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Positions

Taxes and Fees .

Wireless consumers pay a disproportionate amount of taxes and fees for wireless products and services. These fees have an outsize impact on low-income households, who often rely on wireless the most. CTIA supports fair, equitable, and transparent tax policies for wireless goods and services.

Taxes and Fees

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Wireless service is increasingly the sole means of communication and connectivity for many Americans, particularly young people and those with lower incomes. According to the CDC, more U.S. adults living in (69.2%) or near (64.6%) poverty are wireless-only, meaning they don’t have a landline, compared to 58.8% of higher income adults. And 26% of U.S. adults making less than $30,000 per year are smartphone-only broadband users—compared to 6% of those making over $75,000 (Pew).

Wireless consumers pay a disproportionate amount of taxes and fees for wireless products and services. High wireless taxes and fees contribute to the digital divide and undercut efforts to bring affordable broadband to all Americans. CTIA supports fair, equitable, and transparent tax policies for wireless goods and services.

High and Unfair Wireless Taxes and Fees

Wireless Taxes and Fees

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Source: Tax Foundation

Wireless Taxes and Fees

A typical American household with 4 wireless phones paying $100 per month on a family plan can expect to pay about $270 per year in wireless taxes, fees, and surcharges – up from $260 in 2019.

Source: Tax Foundation

Wireless consumers pay 22.6% on average in combined taxes and fees from federal, state, and local governments on their monthly calling plans. That’s the highest rate ever and more than 2.5 times the average sales tax rate for other goods or services.

Taxes on wireless are increasing, all while wireless service costs are declining. Since 2008, the Tax Foundation found the average monthly wireless service bill per line has gone down 26% to about $37, yet wireless taxes have increased by 50%.

These disproportionately high taxes and fees unfairly penalize wireless consumers, especially those living in low-income households. This often regressive tax structure hinders efforts to bridge the digital divide and discourages mobile broadband adoption.

Many states also charge wireless subscribers a 9-1-1 fee to fund emergency communications systems. Funding these systems is important, but some states have raided these funds to pay for other projects. This isn’t fair to consumers, and it’s a threat to public safety. Additionally, since emergency communications systems are an essential government service and provide a common benefit for all citizens, these services should be funded through the broad-based taxes that finance general fund expenditures.

Policy Positions

Policymakers should set tax structures that treat wireless subscribers fairly and help bring broadband to more Americans across the country.

Specifically, policymakers should:

  • Freeze new—and reduce existing—discriminatory taxes and fees that disproportionally impact mobile users.
  • Create a fair system for state and local taxes imposed on digital goods and services.
  • Ensure that wireless 9-1-1 fees are used for maintaining and improving emergency services, or fund them through general revenue.

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