Don't Mess With Taxes

Photo by SHVETS production from Pexels

A cell phone provider's television ad that's on heavy rotation here in the Austin area touts that it has no added fees or taxes.

What it really means is that those charges, aside from sales tax, are included in the price of whatever company plan you choose, rather than listed as separate line items in your monthly bills.

So, despite that Mad Men-style ad sleight of hand, you're going to pay taxes, fees, and state and local government surcharges for your mobile phone services.

And you're paying more than ever toward these amounts.

Taxes and fees keep climbing: A recent Tax Foundation analysis found that those taxes and fees on the typical American wireless consumer increased in 2021 to a record 24.96 percent.

This is the fourth consecutive year that the assorted charges have increased, notes the Washington, D.C. nonprofit tax policy group.

In dollars, that means a typical American household with four cell phones on a family share plan costing $100 per month would pay nearly $300 per year in taxes, fees, and government surcharges in 2021, write Scott Mackey, managing partner with Leonine Public Affairs LLP, and Ulrik Boesen, Senior Policy Analyst, Excise Taxes, for the Tax Foundation.

That's up from the $270 in such charges last year.

Overall, say the pair, wireless subscribers will pay approximately $11.3 billion in taxes, fees, and surcharges. Nationally, these amounts account for the previously mentioned record 24.96 percent combined levy on taxable voice services.

All those percentages and dollar amounts rival most wireless companies' convoluted bills. But for this weekend's By the Numbers [dis]honor, I'm going with the almost 25 percent annual increase in cell phone service taxes.

National wireless taxes overview: The study found that Illinois has the highest wireless taxes in the country, at 34.56 percent.

The other top five in the cell telephone tax area are Arkansas at 32.04 percent; Washington at 31.81 percent; Nebraska at 31.36 percent; and New York at 30.73 percent.

The Tax Foundation map below shows how each state stacks up when it comes to cell phone taxes.

Taxable telephone services are cheaper: The one bit of good news is that the taxable telephone services themselves have become more affordable, relatively speaking, of course.

The per-line price for wireless service continues to fall, according to Mackey and Boesen. Over the last five years, the average monthly revenue per wireless line has gone from $41.50 per month in 2017 to $35.31 in 2021.

For most of us that means our higher cell phone taxes are offset by the services' lower prices.

Personally, I haven't seen this price drop from my cell service. So as soon as I post this, I'm starting my search for a potentially cheaper wireless provider.

You also might find these items of interest:

• Deducting your cell phone as a business expense
• Tax law changes in 13 states took effect on July 1
• Where your state ranks when it comes to property taxes

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