Easing the wireless tax burden

As Congress returns to session next week, tax fairness will be high on the agenda as both sides of the aisle gear-up for debates regarding the federal budget, the Buffett tax, and deficit reduction strategies. Amid the political pyrotechnics likely to result, another lesser-known but potentially sweeping tax fairness issue could also be discussed with a bill introduced in the Senate that could help limit the sky-rocketing tax burden being carried on the backs of the more than 300 million Americans who subscribe to mobile phone services.

The Wireless Tax Fairness Act (S.543), sponsored by Senators Ron Wyden (D-OR) and Olympia Snowe (R-ME), will help mitigate the discriminatory tax drain on mobile consumers who today, spend an average of nearly 14% on state and local fees, making wireless taxes almost double the average state sales tax. The Act will implement a five year moratorium to prevent the implementation of any new taxes imposed solely on wireless services.

And not a moment too soon.

Today, there are more wireless subscriptions than people in the U.S and consumers are purchasing more smartphones than personal computers. In fact, half of American adults now carry smartphones and there will be an estimated two billion networked mobile devices in our country by 2015. Although historic levels of investment and innovation in the dynamic wireless ecosystem are transforming our connected lives, mobile consumers are shouldering a significant and growing tax burden.

High state and local taxes for mobile services hurt those who rely on wireless the most and can least afford it. More than 30% of adults are living in wireless-only households with low-income consumers making up a larger portion of this group.

There is also significant mobile usage in communities too often left on the wrong side of the digital divide. The Pew Research Center’s Internet and American Life Project found African Americans and Hispanics are adopting smartphones at a faster pace than the national average. The benefits of mobile broadband for all Americans are evident from the exponential growth in consumer demand across all communities.

The proposed moratorium in The Wireless Tax Fairness Act would not only protect consumers, but also help ensure that mobile adoption and usage is not discouraged by new, discriminatory state and local wireless taxes. It also would help minimize any unintended consequences that could depress innovation and investment or limit the vast opportunities for the nation’s economy. A recent study reported that the transition from 2G to 3G wireless networks created 1.5 million new jobs between 2007 and 2011. By placing a moratorium on any new wireless taxes, policymakers can ensure that consumers are protected and the U.S. mobile economy can continue to flourish.

The Senate needs to encourage continued innovation, investment, and access in the mobile sector. The Wireless Tax Fairness Act will be an important step forward to ensuring consumers reap the vast benefits wireless technologies, but without having to carry additional tax burdens in doing so.

Jonathan Spalter, chairman of Mobile Future, has been founding CEO of leading technology, media, and research companies, including Public Insight, Snocap, and Atmedica Worldwide. He served in the Clinton Administration as a Director on the National Security Council.

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