The Technologically Challenged Tax Code

(Photo by: Ambimb)

While operating a cell phone has become so simple that it seems like every ten-year-old has one, dissecting your cell’s bill has become so confusing it almost requires the use of the Rosetta Stone. Anyone who has had the joy of questioning a cell phone bill knows how hard it is to decipher what fee is for what and which charge goes to what line. It has come to the point where it is more efficient to just pay the bill rather than waste half the day waiting on hold to try to correct the discrepancy with technical support. Over the last few years, it seems like every month there is a new “regulatory fee” or tax increase. For those of us locked into two year contracts so we could afford to buy the newest Blackberry Apocalypse or iPhone 12, what choice do we have but pay it? Luckily the end is in sight, at least partially.

Last year the Cell Tax Fairness Act was introduced, a bill which, if enacted, would ban any new state or local taxes imposed on mobile phones. Currently, taxes on cell phones are twice that of other goods and services. In recent years, these taxes increase four times faster than similar taxes on other goods and services, according to a study by the National Taxpayers Union. While the Act would not repeal any existing state or local taxes, it would prevent further taxation from being enacted.

While it might not result in significant savings, the Act would be a welcome relief for taxpayers who have little recourse against the recent tax hikes in an increasingly cell phone driven world. Not only will it prevent state and local governments from increasing our tax bill, but it will prevent wireless companies from increasing fees and dressing them up as mandatory taxes. Every cell phone bill is riddled with various fees and charges that are passed off as mandatory and presented as if they are imposed by the government. With the enactment of the Cell Tax Fairness Act, consumers can be certain that any new “fee” imposed by their specific carrier, could possibly be avoided on another network. If nothing else, this will give the public back some of the bargaining power and clarity when analyzing their next bill.

Congress has already passed another measure to repeal a provision in the tax code which currently treats personal use of an employer provided cell phone as taxable income to the employee. This legislation, coupled with the Cell Tax Fairness Act, demonstrate a few small steps toward tax reform. There are countless areas of the tax code in great need of an overhaul due to the ever-changing technological world. Every step toward reform is a welcome shift from the outdated, archaic rules that were enacted decades before the Internet existed.