New York states cellphone taxes are among highest in the nation

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The cellphone has become a necessity in many households, both modest and wealthy, but governments are driving up its price, especially here.

New York state has some of the highest cellphone taxes in the United States. That’s one of the conclusions of a new report by the Tax Foundation.

It found that in New York City a typical household with four phones pays $100 per month for taxable wireless services.

The national monthly average is about $27 in wireless taxes, fees and surcharges.

“Overall, New York state residents face the fifth-highest combined state and local cellphone tax rate in the country at 18.56 percent,” the report said. Add federal wireless charges, and taxes comprise 25 percent of the New York household cellphone bill.

Illinois has the highest wireless taxes in the nation at 27 percent, followed by Alaska and Washington at 26 percent, then Nebraska at 25.5 percent and New York at 25.2 percent, the report said.

Ironically, rising telephone taxes come when basic cellphone costs are declining because of increased competition, the Tax Foundation said.

“Since 2008, average monthly wireless service bills per subscriber have dropped from just under $50 per line per month to $38.66 — a 23 percent reduction. Meanwhile, wireless taxes have increased from 15.1 percent to 19.1 percent of the average bill — a 26 percent increase,” the report said.

Why is New York above the 19.1 percent national cellphone tax average?

“There are a lot of municipalities and authorities that are levying these taxes,” said Scott Mackey, an economist and one of the authors of the report. He noted many entities impose cellphone taxes and that New York sales taxes, running at 8.44 percent, are also high.

Mackey adds that New York state allows New York City and other selected cities, school districts and certain transit districts to levy wireless taxes.

These taxes/fees, he warns, raise money for various tax authorities but also harm the poor.

“It is unfortunate because today everyone needs a cellphone, and these taxes are regressive. They are hurting people with low incomes the most,” Mackey says. This is something noted by another study.

About 68 percent of all poor adults lived in households with wireless but no home phone, according to a 2017 study by the Centers for Disease Control.

Cutting what one business group called a “discriminatory” tax could have a positive effect on the economy and actually generate more money for governments over the long term.

“Remedying the discriminatory tax treatment of telecom goods and services may reduce tax receipts in the short term,” wrote the International Chamber of Commerce in a recent report. But in the longer term, the

ICC sees wireless usage growth continuing its upward progression, so any initial revenue loss will be made up down the road.

Mackey says there’s another problem with cellphone taxes. They could lead to “slower” deployment of new generations of wireless broadband technologies. They are “a key element,” Mackey says, “to the future development of smart cities.”

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