Revenue enhancement | sixteen.48% | ||
| Puerto Rico | IVU (Sales Taxation) | eleven.50% | |
| 911 fee | ane.36% | $0.50 per line | |
| USF | 0.87% | one.39% times FCC safe harbor | |
| TOTAL TRANSACTION Taxation | 13.73% | ||
| Rhode Island | |||
| State sales tax | 7.00% | Access, interstate, and intrastate | |
| Gross receipts tax | v.00% | Access, interstate, and intrastate | |
| 911 and showtime responder fee | 3.39% | $1.25 per month | |
| TOTAL TRANSACTION TAX | 15.39% | ||
| South Carolina | |||
| Country sales tax | 6.00% | Access, interstate, and intrastate | |
| Local sales taxation | 2.l% | Avg. of Charleston (iii%) and Columbia (2%) | |
| Municipal license tax | i.00% | Charleston (one.0%) and Columbia (1.0%) | |
| Dual party relay accuse | 0.08% | $0.03 per line per month | |
| State USF | 1.37% | 2.18% times FCC rubber harbor | |
| 911 tax | 1.68% | $0.62 / month | |
| TOTAL TRANSACTION Tax | 12.63% | ||
| South Dakota | |||
| State sales tax | 4.50% | Access, interstate, and intrastate | |
| State gross receipts tax | 4.00% | ||
| local option sales revenue enhancement | 2.00% | Avg. of Pierre (2.0%) and Sioux Falls (2.0%) | |
| 911 excise | 3.39% | $1.25 per month | |
| TRS fee | 0.41% | $0.15 per month by statute | |
| PUC fee | 0.09% | 0.15% of intrastate receipts | |
| Total TRANSACTION Taxation | xiv.39% | ||
| Tennessee | |||
| State sales tax | 7.00% | Access, interstate, and intrastate | |
| Local sales tax | two.50% | Statewide local charge per unit for intrastate | |
| 911 tax | 3.15% | $i.16 per calendar month | |
| Total TRANSACTION TAX | 12.65% | ||
| Texas | |||
| State sales tax | half-dozen.25% | Admission, interstate, and intrastate | |
| Local sales tax | 2.00% | Austin (2.0%) and Houston (2.0%) | |
| Wireless 911 revenue enhancement | i.36% | $0.50 per month per line | |
| Texas USF | ii.08% | 3.iii% times FCC safe harbor | |
| 911 Equalization surcharge | 0.xvi% | $0.06 per line | |
| Total TRANSACTION TAX | 11.84% | ||
| Utah | |||
| Country sales tax | 4.85% | Access and intrastate | |
| Local sales taxes | ii.65% | Avg. of Salt Lake Metropolis (2.nine%) and Provo (2.four%) | |
| Local utility wireless | three.50% | Levied at three.5% max. in SLC and Provo | |
| Land 911 service charges | ii.sixty% | $0.96 per line per month | |
| State Radio Network charge | 1.41% | $0.52 per line per calendar month | |
| Country USF | 1.63% | $0.lx per line per month | |
| Full TRANSACTION Revenue enhancement | 16.64% | ||
| Vermont | |||
| State sales tax | 6.00% | Access, interstate, and intrastate | |
| Local sales tax | 0.50% | Avg. of Montpelier (0%) and Burlington (i%) | |
| Land 911/USF | 2.forty% | Funds 911 and other programs | |
| TOTAL TRANSACTION Revenue enhancement | 8.ninety% | ||
| Virginia | |||
| State communications sales tax | 5.00% | ||
| Wireless 911 | 2.03% | $0.75 per calendar month | |
| Full TRANSACTION TAX | 7.03% | ||
| Washington | |||
| State sales tax | 6.l% | Admission, interstate, and intrastate | |
| Local sales taxes | 3.25% | Avg. of Olympia (2.nine%) and Seattle (iii.6%) | |
| B&O / Utility Franchise — local | vii.50% | Avg. of Olympia (9%) and Seattle (half dozen%) | |
| 911 — state | 0.68% | $0.25 per calendar month | |
| 911 — local | ane.90% | $0.70 per month | |
| Total TRANSACTION TAX | 19.83% | ||
| West Virginia | |||
| State sales revenue enhancement | 0.00% | No sales revenue enhancement on wireless | |
| Wireless 911 / public rubber / tower fee | 10.42% | $iii.84 per month | |
| Total TRANSACTION Taxation | x.42% | ||
| Wisconsin | |||
| Country sales tax | five.00% | Access, intrastate, and interstate | |
| Local sales tax | 0.50% | Avg. of Milwaukee (0.5%) and Madison (0.5%) | |
| Law and Burn Protection Fee | 2.03% | $0.75 per month | |
| State USF | 0.18% | 0.29% times FCC safety harbor | |
| Full TRANSACTION Tax | seven.72% | ||
| Wyoming | |||
| Land sales tax | 4.00% | Access and intrastate | |
| Local sales tax | i.50% | Avg. of Cheyenne (2%) and Casper (one%) | |
| TRS | 0.24% | Up to $0.25/calendar month ($0.09 currently) | |
| USF | 0.69% | ane.1% times FCC rubber harbor | |
| 911 tax | 2.03% | $0.75 per month in Cheyenne and Casper | |
| Total TRANSACTION Taxation | 8.47% | ||
| ARPU= 36.86 | |||
| FCC Safe Harbor = 62.9% | |||
| Sources & Methodology: Commission on State Revenue enhancement, 50-State Report and Study on Telecommunications Taxation, May 2005. Updated July 2020 past Scott Mackey, Leonine Public Diplomacy LLP, using state statutes and regulations. Average Monthly Revenue Per Unit (ARPU): $36.86 per Cellular Telephone and Internet Association, July 2020. | |||
[1] Whenever this newspaper refers to taxes as a percentage of the wireless services bill, it refers exclusively to the taxable portion of that bill. Internet access is non taxable according to federal police. More than details in Appendix A. See House Judiciary Commission, "H. Rept. 113-510 – Permanent Net Tax Liberty Act," 2013-2014, July 3, 2014, https://www.congress.gov/congressional-study/113th-congress/house-report/510/one.
[2] Stephen J. Blumberg and Julian V. Luke, "Wireless Substitution: Early Release of Estimates from the National Wellness Interview Survey, January-June 2019," National Centre for Health Statistics, May 2020, viii,https://world wide web.cdc.gov/nchs/data/nhis/earlyrelease/wireless202005-508.pdf.
[three] These estimates are calculated past applying the rates of percentage-based taxes in each state by the average monthly neb after excluding the estimated 49.4 pct of the average monthly bill representing internet admission. For flat rate per line impositions, the per line rate is multiplied by the estimated number of postpaid wireless lines.
[4] Missouri enacted HB1456 in 2018 that authorizes certain cities and counties to impose wireless 911 fees on or after Jan 1, 2019 if approved past voters. As of this writing, no local jurisdictions had imposed a wireless 911 fee.
[5] Federal Communications Commission, "Eleventh Almanac Report to Congress on State Collection and Distribution of 911 Fees and Enhanced 911 Fees and Charges for the Period January 1, 2018 to December 31, 2018," Dec. 19, 2019, https://world wide web.fcc.gov/files/11thannual911feereport2019pdf.
[vi] Bill Ruthhart and Hal Dardick, "Emanuel'due south Latest Possible Tax Hike: 911 Phone Fees," Chicago Tribune, June 1, 2017, http://www.chicagotribune.com/news/local/politics/ct-rahm-emanuel-telephone-fee-increase-met-0602-20170601-story.html.
[7] International Sleeping room of Commerce, "ICC Word Paper on the Adverse Effects of Discriminatory Taxes on Telecommunications Service," Oct. 26, 2010. https://cdn.iccwbo.org/content/uploads/sites/iii/2010/x/ICC-discussion-paper-on-the-adverse-effects-of-discriminatory-taxes-on-telecommunications-services.pdf.
[8] "International Chamber of Commerce, "ICC Discussion Paper on the Adverse Effects of Discriminatory Taxes on Telecommunications Service," 2.
[9] U.S. Demography Bureau, "Service Annual Survey Latest Data (NAICS-basis)," Nov. 26, 2019, https://world wide web.demography.gov/data/tables/2018/econ/services/sas-naics.html.
[10] For the purposes of this report, the FCC safety harbor percentage is used. This allows for consequent multiyear comparisons of taxes, fees, and surcharges.
How To Calculate Cell Phone Taxes And Fees In New York State,
Source: https://taxfoundation.org/wireless-taxes-cell-phone-tax-rates-by-state-2020/
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