The Hidden 17% Tax Most Wireless Customers Don't Know Their Paying

Olivia Clifford  |

With the majority of the country attached to their mobile devices, it may come as a surprise that added taxes and surcharges on a wireless bill goes unnoticed. The Tax Foundation put of their 2013 new report finding that the so called “hidden taxes” of wireless charges has risen to 17.2 percent, which is up from last years 16.3 percent. The taxes and surcharges come from different local, state, federal taxes, as well as 911 system and school district surcharges. Most of these added charges are largely invisible and get added on as the end of monthly wireless bills. One of the main issues involved with the double-digit tax add on has to do with there being so many different jurisdictions and fees that culminate together. In New York alone, there are 12 different taxes and surcharges that get added on to any registered wireless bills. 

In general the Federal Universal Service Fund, tacks on a 5,83 percent tax to all cell phone bills nation wide. Even if you reside in a state where there is no sales tax imposed on the population, you are still subject to the wireless taxes and surcharges. There are many political figures who argue that these hidden taxes were put in place as a way to dodge the fall out that comes with raising the federal taxes. In 2002, the Mobile Telecommunications Sourcing Act was implemented and states that wireless taxes are based off the address that the cellular phone company determines to be the primary place of use. This is to stop consumers from purchasing and signing mobile contracts in those states that have lower tax rates, such as Oregon. Currently there is a 2013 Wireless Tax Fairness Act that is going through congress that had bipartisan support. The main goal of this act would be to issue a memorandum on the raising of the taxes, but does not intend to decrease the existing tax rates. 

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