Record High Taxes and Fees On Wireless Consumers in 2015

Tax Foundation
Nov. 17, 2015

Increases in federal, state, and local fees drove the national average wireless tax and fee burden to its highest level ever – nearly 18 percent of the average U.S. wireless customer’s bill. This is an increase of nearly one percentage point over 2014 levels and is almost two and one half times higher than the general sales tax rate imposed on most other taxable goods and services.

Wireless industry competition has led to significant reductions in average monthly bills even as consumers get new and expanded wireless plans. However, the consumer benefits of lower wireless prices have been partially offset by increases in government taxes and fees. The average monthly wireless bill dropped from just under $49.94 in 2008 to $46.64 in 2015, a price decrease of nearly 7 percent. At the same time, the tax rate increased from 15.5 percent to nearly 18 percent.

Consumers in Washington State pay over 25 percent of their bills in taxes and fees, while consumers in eight other states – Nebraska, New York, Illinois, Missouri, Rhode Island, Florida, Arkansas, and Pennsylvania – pay total taxes and fees in excess of 20 percent of their bills. Consumers in Oregon and Nevada continue to enjoy the lowest wireless taxes in the country.

Wireless consumers pay about $5.8 billion annually in excessive state and local taxes and fees, defined as taxes and fees in excess of the normal state and local sales taxes imposed on the purchase of other goods and services. In addition, wireless consumers pay about $5 billion in Federal Universal Service Fund surcharges.

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