Out of Control Policy Blog

Cell Phone Tax Shock in the Big Apple

The New York Post takes note of the skyrocketing taxes and surcharges state and local governments are slapping on cell phones.

Eleven federal, state and city levies add as much as 33 percent to the cost of New Yorkers' cellphones, a Post analysis found.

A typical cell plan costing $49.99 a month comes with a total tax bill of $10.59 -- a 21.18 percent tax rate that helps give New York the fourth-highest cellphone taxes of any state.

And cheaper plans favored by the frugal and poor are taxed at higher rates.

Someone with a $29.99 T-Mobile Basic plan with 300 minutes pays $6.95 in taxes monthly, a rate of 23.18 percent, 2 percentage points above the typical city bill.

People trying to save money with multiline family plans are hit harder.

Federal, state and local taxes on a two-line Sprint plan costing $69.99 a month add up to $15.73, a rate of 24.25 percent, 3 points above the typical bill.

The report also notes that surcharges once created to fund telecom-related infrastructure are now routinely diverted into other non-telecom related projects. Did the legislature correct this misallocation? Hardly! Instead they institutionalized it!

Cellphone customers gripe that there's no justification for some of the fees, such as the state's $1.20-per-line, per-month 911 charge. Responding to complaints that only a tiny amount of the tax went to 911 service, the Legislature voted this month to call it a "public-service fee" instead.

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Comments to "Cell Phone Tax Shock in the Big Apple":

monkeygirl | April 17, 2009, 10:13pm | #

We're in a recession remember! does adding or rasing taxes seem like the reasonable thing to do? We're not talking about the top 1% of the us population now, we're talking about the majority of the folks that own cell phones. And monthly contract phones are just as bad. The best thing to do is just switch to prepaid plans and buy your minutes as you need them. I went from paying $82 a month to $25 just by switching to tracfone. Sure, i don't have all the "unlimited" minutes and texting, but at least I can now manage my finances and stick to my budget!

Lucas M. | May 20, 2009, 5:02am | #

It is true that today cell phone has been playing a vital role in everyone's life. The review above was a good example on how to make us of our cellphone in its' handiest way we can. Talking about cell phone, one of the largest cell phones carrying in the nation is the Sprint. Sprint does not take kindly to their database being hacked, and that's what Gary Morrow and Timothy Flowers (who worked in Sprint's billing department) did. The two said that they would eliminate cell phone bills for them, hacking into the database and messing with payment records so they didn’t have to pay. They'll need installment loans for attorneys now, as both have been charged with felony theft and computer crime charges. They operated out of Overland Park, Kansas, but authorities caught on to their scheme and they were booked. Sprint has been mum, but they'll need short term loans to keep out of prison

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