Did Federal Universal Service Charge Increase
Central Findings
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A typical American household with four phones on a "family share" program, paying $100 per calendar month for taxable wireless service, can expect to pay about $270 per year in taxes, fees, and surcharges—up from $260 in 2022.
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Nationally, these impositions make up about 22.6 percent of the average bill—the highest charge per unit ever. Illinois has the highest wireless taxes in the country at 32.2 percent, followed past Arkansas at thirty.0 percent, Washington at 29.7 percent, Nebraska at 29.1 percent, and New York at 28.half-dozen percent.
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Since 2008, average monthly wireless service bills per subscriber have dropped past 26 per centum, from $50 per line to almost $37 per line. Even so, wireless taxes have increased by 50 percent, from 15.1 percent to 22.6 percent of the average beak.
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At the end of 2022, over 67 per centum of depression-income adults had wireless as their telephone service, and 58 percentage of all adults were wireless-only. Excessive taxes and fees, especially the very high per-line charges, impose a asymmetric brunt on low-income consumers. In Chicago, a family with iv lines of taxable wireless service paying $100 per month is subjected to over $500 per year in taxes and fees.
Introduction
Taxes, fees, and government surcharges on wireless consumers increased again in 2022, jumping from 21.7 percentage to 22.vi percent of a customer'southward bill.[one] An American household with four wireless phones paying $100 per month for wireless vocalism service can expect to pay near $270 per year in wireless taxes, fees, and surcharges—up from $260 in 2022.
Land and local taxes on wireless services increased slightly, from 12.7 percent to 12.8 percentage, the seventh consecutive increase. The Federal Universal Service Fund (FUSF) surcharge increased from nine.1 percent to 9.8 percent of the typical wireless vocalization bill—a 9 percent increase in 2022, following a 36 percent increase in 2022.
Fortunately for wireless consumers, toll competition continues to push down the average monthly per-line cost of wireless voice service. Average revenue per subscriber fell for the fourth consecutive year, from $41.50 per month in 2022 to $36.86 per month in 2022. Unfortunately, consumers were not able to fully enjoy this price reduction because taxes, fees, and surcharges increased again.
Wireless consumers will pay an estimated $17.5 billion in taxes, fees, and authorities surcharges to federal, state, and local governments in 2022 based on the taxation rates calculated in this report. These taxes, fees, and surcharges interruption down equally follows:
- $5.vi billion in sales taxes and other non-discriminatory consumption taxes
- $vi.3 billion in FUSF surcharges
- $3.5 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 manufacture-specific state and local taxes and fees
Consumers in Illinois go on to pay the highest wireless taxes in the state. This year, cheers to large increases in the 911 fee and other state charges, Arkansas now has the 2nd highest wireless taxes in the country. Wireless users in Idaho, Oregon, and Nevada pay the lowest wireless taxes.
Wireless service is increasingly the sole ways of communications and connectivity for many Americans, particularly young people, and those with lower incomes. At the end of 2022, according to the Centers for Disease Control and Prevention, about 67 pct of all depression-income adults lived in wireless-only households and 58 percentage of adults of all incomes lived in wireless-only households.[2] These excessive taxes and fees—especially those that impose high per-line taxes and fees—impose a asymmetric tax brunt on those least able to afford them.
Wireless Taxes and Fees Increase in 2022
This is the eleventh in a serial of reports that examine trends in taxes, fees, and government surcharges imposed on wireless vocalization service by federal, state, and local governments since 2003. The methodology, originally developed by the Council on State Taxation in a 1999 report, is detailed in Appendix A.
Table 1 shows national trends in taxation rates imposed by all levels of regime on taxable wireless service between 2003 and 2022. Betwixt 2005 and 2006, wireless taxes decreased afterward the federal courts forced the IRS to terminate the imposition of the 3 percent federal excise tax on wireless service. Later on that court decision, wireless tax rates dropped to a low of xiv.one percent. Since then, all the same, wireless taxation rates have climbed steadily to their current rate of 22.six pct.
| Weighted Average | |||||
|---|---|---|---|---|---|
| Wireless: Country & Local revenue enhancement & fee | Wireless: Federal tax & fee | Wireless: Federal/State/Local tax & fee | General Sales/Apply Taxation | Disparity — Wireless Tax Over General Sales Revenue enhancement | |
| 1/1/2003 | 10.20% | v.07% | xv.27% | 6.87% | 3.33% |
| four/i/2004 | 10.74% | 5.48% | 16.22% | 6.93% | 3.81% |
| 7/one/2005 | 10.94% | five.91% | xvi.85% | half dozen.94% | iv.00% |
| vii/i/2006 | 11.fourteen% | two.99% | fourteen.13% | 7.04% | 4.10% |
| seven/1/2007 | eleven.00% | 4.19% | xv.19% | 7.07% | 3.93% |
| 7/ane/2008 | ten.86% | 4.23% | 15.09% | 7.11% | 3.75% |
| seven/1/2009 | 10.74% | 4.79% | fifteen.53% | vii.26% | 3.48% |
| 7/1/2010 | xi.21% | 5.05% | 16.26% | 7.42% | three.79% |
| 7/1/2012 | 11.36% | five.82% | 17.xviii% | 7.33% | 4.03% |
| vii/i/2014 | xi.23% | 5.82% | 17.05% | vii.51% | 3.72% |
| 7/1/2015 | 11.l% | half dozen.46% | 17.96% | 7.57% | 3.93% |
| 7/1/2016 | 11.93% | 6.64% | eighteen.57% | 7.61% | 4.32% |
| 7/ane/2017 | 12.11% | vi.34% | 18.46% | 7.65% | 4.46% |
| seven/1/2018 | 12.46% | 6.64% | xix.10% | vii.65% | 4.81% |
| 7/1/2019 | 12.65% | 9.05% | 21.70% | 7.74% | 4.91% |
| 7/one/2020 | 12.82% | 9.83% | 22.65% | vii.75% | 5.07% |
| Annotation: Federal includes 3 percent federal excise tax (until May 2006) and Federal Universal Service Fund (FUSF) accuse, which is set past the FCC and varies quarterly. FUSF charge equally of July ane, 2022 is calculated by 37.ane percent interstate safety harbor times 26.five percent contribution factor, which equals a nine.83 percentage effective revenue enhancement rate, http://world wide web.usac.org/cont/tools/contribution-factors.aspx. Source: Methodology derived from Committee on Land Taxation, "50-Country Report and Report on Telecommunications Taxation," May 2005; updated July 2022 from land statutes, FCC data, and local ordinances past Scott Mackey, Leonine Public Affairs LLP, Montpelier, VT. | |||||
Table 1 as well separates the impact of federal taxes and surcharges from state and local government taxes, fees, and surcharges. Throughout the menstruation, state and local taxes accept been trending upward steadily, from x.twenty percentage in 2003 to their current level of 12.82 percent in 2022.
The FUSF surcharge has as well increased throughout the flow, only with dramatic increases since 2022. In simply two years, the effective rate of the FUSF surcharge increased past 48 percent, from 6.64 percent to 9.83 percent of the average wireless bill. For a detailed explanation of the FUSF charge and how it is imposed, see Appendix B.Table 1 also separates the bear on of federal taxes and surcharges from state and local government taxes, fees, and surcharges. Throughout the period, state and local taxes accept been trending upward steadily, from 10.twenty percent in 2003 to their current level of 12.82 pct in 2022.
Table 1 also shows the general trends in average tax rates of the sales and employ tax, which is the primary broad-based consumption tax imposed past 45 states, the District of Columbia, and Puerto Rico. Since 2003, the boilerplate state-local sales tax rate has increased by 0.88 per centum points—from 6.87 per centum to 7.75 percent. During that same period, wireless taxes increased by ii.62 pct points—from x.xx pct to 12.82 per centum. Boilerplate wireless tax rates increased three times faster than average sales tax rates.
Wireless industry contest has led to significant reductions in average monthly bills since 2008, a trend that accelerated between 2022 and 2022. Since 2008, average wireless monthly bills have decreased from just under $fifty per month to $36.86 per month—a 26 percent reduction—while wireless taxes have increased from fifteen.1 percent to 22.6 per centum—a 50 per centum increment. Unfortunately, consumers have non enjoyed the full benefits of wireless price competition because taxes, fees, and government surcharges go on to increase.
Table 2 shows wireless taxation, fee, and government surcharge rates equally of July 2022. Cavalcade one shows the average combined land-local tax rate in the largest metropolis and the upper-case letter city in each state, while column ii shows the effective charge per unit of the FUSF surcharge. In 2022, Illinois retained its ranking as the country with the highest wireless tax burden. Arkansas moved up from the sixth highest taxes in 2022 to the 2d highest in 2022, followed by Washington, Nebraska, and New York.
| State Rankings | 2020 Wireless State-Local Charge per unit | 2019 Federal USF Charge per unit | 2020 Combined Federal/State/Local Rate | |
|---|---|---|---|---|
| 1 | Illinois | 22.37% | ix.83% | 32.20% |
| 2 | Arkansas | 20.21% | 9.83% | thirty.04% |
| three | Washington | 19.83% | nine.83% | 29.66% |
| 4 | Nebraska | 19.30% | 9.83% | 29.13% |
| 5 | New York | 18.75% | 9.83% | 28.59% |
| 6 | Kansas | xvi.68% | 9.83% | 26.51% |
| 7 | Utah | 16.64% | 9.83% | 26.47% |
| 8 | Pennsylvania | sixteen.48% | 9.83% | 26.31% |
| 9 | Rhode Island | 15.39% | 9.83% | 25.22% |
| 10 | North Dakota | fifteen.26% | ix.83% | 25.09% |
| 11 | Maryland | fourteen.95% | 9.83% | 24.78% |
| 12 | Missouri | 14.91% | nine.83% | 24.74% |
| 13 | Florida | 14.89% | 9.83% | 24.72% |
| 14 | Oklahoma | 14.56% | ix.83% | 24.39% |
| 15 | Southward Dakota | fourteen.39% | 9.83% | 24.22% |
| 16 | Alaska | 14.32% | 9.83% | 24.16% |
| 17 | Puerto Rico | xiii.73% | 9.83% | 23.56% |
| 18 | California | xiii.39% | 9.83% | 23.22% |
| 19 | Tennessee | 12.65% | 9.83% | 22.48% |
| twenty | Arizona | 12.64% | 9.83% | 22.47% |
| 21 | South Carolina | 12.63% | 9.83% | 22.47% |
| 22 | New Mexico | 12.13% | 9.83% | 21.97% |
| 23 | Georgia | 12.09% | 9.83% | 21.92% |
| 24 | Commune of Columbia | 12.06% | 9.83% | 21.89% |
| 25 | Colorado | 11.98% | 9.83% | 21.81% |
| 26 | Indiana | 11.96% | 9.83% | 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% |
| xxx | Minnesota | 10.72% | ix.83% | 20.55% |
| 31 | West Virginia | 10.42% | 9.83% | xx.25% |
| 32 | Massachusetts | 10.32% | 9.83% | 20.15% |
| 33 | Michigan | 10.18% | 9.83% | twenty.01% |
| 34 | Mississippi | 9.85% | 9.83% | 19.68% |
| 35 | Louisiana | 9.fourscore% | nine.83% | 19.63% |
| 36 | Iowa | 9.79% | nine.83% | 19.63% |
| 37 | New Jersey | nine.07% | ix.83% | 18.90% |
| 38 | New Hampshire | ix.03% | ix.83% | xviii.87% |
| 39 | North Carolina | 8.98% | nine.83% | 18.81% |
| forty | Vermont | 8.xc% | nine.83% | eighteen.73% |
| 41 | Maine | 8.71% | ix.83% | 18.54% |
| 42 | Ohio | 8.52% | nine.83% | 18.35% |
| 43 | Wyoming | 8.47% | 9.83% | xviii.thirty% |
| 44 | Connecticut | 7.92% | nine.83% | 17.76% |
| 45 | Hawaii | seven.83% | 9.83% | 17.66% |
| 46 | Wisconsin | 7.72% | 9.83% | 17.55% |
| 47 | Virginia | vii.03% | 9.83% | 16.87% |
| 48 | Montana | six.73% | nine.83% | 16.57% |
| 49 | Delaware | 6.68% | nine.83% | sixteen.51% |
| 50 | Nevada | 3.46% | 9.83% | 13.29% |
| 51 | Oregon | 2.98% | 9.83% | 12.82% |
| 52 | Idaho | 2.71% | 9.83% | 12.54% |
| Weighted Avg. | 12.82% | 9.83% | 22.65% | |
| Simple Avg. | 11.81% | 9.83% | 21.64% | |
| Source: Methodology from COST, "l-Land Report and Report on Telecommunication Taxation," May 2005. Updated July 2022 using state statutes, FCC data, and local ordinances. | ||||
Figure 2 shows the states past average country-local rates, without including the FUSF imposition. Other than the cluster of low-taxation states in the western United States, at that place does not appear to be whatever strong regional patterns to the distribution of high-tax and depression-tax states. The New England states tend to have lower wireless tax rates, while the high-tax states are scattered throughout the country.
One of the longstanding arguments for reform of wireless taxation is the disparity in tax burdens on wireless as compared to broad-based consumption taxes imposed on other goods and taxable services subject to sales and use taxes. Wireless and other telecommunications services are i of the few services that are consistently field of study to sales and use taxes past states with both narrow and wide sales tax bases. Furthermore, states like Delaware, Montana, and New Hampshire that do not impose a full general sales tax 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 revenue enhancement 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.i percentage versus x.0 percent. Other states with large disparities include Nebraska, Alaska, Arkansas, New York, and Washington. New Hampshire, Delaware, and Montana—all states that do not have general sales taxes simply 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 3 too shows that 2 states—Idaho and Nevada—impose lower taxes on wireless service than on other goods and services subject to the general sales tax.
Total Taxes Paid
Wireless consumers pay about $eleven.ix billion in taxes and fees that are specifically levied on telecommunications services but non on other taxable goods and services. This total includes approximately $6.iii billion in FUSF surcharges, $three.5 billion in 911 fees, and some other $2.1 billion in other discriminatory state and local taxes, fees, and government surcharges. The remaining $5.6 billion in taxes on wireless service are non-discriminatory sales and use taxes that are imposed on other taxable appurtenances and services.[iii]
| Country-Local Sales Revenue enhancement Charge per unit | State-Local Wireless Revenue enhancement Charge per unit | Wireless Over/Under Sales Tax Rate | Disparity Multiple | |
|---|---|---|---|---|
| Illinois | 10.00% | 22.37% | 12.37% | ii.24 |
| Nebraska | 7.13% | 19.30% | 12.17% | 2.71 |
| Alaska | ii.50% | 14.32% | 11.82% | 5.73 |
| Arkansas | ix.50% | twenty.21% | ten.71% | 2.xiii |
| New York | 8.44% | xviii.75% | ten.31% | 2.22 |
| Washington | 9.75% | 19.83% | x.08% | 2.03 |
| Pennsylvania | seven.00% | 16.48% | 9.48% | 2.35 |
| Utah | 7.fifty% | 16.64% | 9.fourteen% | 2.22 |
| New Hampshire | 0.00% | nine.03% | 9.03% | NA |
| Maryland | vi.00% | 14.95% | 8.95% | two.49 |
| Rhode Island | 7.00% | xv.39% | eight.39% | 2.20 |
| Kansas | eight.33% | sixteen.68% | 8.35% | ii.00 |
| North Dakota | 7.25% | 15.26% | viii.01% | 2.x |
| S Dakota | half-dozen.50% | fourteen.39% | 7.89% | 2.21 |
| Florida | 7.25% | xiv.89% | 7.64% | 2.05 |
| Montana | 0.00% | 6.73% | 6.73% | NA |
| Delaware | 0.00% | 6.68% | 6.68% | NA |
| Missouri | 8.41% | 14.91% | 6.50% | one.77 |
| District of Columbia | 6.00% | 12.06% | vi.06% | 2.01 |
| Oklahoma | 8.57% | 14.56% | v.99% | ane.70 |
| Kentucky | vi.00% | 10.97% | 4.97% | one.83 |
| Indiana | 7.00% | 11.96% | four.96% | 1.71 |
| California | 9.thirteen% | xiii.39% | 4.27% | 1.47 |
| Michigan | 6.00% | x.18% | 4.18% | i.70 |
| South Carolina | eight.fifty% | 12.63% | 4.xiii% | 1.49 |
| Massachusetts | 6.25% | x.32% | 4.07% | 1.65 |
| Arizona | viii.65% | 12.64% | 3.99% | 1.46 |
| New Mexico | 8.16% | 12.13% | three.97% | 1.49 |
| Hawaii | iv.00% | vii.83% | iii.83% | ane.96 |
| Colorado | 8.28% | 11.98% | 3.70% | 1.45 |
| Georgia | 8.45% | 12.09% | iii.64% | 1.43 |
| Texas | eight.25% | xi.84% | 3.59% | one.44 |
| W Virginia | 7.00% | 10.42% | 3.42% | 1.49 |
| Maine | 5.l% | 8.71% | 3.21% | i.58 |
| Tennessee | nine.l% | 12.65% | 3.15% | 1.33 |
| Oregon | 0.00% | 2.98% | two.98% | NA |
| Wyoming | 5.l% | 8.47% | 2.97% | 1.54 |
| Iowa | 7.00% | ix.79% | 2.79% | 1.xl |
| Minnesota | vii.96% | 10.72% | 2.76% | 1.35 |
| New Jersey | vi.63% | nine.07% | 2.44% | 1.37 |
| Vermont | half dozen.50% | viii.90% | 2.40% | 1.37 |
| Mississippi | 7.50% | nine.85% | 2.35% | 1.31 |
| Puerto Rico | 11.50% | 13.73% | 2.23% | ane.19 |
| Wisconsin | five.50% | 7.72% | 2.22% | 1.forty |
| Due north Carolina | 7.25% | 8.98% | i.73% | 1.24 |
| Connecticut | half dozen.35% | seven.92% | 1.57% | 1.25 |
| Virginia | five.65% | vii.03% | 1.38% | ane.25 |
| Alabama | 10.00% | 11.05% | i.05% | 1.10 |
| Ohio | 7.75% | viii.52% | 0.77% | 1.10 |
| Louisiana | 9.lxx% | 9.80% | 0.x% | 1.01 |
| Idaho | 6.00% | ii.71% | -3.29% | 0.45 |
| Nevada | seven.99% | 3.46% | -4.53% | 0.43 |
| US Weighted Average | seven.75% | 12.82% | 5.07% | i.65 |
| Source: Methodology from Toll, "50-State Written report and Written report on Telecommunications Taxation," May 2005. Updated July 2022 using state statutes, FCC data, and local ordinances. | ||||
Appendix C provides a detailed breakdown of the specific taxes, fees, and government surcharges imposed in each state, including the respective rates of each. To facilitate interstate comparisons, local rates imposed in the nigh populated urban center and the capital city in each land are averaged into a single rate. In the example of taxes and fees that are imposed on a flat per-line ground—for example, $1.00 per calendar month per line—the taxation is converted from a flat amount to a per centum past dividing the flat corporeality by the industry average acquirement per line of $36.86 per calendar month. For a detailed description of the methodology in this report, please see Appendix A.
Trends in Wireless Taxes and Fees
911 Fees
Most states impose 911 fees to fund capital expenses associated with the 911 system, and in some states these fees fund operations as well. Wireless 911 fees vary profoundly by state, from a low of aught in Missouri[iv] to a loftier of $5.00 per line per month in the City of Chicago.
In 2022, Arkansas doubled the state 911 fee from $.65 per line per month to $ane.thirty per line per month. Oregon increased the 911 fee from $0.75 per line per month to $1.00 per line per month. Maine reduced the 911 fee from $0.45 per line per month to $0.35 per line per month.
Unfortunately, according to the Federal Communications Commission (FCC), some states and localities routinely divert 911 fees for other purposes.[5] For example, the City of Chicago used the authorisation granted by the legislature to increase its monthly 911 fee from $3.ninety per line to $v.00 per line, effective January 1, 2022. Media reports suggested that the 911 fee increment was intended to cover a shortfall in city pension obligations.[vi] The FCC report identified other states that routinely divert 911 fees paid by wireless consumers to other purposes: Nevada, New Jersey, New York, Rhode Island, and West Virginia.
State Universal Service Funds
Some states have their ain universal service funds (USF) that provide subsidies for many of the same purposes as the FUSF. Land USF surcharges are imposed on intrastate revenues, while the FUSF is imposed on interstate revenues. In states like Arkansas, Alaska, Kansas, Nebraska, and California, loftier state USF surcharge rates add together significantly to the overall burden on wireless consumers. For example, the USF charge per unit in Arkansas is xi.25 pct of all intrastate charges. Tabular array B1 in Appendix B lists the rates in the 20 states that impose a land USF charge.
In 2022, state USF rates were increased in Arkansas, Kansas, Michigan, and South Carolina and were reduced in Nevada, New Mexico, and Wyoming.
State-Level Wireless Taxes
In addition to 911 fees and land USF charges, xiv states impose taxes on wireless service that are either in addition to country sales taxes or in lieu of sales taxes simply imposed at a higher rate than the land sales tax. Tabular array iv lists these states. No states increased or decreased these discriminatory state wireless taxes in 2022.
| Land Gross Receipts Tax in Addition to Sales Revenue enhancement | College Land Tax Charge per unit in Lieu of Sales Tax | Wireless Tax only No State Sales Taxation |
|---|---|---|
| Indiana | District of Columbia | Delaware |
| Kentucky | Florida | Montana |
| New York | Illinois | New Hampshire |
| North Dakota | Maine | |
| Pennsylvania | ||
| Rhode Island | ||
| South Dakota | ||
| Source:Country Statutes | ||
Local Wireless Taxes
Many local governments also 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 authorisation to impose "correct-of-manner" (ROW) fees on telephone companies for placing poles, wires, and other landline infrastructure on public property. In other states, localities accept the authorisation to impose franchise or license fees on telephone companies in exchange for an exclusive franchise agreement to provide service inside the municipality.
In the belatedly 1990s and early 2000s, when wireless service began to displace landline service, localities became concerned almost losing taxes and fees from landline telephone services and sought to extend these taxes and fees to wireless services. This occurred even though wireless providers typically did not use the public right-of-way to place equipment or, when they did use public holding similar buildings, the usage was de minimis and paid for through negotiated rental agreements.
Local governments in xiii states currently impose some type of taxation or fee on wireless service over and in a higher place whatever wide-based local sales tax. In virtually of these states, the local wireless tax is in addition to state taxes. California is the exception—wireless service is not subject to sales taxes but is subject to local Utility User Taxes (UUT) at rates as loftier as 11 percent. Table 5 provides a breakup of the types of local wireless taxes.
| Privilege, License, or User Taxes | Country-Authorized Telecom Taxes | School Commune and Other Special District Taxes |
|---|---|---|
| Arizona | Florida | Kentucky |
| California | Illinois | New York |
| Maryland | Maryland | |
| Missouri | New York | |
| Nebraska | Utah | |
| Nevada | ||
| Southward Carolina | ||
| Washington | ||
| Note: Excludes local general sales taxes. Source: Country statutes. | ||
Local government taxes accept a pregnant impact on the overall tax brunt on wireless consumers in many of the states that rank loftier in the overall wireless tax and fee burden. In almost of the top ten states shown in Table two with the highest wireless taxes, local taxes play a prominent role. Nebraska allows local business license taxes with rates every bit loftier as 6.25 percent. Washington allows municipal governments to impose "utility franchise taxes" with rates every bit high equally 9 percent. New York allows New York Metropolis, other selected cities, school districts, and certain transit districts to levy various wireless taxes in addition to county 911 fees. Finally, Florida and Illinois take special country communications taxes with a local add-on that result in rates typically two times college than the general sales tax rates.
Table 6 illustrates the impact of taxes and fees on consumers in selected large cities effectually the state. Wireless service is increasingly condign the sole means of communication and connectivity for many Americans, particularly those struggling to overcome poverty. As noted previously, at the end of 2022, more than 67 percentage of all depression-income adults had wireless-only service, and 58 pct of all adults were wireless-but. Excessive local taxes and fees, peculiarly the very high per line charges like those imposed in Chicago and Baltimore, impose a asymmetric brunt on depression-income consumers. In Chicago, the taxes on a family with four lines of taxable wireless service paying $100 per month are more than than $500 per twelvemonth—about 43 percent of their monthly neb.
| City | Tax on four-line voice plan at $100 per calendar month | Effective Tax Rate |
|---|---|---|
| Chicago, IL | $43.83 | 43.83% |
| Baltimore, MD | $37.03 | 37.03% |
| Omaha, NE | $32.00 | 32.00% |
| Piffling Rock, AR | $31.27 | 31.27% |
| New York, NY | $thirty.xxx | 30.30% |
| Seattle, WA | $29.73 | 29.73% |
| Philadelphia, PA | $29.43 | 29.43% |
| Common salt Lake City, UT | $29.40 | 29.40% |
| 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 Rate |
| Chicago, IL | $thirteen.78 | 37.39% |
| Baltimore, Doc | $11.13 | 30.21% |
| Footling Stone, AR | $ten.89 | 29.55% |
| Omaha, NE | $10.74 | 29.thirteen% |
| Seattle, WA | $ten.51 | 28.51% |
| New York, NY | $10.46 | 28.37% |
| Philadelphia, PA | $x.07 | 27.31% |
| Common salt Lake Urban center, UT | $9.85 | 26.72% |
| Tallahassee, FL | $nine.31 | 25.26% |
| Providence, RI | $9.xxx | 25.22% |
| Source: Author'southward calculations, using state statutes and local ordinances. | ||
The Impact 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. Nevertheless, at that place are two compelling reasons why policymakers should be cautious nigh expanding wireless taxes, fees, and surcharges. Beginning, equally discussed above, wireless taxes and fees are regressive and have a asymmetric bear on 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 education and remote piece of work during the coronavirus pandemic. Second, discriminatory taxes may boring investment in wireless infrastructure. Aplenty evidence exists that investments in wireless networks provide economical benefits to the broader economy because and then many sectors—transportation, health care, free energy, education, fifty-fifty government—employ wireless networks to boost productivity and efficiency. These economic benefits are especially important during the current pandemic because they help employees work remotely and allow students to keep their studies remotely.
Network investment is important non only to consumers and businesses that employ these networks but also to the unabridged American economy. A study by the International Chamber of Commerce (ICC) in Paris surveyed the evidence non simply from the The states and Europe but from the developing world also.[seven] Economists that take examined the link between investments in communications and it infrastructure and economical growth have consistently found a strong link. Only put, wireless infrastructure investment enables an unabridged entrepreneurial civilisation to focus on creating applications and devices to make businesses more productive and to ameliorate the lives of consumers. These tools in turn make businesses more productive and profitable so that they can create new jobs that generate economic activity and tax revenues for governments.
While almost infrastructure investments create these types of multiplier effects, the multiplier furnishings for telecommunications infrastructure are higher than other industries because communications and information technology are so deeply embedded in business processes. These infrastructure investments also benefit the government and nonprofit sectors in ways that exercise non necessarily evidence up direct in economic statistics, but notwithstanding make these sectors more efficient and enable them to lower the cost of providing authorities services.
As noted in the ICC report, "Remedying the discriminatory tax handling of telecom goods and services may reduce taxation receipts in the short-term, but the longer-term increment in the utilize of avant-garde capability devices, service demand, and network deployment resulting from these taxation reductions is likely to counteract this loss of acquirement over time."[8] Policymakers need to counterbalance the trade-offs between the brusque-term acquirement benefits of excessive wireless taxes versus the long-term economic impact on the country from reduced infrastructure investment.
Conclusion
Wireless consumers go on to be burdened with high taxes, fees, and surcharges in many states and localities across the United States. While land and local regime taxes and fees were relatively stable between 2022 and 2022, pregnant increases in the FUSF over the concluding two years take pushed taxes on wireless service to tape-loftier levels. Excessive taxes on wireless consumers unduly touch on low-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 pb to slower deployment of wireless network infrastructure, including fifth generation (5G) wireless broadband technologies.
States should study their existing communications tax structure and consider policies that transition their taxation systems away from narrowly-based wireless taxes and toward broad-based revenue enhancement sources that do non distort consumer purchasing decisions and exercise not tedious investment in disquisitional infrastructure like wireless broadband.
Appendix A
Methodology
The methodology used in this study to calculate wireless taxes compares the applicable federal, state, and local rates on wireless voice service in the capital metropolis and the most populated city in each land. This methodology was developed by the Committee on State Taxation (COST) in its landmark "l-State Study and Report on Telecommunications Taxation," start published in 2000.
The use of a consequent methodology allows for accurate time-series comparisons across states and over fourth dimension. Still, changes in consumer demand for wireless services pose challenges when measuring the bear upon of wireless taxes on consumer bills. 2 trends in the industry are significantly impacting the amount of taxes that wireless consumers pay on their monthly bills.
Start, a growing share of wireless consumer purchases is for cyberspace access. U.Due south. Demography Bureau data from 2022 suggests that about 49.7 pct of total wireless service revenues (which excludes sales and rental of equipment and other non-service operating revenue) for the industry as a whole are from the sale of internet admission.[9] This percent continues to grow equally wireless consumers utilize more internet access and less voice phone service each year.
Under federal constabulary, as of July 1, 2022, all states are precluded from imposing taxes on internet access. This suggests that of the "typical" consumer'south monthly expenditure of $36.86 per month, approximately $eighteen.32 is for non-taxable internet admission and $18.54 is for taxable wireless service. A consumer applying the taxation rates in this report to their total pecker will detect that the effective revenue enhancement rate overstates their bodily revenue enhancement paid if their calling program includes both taxable voice service and exempt internet admission.
Second, the report's methodology understates the taxation rate touch of apartment rate taxes and fees—those that are imposed as a set dollar amount per line. Nether the report's methodology, a $ane.00 per month per line taxation is converted to a percentage amount by dividing $one.00 by the $36.86 average monthly bill, resulting in a taxation rate of 2.7 pct in this instance. However, these flat rate taxes and fees are merely permitted to exist imposed on the portion of the wireless bill that is not internet access. In this same example, if the $1.00 per month were divided by the taxable portion of the neb ($18.54), the tax rate would be 5.iv percent.
Notwithstanding these methodological challenges, the authors have determined that the benefits of retaining the current methodology—consistent measurement of trends in tax rates over time—outweigh the benefits of irresolute the methodology to accommodate to recent trends. This is especially true since the Census Agency has just been tracking the per centum of wireless expenditures on internet access since 2022, so information technology would not be possible to go back and retroactively adjust data prior to 2022.
Appendix B
What Are Universal Service Funds?
The Federal Universal Service Fund
The Federal Universal Service Fund (FUSF) is administered by the FCC under open-concluded say-so from Congress. The plan subsidizes telecommunication services for schools, libraries, hospitals, depression-income people, and rural telephone companies operating in high-cost areas. The FCC has besides recently decided to apply funds to subsidize broadband deployment.
The FCC has authority to fix spending for these programs exterior of the normal congressional appropriations process. After deciding what to spend on the various programs, the FCC sets the quarterly "contribution factor" or surcharge charge per unit 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 client bills.
FUSF surcharges apply but 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 phonation minutes or a fixed number of voice minutes for a gear up amount. Since these plans include both interstate calls (subject area to the FUSF) and intrastate calls (non subject area to FUSF), the FCC allows providers to allocate the fixed monthly plans to interstate and intrastate calls by ane of ii methods. Carriers may use "traffic studies" to bear witness the actual split between interstate and interstate calls for all subscribers and utilize the FUSF to the aggregated interstate portion of subscriber calls.
Alternatively, carriers may utilise a single uniform national "safe harbor" percentage to its fixed monthly plans. The FCC currently sets this safe harbor at 37.1 percent of the fixed monthly charge. For example, when determining the FUSF, a $50 monthly wireless voice calling plan is accounted to include $xviii.55 in interstate calls and $31.45 in intrastate calls. If a carrier elects to use the safety harbor, the FUSF rate would be applied to $18.55 of the bill each month.
The FUSF rate is set by the FCC each quarter. For the period beginning July 1, 2022, the rate is 26.5 percent. Thus, the FUSF rate applied on assessable wireless revenues using the FCC rubber harbor corporeality is 9.83 pct (26.v pct times 37.1 percent).[x] Figure B1 highlights the significant growth in the FCC contribution rate since 2003.
Figure B1
Despite the growing burden on wireless consumers, Congress has shown little interest in restricting or otherwise limiting the growth of the programs funded through the FSUF.
Country Universal Service Funds
States also accept the authority to supplement the programs funded through the FUSF with their own programs funded through state universal service funds. The state programs are funded past surcharges applied to the intrastate portion of telephone charges. In this written report, the inverse of the FUSF prophylactic harbor is used to calculate the rates of the state USF in all states except Vermont, which imposes its state USF on both interstate and intrastate charges. As in the previous example, if a consumer has a $l monthly wireless voice programme, 62.9 percent of that charge ($31.45) is accounted to be an intrastate service discipline to the land USF charge and $18.55 is an interstate service not subject to state USF charges.
Like the FUSF, state universal service fund charges practice non apply to cyberspace access. State USF charges are a key factor in the high wireless tax burden in states like Arkansas, Alaska, Kansas, Nebraska, and California.
| Land | Constructive Rate | Adding |
|---|---|---|
| Arkansas | 7.08% | 11.25% times FCC safety harbor |
| Alaska | 6.29% | ten.0% times FCC Intrastate prophylactic harbor |
| Kansas | five.91% | 9.4% x FCC safe harbor |
| Nebraska | iv.75% | $1.75 per line per calendar month |
| California | four.37% | 7.28% times FCC Intrastate prophylactic harbor |
| Oklahoma | 3.95% | six.28% times FCC safe harbor |
| Louisiana | 3.50% | Carrier rates assigned by Public Service Commission |
| Vermont | two.40% | Funds 911 and other programs |
| New United mexican states | 2.39% | $0.88 per line per month |
| Texas | two.08% | 3.3% times FCC safety harbor |
| Colorado | i.64% | 2.6% times FCC safety harbor |
| Utah | 1.63% | $0.sixty per line per month |
| S Carolina | 1.37% | 2.xviii% times FCC safe harbor |
| Maine | ane.19% | $0.44 per line |
| Puerto Rico | 0.87% | 1.39% times FCC safety harbor |
| Wyoming | 0.69% | 1.1% times FCC prophylactic harbor |
| Indiana | 0.69% | 1.09% times FCC safe harbor |
| Kentucky | 0.19% | $.07 per month |
| Wisconsin | 0.xviii% | 0.29% times FCC condom harbor |
| Maryland | 0.14% | $0.05 per month per line |
| Nevada | 0.11% | 0.17% times FCC Safe Harbor |
| Source: Author'southward calculation from land statutes and land utility commisions. | ||
Appendix C
| Land | Type of Tax | Rate | Comments |
|---|---|---|---|
| Alabama | |||
| AL Jail cell Service Tax | half-dozen.00% | Access, interstate, and intrastate | |
| E911 | 5.05% | $one.86 per month | |
| Total TRANSACTION TAX | 11.05% | ||
| Alaska | |||
| Local Sales Tax | 2.50% | Avg. of Juneau (5%) and Anchorage (0%) | |
| Local E911 | 5.29% | Anchorage: $ii.00 and Juneau: $1.90 | |
| Land USF | 6.29% | 10.0% times FCC safe harbor | |
| TRS fee | 0.24% | $0.09 per line | |
| TOTAL TRANSACTION TAX | 14.32% | ||
| Arizona | |||
| State sales (transaction priv.) | v.60% | Intrastate telecommunication service | |
| Canton sales (transaction priv.) | 0.threescore% | Avg. of Phoenix (Maricopa) (0.7%) and Tucson (Pima) (0.5%) | |
| Metropolis telecommunications | five.xc% | Avg. Phoenix (4.7%) and Tucson (seven.1%) | |
| 911 | 0.54% | $0.20 per month | |
| TOTAL TRANSACTION TAX | 12.64% | ||
| Arkansas | |||
| State sales revenue enhancement | 6.50% | ||
| Local sales taxes | 3.00% | Avg. Little Rock (2.5%) and Fayetteville (iii.5%) | |
| State High Price Fund | vii.08% | 11.25% times FCC safe harbor | |
| Wireless 911 | 3.53% | $ane.thirty per month statewide. | |
| TRS service & TRS equipment | 0.11% | $0.04 per line per month | |
| Total TRANSACTION TAX | 20.21% | ||
| California | |||
| Local Utility User Taxation | 8.00% | Avg. of LA (9%) and Sacramento (7%) | |
| Country 911 | 0.81% | $0.30 per line per calendar month | |
| PUC fee | 0.21% | 0.34% times FCC safe harbor | |
| ULTS (lifeline) | 2.99% | 4.75% times FCC rubber harbor | |
| Deaf/CRS | 0.31% | 0.5% times FCC safe harbor | |
| High Cost Funds A & B | 0.22% | 0.35% times FCC safe harbor | |
| Teleconnect Fund | 0.49% | 0.78% times FCC safe harbor | |
| CASF – advanced services fund | 0.35% | 0.56% times FCC condom harbor | |
| Full TRANSACTION TAX | 13.39% | ||
| Colorado | |||
| Land Sales Tax | 2.90% | Access and intrastate | |
| Local Sales Tax — City/County | 3.82% | Avg. of Denver (5.41%) and Colorado Springs (2.23%) | |
| 911 | 3.46% | Denver: $i.20 and Colorado Springs: $1.35 | |
| USF | 1.64% | ii.6% times FCC safe harbor | |
| TDD Tax | 0.16% | $0.06 per month | |
| TOTAL TRANSACTION TAX | 11.98% | ||
| Connecticut | |||
| Country sales taxation | 6.35% | Admission, interstate, and intrastate | |
| 911 | one.57% | $0.58 per line | |
| TOTAL TRANSACTION TAX | seven.92% | ||
| Delaware | |||
| Public Utility Gross Receipts Revenue enhancement | 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 Tax | 10.00% | Monthly gross charge; | |
| 911 | two.06% | $0.76 per month | |
| TOTAL TRANSACTION TAX | 12.06% | ||
| Florida | |||
| State Communications services | seven.44% | Access, interstate, and intrastate | |
| Local Communications services | 6.36% | Jacksonville (5.82%) and Tallahassee (6.9%) | |
| 911 | 1.09% | $0.40 per calendar month statewide | |
| Full TRANSACTION TAX | 14.89% | ||
| Georgia | |||
| State sales revenue enhancement | 3.lxxx% | four% of "access charge" — presume $35 | |
| Local sales tax | 4.23% | Avg. rate Atlanta (4.9%) and Augusta (four%) | |
| Local 911 | 4.07% | $1.50 per line statewide | |
| Total TRANSACTION TAX | 12.09% | ||
| Hawaii | |||
| Public service company tax | 4.00% | ||
| Boosted canton tax | 1.89% | ||
| PUC Fee | 0.16% | 0.25% of intrastate charges | |
| Wireless 911 fee | 1.79% | $0.66 per calendar month | |
| TOTAL TRANSACTION TAX | 7.83% | ||
| Idaho | |||
| Telephone service assistance program | 0.00% | Set annually by PUC (currently zero) | |
| Statewide wireless 911 | 2.71% | Boise: $1.00 per calendar month | |
| Total TRANSACTION TAX | 2.71% | ||
| Illinois | |||
| Land telecom excise tax | seven.00% | Access, interstate, and intrastate | |
| Simplified municipal tax | 6.l% | Avg. of Chicago (7%) and Springfield (6%) | |
| Wireless 911 | 8.82% | Chicago: $5 per month and others: $1.l per month | |
| TRS fee | 0.05% | $0.02 per line per month | |
| Total TRANSACTION Revenue enhancement | 22.37% | ||
| Indiana | |||
| State sales tax | seven.00% | Access and intrastate | |
| Utility receipts tax | one.40% | Same base as sales revenue enhancement | |
| Wireless 911 | 2.71% | $1.00 per month | |
| State USF | 0.69% | 1.09% times FCC safety harbor | |
| PUC fee | 0.08% | 0.xiii% times FCC rubber harbor | |
| TRS fee | 0.08% | $0.03 per line per month | |
| TOTAL TRANSACTION TAX | 11.96% | ||
| Iowa | |||
| Country sales tax | 6.00% | ||
| Local option sales taxes | ane.00% | Avg. of Cedar Rapids (1%) and Des Moines (1%) | |
| Wireless 911 | ii.71% | $1.00 per month | |
| Dual Party Relay Service fee | 0.08% | $0.03 per month | |
| TOTAL TRANSACTION Tax | 9.79% | ||
| Kansas | |||
| Country sales revenue enhancement | half dozen.50% | Intrastate and interstate | |
| Local pick sales taxes | 1.83% | Avg. of Wichita (one.0%) and Topeka (2.65%) | |
| USF | v.91% | 9.4% times FCC condom harbor | |
| Wireless 911 | 2.44% | $0.90 per month per line | |
| TOTAL TRANSACTION Revenue enhancement | xvi.68% | ||
| Kentucky | |||
| State sales tax | half dozen.00% | Access, interstate, and intrastate | |
| School utility gross receipts | 1.50% | Avg. of Frankfort (3%) and Lousiville (0%) | |
| Kentucky USF | 0.xix% | $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 taxation | one.30% | Admission, interstate, and intrastate | |
| TOTAL TRANSACTION Tax | 10.97% | ||
| Louisiana | |||
| State sales tax | 3.45% | Intrastate rate | |
| Wireless 911 | 2.85% | New Orleans: $1.25 per month and Baton Rouge: $0.85 per calendar month | |
| Land USF | 3.50% | May vary by carrier | |
| TRS fee | 0.14% | $0.05 per line per month | |
| Full TRANSACTION Tax | 9.80% | ||
| Maine | |||
| State service provider tax | 6.00% | ||
| 911 fee | 0.95% | $0.35 per month | |
| Maine USF | 1.19% | $0.44 per line | |
| MTEAF | 0.57% | $0.21 per line per month | |
| TOTAL TRANSACTION Taxation | 8.71% | ||
| Maryland | |||
| State sales tax | half-dozen.00% | ||
| Local telecom excise | 5.43% | Baltimore: $4.00 per month and Annapolis: $0.00 | |
| State 911 | 1.36% | $0.50 per month per line | |
| County 911 | 2.03% | Currently $0.75 per month in all counties | |
| State USF | 0.fourteen% | $0.05 per account | |
| Full TRANSACTION TAX | fourteen.95% | ||
| Massachusetts | |||
| Land sales tax | vi.25% | Interstate and intrastate | |
| Wireless 911 | 4.07% | $1.50 per month | |
| Full TRANSACTION TAX | 10.32% | ||
| Michigan | |||
| State sales tax | half dozen.00% | Interstate and intrastate | |
| State wireless 911 | 0.68% | $0.25 per month | |
| County wireless 911 | iii.01% | Detroit: $0.42 and Lansing: $ane.80 | |
| Intrastate price assessment | 0.49% | 0.78% of intrastate charges | |
| TOTAL TRANSACTION Tax | ten.18% | ||
| Minnesota | |||
| Land sales taxation | six.88% | Interstate and intrastate | |
| Local sales tax | i.08% | Avg. of Minneapolis (1.15%) and St. Paul (1.0%) | |
| 911 | two.58% | $0.95 per month | |
| Telecom access MN fund | 0.19% | $0.07 per line per month | |
| Total TRANSACTION Tax | ten.72% | ||
| Mississippi | |||
| State sales tax | 7.00% | Admission, interstate, and intrastate | |
| Wireless 911 & 911 grooming fee | ii.85% | $1.05 per calendar month per line | |
| TOTAL TRANSACTION TAX | 9.85% | ||
| Missouri | |||
| State sales tax | 4.23% | Admission and intrastate | |
| Local sales taxes | four.nineteen% | Avg. Jefferson City (iii.five%) and Kansas City (4.875%) | |
| Local business organization license revenue enhancement | six.50% | Avg. of Jefferson Urban center (7%) and Kansas City (6% residential) | |
| TOTAL TRANSACTION Revenue enhancement | 14.91% | ||
| Montana | |||
| Telecom excise tax | 3.75% | Access, interstate, and intrastate | |
| 911 & E911 tax | 2.71% | $1.00 per number per calendar month | |
| TDD tax | 0.27% | $0.10 per number per month | |
| TOTAL TRANSACTION Revenue enhancement | 6.73% | ||
| Nebraska | |||
| State sales revenue enhancement | 5.50% | Access and intrastate | |
| Local sales tax | 1.63% | Avg. of Lincoln (1.75%) and Omaha (1.v%) | |
| City business and occupation tax | half-dozen.13% | Avg. of Omaha (6.25%) and Lincoln (6.0%) | |
| State USF | 4.75% | $one.75 per line per month | |
| Wireless 911 | i.22% | $0.45 per month | |
| TRS | 0.08% | $0.03 per month | |
| Full TRANSACTION TAX | xix.30% | ||
| Nevada | |||
| Local franchise / gross receipts | two.03% | 5% of get-go $xv intrastate revenues | |
| Local 911 revenue enhancement | 1.15% | Washoe County: $0.85 per calendar month and Clark County: $0.00 | |
| State deaf relay charge | 0.16% | $0.06 per access line | |
| Nevada USF | 0.11% | 0.17% times FCC Prophylactic Harbor | |
| Total TRANSACTION TAX | 3.46% | ||
| New Hampshire | |||
| Communication services revenue enhancement | 7.00% | Access, interstate, and intrastate | |
| 911 tax | 2.03% | $0.75 per month | |
| TOTAL TRANSACTION Revenue enhancement | 9.03% | ||
| New Jersey | |||
| Land sales tax | 6.63% | ||
| Wireless 911 | two.44% | $0.90 per month | |
| Full TRANSACTION TAX | 9.07% | ||
| New Mexico | |||
| State gross receipts (sales) tax | 5.13% | Intrastate: 5.125% and interstate: 4.25% | |
| City and canton gross receipts taxation | 3.03% | Avg. Santa Fe (three.3125%) and Albuquerque (2.75%) | |
| Wireless 911 | 1.38% | $0.51 per calendar month | |
| TRS surcharge | 0.21% | 0.33% times FCC safe harbor | |
| Country USF | 2.39% | $0.88 per line per calendar month | |
| Full TRANSACTION Taxation | 12.13% | ||
| New York | |||
| State sales taxation | 4.00% | Intrastate and monthly access | |
| Local sales taxes | iv.25% | Avg. of NYC (4.5%) and Albany (iv%) | |
| MCTD sales revenue enhancement | 0.19% | Avg. of NYC (0.375%); and Albany (0%) | |
| State excise taxation (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 tax | 1.49% | Avg of. NYC (84% of ii.35%) and Albany (i%) | |
| State wireless 911 | 3.26% | $one.xx per month | |
| Local wireless 911 | 0.81% | $0.30 per month — NYC & most counties | |
| Schoolhouse district utility sales revenue enhancement | 1.50% | Albany: 3% and NYC: 0% | |
| Full TRANSACTION TAX | xviii.75% | ||
| North Carolina | |||
| Country and loccal sales tax | seven.00% | Statewide combined rate includes local rates | |
| Wireless 911 | 1.76% | $0.65 per calendar month | |
| TRS Charge | 0.22% | $0.08 per calendar month | |
| TOTAL TRANSACTION TAX | 8.98% | ||
| Northward Dakota | |||
| State sales revenue enhancement | five.00% | Admission and intrastate | |
| Local sales taxes | ii.25% | Avg Fargo (two.5%) and Bismarck (ii.0%) | |
| State gross receipts tax | 2.50% | Interstate and intrastate | |
| Statewide Interoperable Radio Network Tax | 1.36% | $0.50 per line per calendar month | |
| Local 911 tax | 4.07% | Bismarck: $1.50 and Fargo: $1.50 | |
| TRS | 0.08% | Up to $0.eleven per calendar month (currently $0.03) | |
| Total TRANSACTION Tax | 15.26% | ||
| Ohio | |||
| State sales tax | 5.75% | Access, interstate, and intrastate | |
| Local sales taxes | 2.00% | Avg. of Columbus (1.75%) and Cleveland (2.25%) | |
| Regulatory fee | 0.09% | 0.139% of intrastate revenues | |
| Country/local wireless 911 | 0.68% | $0.25 per month per telephone number | |
| Total TRANSACTION Revenue enhancement | 8.52% | ||
| Oklahoma | |||
| State sales tax | four.50% | Access, interstate, and intrastate | |
| Local sales taxes | iv.07% | Avg. of OK City (four.125%) and Tulsa (4.017%) | |
| Local 911 | 2.03% | $0.75 per month in OK Metropolis and Tulsa | |
| USF | 3.95% | 6.28% times FCC prophylactic harbor | |
| Full TRANSACTION TAX | 14.56% | ||
| Oregon | |||
| Local utililty tax | 0.00% | No tax on wireless in Portland or Salem | |
| 911 tax | 2.71% | $1.00 per month | |
| RSPF Surcharge | 0.27% | $0.10 per month | |
| TOTAL TRANSACTION Taxation | 2.98% | ||
| Pennsylvania | |||
| State sales revenue enhancement | 6.00% | Access, interstate, and intrastate | |
| Country gross receipts tax | five.00% | Access, interstate, and intrastate | |
| Local sales tax | i.00% | Avg. of Philadephia (2%) and Harrisburg (0%) | |
| Statewide wireless 911 | four.48% | $1.65 per month | |
| Full TRANSACTION TAX | 16.48% | ||
| Puerto Rico | IVU (Sales Taxation) | 11.50% | |
| 911 fee | 1.36% | $0.50 per line | |
| USF | 0.87% | one.39% times FCC safe harbor | |
| TOTAL TRANSACTION TAX | 13.73% | ||
| Rhode Island | |||
| State sales tax | 7.00% | Admission, interstate, and intrastate | |
| Gross receipts tax | 5.00% | Access, interstate, and intrastate | |
| 911 and beginning responder fee | 3.39% | $ane.25 per month | |
| Full TRANSACTION Revenue enhancement | 15.39% | ||
| South Carolina | |||
| State sales tax | 6.00% | Access, interstate, and intrastate | |
| Local sales tax | 2.50% | Avg. of Charleston (iii%) and Columbia (2%) | |
| Municipal license taxation | i.00% | Charleston (1.0%) and Columbia (one.0%) | |
| Dual party relay accuse | 0.08% | $0.03 per line per calendar month | |
| State USF | 1.37% | 2.18% times FCC safe harbor | |
| 911 tax | ane.68% | $0.62 / month | |
| Total TRANSACTION TAX | 12.63% | ||
| South Dakota | |||
| State sales revenue enhancement | 4.50% | Access, interstate, and intrastate | |
| State gross receipts taxation | iv.00% | ||
| local option sales tax | 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.fifteen per month by statute | |
| PUC fee | 0.09% | 0.15% of intrastate receipts | |
| TOTAL TRANSACTION Tax | fourteen.39% | ||
| Tennessee | |||
| State sales tax | vii.00% | Access, interstate, and intrastate | |
| Local sales taxation | 2.l% | Statewide local rate for intrastate | |
| 911 tax | 3.15% | $1.xvi per month | |
| TOTAL TRANSACTION Taxation | 12.65% | ||
| Texas | |||
| Country sales tax | half dozen.25% | Access, interstate, and intrastate | |
| Local sales tax | 2.00% | Austin (2.0%) and Houston (2.0%) | |
| Wireless 911 tax | 1.36% | $0.50 per calendar month per line | |
| Texas USF | 2.08% | 3.3% times FCC safe harbor | |
| 911 Equalization surcharge | 0.xvi% | $0.06 per line | |
| Total TRANSACTION Tax | xi.84% | ||
| Utah | |||
| State sales tax | 4.85% | Access and intrastate | |
| Local sales taxes | ii.65% | Avg. of Salt Lake City (2.nine%) and Provo (2.four%) | |
| Local utility wireless | three.50% | Levied at iii.5% max. in SLC and Provo | |
| Land 911 service charges | two.60% | $0.96 per line per calendar month | |
| State Radio Network accuse | 1.41% | $0.52 per line per month | |
| State USF | one.63% | $0.lx per line per month | |
| TOTAL TRANSACTION TAX | 16.64% | ||
| Vermont | |||
| Land sales revenue enhancement | 6.00% | Access, interstate, and intrastate | |
| Local sales tax | 0.50% | Avg. of Montpelier (0%) and Burlington (1%) | |
| Land 911/USF | 2.40% | Funds 911 and other programs | |
| Total TRANSACTION Revenue enhancement | 8.xc% | ||
| Virginia | |||
| State communications sales tax | 5.00% | ||
| Wireless 911 | 2.03% | $0.75 per month | |
| TOTAL TRANSACTION TAX | 7.03% | ||
| Washington | |||
| State sales revenue enhancement | vi.50% | Access, interstate, and intrastate | |
| Local sales taxes | 3.25% | Avg. of Olympia (2.9%) and Seattle (3.6%) | |
| B&O / Utility Franchise — local | 7.50% | Avg. of Olympia (9%) and Seattle (vi%) | |
| 911 — state | 0.68% | $0.25 per month | |
| 911 — local | i.90% | $0.70 per month | |
| TOTAL TRANSACTION Revenue enhancement | 19.83% | ||
| West Virginia | |||
| State sales tax | 0.00% | No sales tax on wireless | |
| Wireless 911 / public safety / tower fee | x.42% | $iii.84 per month | |
| Total TRANSACTION TAX | x.42% | ||
| Wisconsin | |||
| Country sales revenue enhancement | v.00% | Access, intrastate, and interstate | |
| Local sales tax | 0.50% | Avg. of Milwaukee (0.5%) and Madison (0.5%) | |
| Police and Burn down Protection Fee | 2.03% | $0.75 per calendar month | |
| State USF | 0.18% | 0.29% times FCC safe harbor | |
| Total TRANSACTION TAX | 7.72% | ||
| Wyoming | |||
| Land sales revenue enhancement | 4.00% | Access and intrastate | |
| Local sales taxation | ane.fifty% | Avg. of Cheyenne (two%) and Casper (one%) | |
| TRS | 0.24% | Up to $0.25/calendar month ($0.09 currently) | |
| USF | 0.69% | one.1% times FCC safe harbor | |
| 911 tax | 2.03% | $0.75 per calendar month in Cheyenne and Casper | |
| Full TRANSACTION Taxation | 8.47% | ||
| ARPU= 36.86 | |||
| FCC Safe Harbor = 62.9% | |||
| Sources & Methodology: Committee on State Taxation, 50-State Study and Report on Telecommunication Taxation, May 2005. Updated July 2022 by Scott Mackey, Leonine Public Affairs LLP, using state statutes and regulations. Average Monthly Acquirement Per Unit (ARPU): $36.86 per Cellular Phone and Internet Clan, July 2022. | |||
[one] Whenever this newspaper refers to taxes as a percent of the wireless services pecker, information technology refers exclusively to the taxable portion of that nib. Internet admission is non taxable according to federal law. More details in Appendix A. See Business firm Judiciary Committee, "H. Rept. 113-510 – Permanent Internet Tax Liberty Act," 2022-2014, July 3, 2022, https://www.congress.gov/congressional-study/113th-congress/house-report/510/ane.
[2] Stephen J. Blumberg and Julian V. Luke, "Wireless Substitution: Early on Release of Estimates from the National Health Interview Survey, January-June 2022," National Center for Health Statistics, May 2022, eight,https://www.cdc.gov/nchs/data/nhis/earlyrelease/wireless202005-508.pdf.
[3] These estimates are calculated by applying the rates of per centum-based taxes in each state by the average monthly bill later excluding the estimated 49.4 per centum of the average monthly beak representing internet access. 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 2022 that authorizes certain cities and counties to impose wireless 911 fees on or after January one, 2022 if approved by voters. Equally of this writing, no local jurisdictions had imposed a wireless 911 fee.
[five] Federal Communications Commission, "Eleventh Annual Study to Congress on State Collection and Distribution of 911 Fees and Enhanced 911 Fees and Charges for the Period January 1, 2022 to December 31, 2022," Dec. 19, 2022, https://www.fcc.gov/files/11thannual911feereport2019pdf.
[6] Bill Ruthhart and Hal Dardick, "Emanuel's Latest Possible Taxation Hike: 911 Phone Fees," Chicago Tribune, June ane, 2022, http://www.chicagotribune.com/news/local/politics/ct-rahm-emanuel-phone-fee-increase-met-0602-20170601-story.html.
[7] International Bedroom of Commerce, "ICC Discussion Newspaper on the Adverse Effects of Discriminatory Taxes on Telecommunication Service," Oct. 26, 2010. https://cdn.iccwbo.org/content/uploads/sites/3/2010/ten/ICC-word-newspaper-on-the-adverse-effects-of-discriminatory-taxes-on-telecommunications-services.pdf.
[8] "International Sleeping room of Commerce, "ICC Discussion Paper on the Adverse Effects of Discriminatory Taxes on Telecommunications Service," two.
[nine] U.S. Census Agency, "Service Annual Survey Latest Data (NAICS-footing)," November. 26, 2022, https://www.census.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 consistent multiyear comparisons of taxes, fees, and surcharges.
Did Federal Universal Service Charge Increase,
Source: https://taxfoundation.org/wireless-taxes-cell-phone-tax-rates-by-state-2020/
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