What's The Buzz

What's the Buzz: Cell phone taxes hit all-time high

Posted: Feb 16, 2011 6:26 AM by Kelly Werthmann - KTVQ News
Updated: Feb 17, 2011 6:05 AM

Wireless tax burdens are higher than ever.

Consumers in several states, including Nebraska, Washington, and New York, pay more than 20 percent of their wireless bills in taxes and fees, according to PCMag.com. Montana ranks as the fourth lowest wireless tax rate, but consumers in the Treasure State still pay about 11.08 percent.

In the report called "A Growing Burden: Taxes and Fees on Wireless Service" tax experts from KSE Partners spent five years monitoring federal, state and local taxes on wireless consumers. They discovered, on average, consumers pay about 16 percent on taxes and fees, compared to 7.4 percent on other taxable goods. Between 2007 and 2010, these wireless taxes grew three times faster than the retail sales rate.

"There is no sound policy reason to tax wireless and other communications services at these high rates," said Scott Mackey, author of the KSE Partners report. "In fact, at a time when the President, Governors, and business leaders are calling for expansion of wireless service to improve productivity, these excessive taxes actually discourage business and consumer purchases of wireless service and reduce the availability of funds for network modernization."

So why are these wireless taxes so high? The report suggests a couple of reasons, but the blame primarily points toward legislators and Congressmen that target the wireless industry for tax money to relieve the financial burden of recession-starved industries.

As PCMag reports, wireless taxes and fees come in five parts: federal tax, state sales tax, state and local 911 fees and local "utilities" charges. State and local fees vary depending upon the level of authority states give local governments to impose wireless fees. A few states even tax wireless consumers for non-wireless related projects, such as Utah which funds its poison-control centers with a poison-control surcharge.

In order to reduce outrageous taxes and fees, Mackey suggests wireless consumers contact their state legislators and Congressmen and urge them to reduce the archaic tax rates.

For more information about wireless taxes and fees, as well as a list of the top 10 best and worst states wireless tax rates, click here.

In light of the launch of the first iPad-only newspaper, Apple is changing the company's subscription system policy.

Apple announced Tuesday publishers of newspapers and magazines made for the iPhone and iPad are to sell subscriptions by the week, month or year or other period of time, instead of asking readers to buy each issue separately, according to USA Today.

"We believe that this innovative subscription service will proved publishers with a brand new opportunity to expand digital access to their content on the iPad, iPod touch and iPhone, delighting both new and existing subscribers," Apple CEO Steve Jobs said in a statement (Jobs remains on medical leave).

Print advertising, the biggest source of revenue for newspapers, has plunged over the past four years, but digital ads are steadily on the rise. The new policy is aimed at helping publishers sell more digital copies of their content as they look to make up revenue lost as readers migrate from print editions.

The updated subscription system also applies to video and music services, such as the Netflix app.

Learn more by logging onto the USA Today website here.

Do you know of an online story or video that's buzzworthy? Send me the link! E-mail me at kwerthmann@ktvq.com so I can share it both on-air and online! You can also follow me on Twitter @kelly_werthmann for more buzz!

Topics: Wireless taxes, fees, cell phones, Apple, iPad, iPhone, subscription policy, technology, Internet buzz