On average, customers pay 17.1% of their bill in federal,
state and local taxes and fees. But in some states, the average charges can run
as high as 24% of the bill, according to a new report from the Tax
Foundation. Some city residents, meanwhile, end up paying even more: Up to 35%,
thanks to per-line fees and other charges.
All in, wireless customers end up paying tax and fee rates
that are about twice as much as the average sales tax rate on other goods and
services, the Tax Foundation found.
Here's how it breaks down: First, there's the 5.82%
federal charge, which is part excise tax and part Universal Service Fund
charge. After that, how much more you pay depends on where you live.
The highest combined state and local rates are found in
Washington state (18.6%), Nebraska (18.5%), New York (17.7%), Florida (16.6%)
and Illinois (15.8%). Once you tack on the federal government's levy, taxes and
fees make up 22% to 24% of your bill in these states, according to the Tax
Foundation.
The menu of charges won't be identical across states,
either. In Nebraska, for instance you'll be charged a "city business and
occupation tax," while in Illinois you'll have to pay a "simplified
municipal tax."
By contrast, states with the lowest tax rates on cellphone
usage are Oregon (1.8%), Nevada (1.9%), Idaho (2.6%), Montana (6%) and West
Virginia (6.2%). Their combined federal, state and local rates range from about
8% to 12%.
City dwellers tend
to get hit the hardest: In a few cities - for example, Chicago, New
York City and Omaha, Neb. - you may have to shell out quite a bit more.
Chicago takes the cake. If you have a family plan with
four cell phone lines, you could pay 35.4% of your total bill in taxes, fees
and charges. That's thanks to a recently increased 9-1-1 fee, which is now
$3.90 per month, and a high per line fee of $4.
The city's 9-1-1 fee was doubled to $2.50 in 2008 to help
with security upgrades as Chicago bid to host the Olympics, according to the
report. The bid failed, but the fee remained at $2.50. The rationale for the
most recent hike was to avoid a property tax increase. In both cases, the hikes
were unrelated to direct spending on the 9-1-1 system.
Given how essential cell phones have become - from keeping
tabs on your young kids to being reachable for work - high taxes and fees can
be especially hard on poorer citizens, the report's authors contend.
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