Commentary

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.

Steven Titch served as a policy analyst at Reason Foundation from 2004 to 2013.