Heavy Lifting - thoughts and web finds by an economist
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Monday, March 12, 2007

Taxing for the sake of taxing?

Not only are the roads not very good, sales taxes are high, property taxes are high, homeowners insurance is high, we have the highest electricity prices outside Hawaii, gasonline taxes are relatively high, cigarette taxes are out of control, but this afternoon I receive this in my email:

Texas has the 5th Highest Wireless Taxes in the country! Nearly 16% of your total monthly cell phone bill is made up of state and local taxes, fees and surcharges.

Texas' outdated and unfair 1.25% Telecommunications Infrastructure Fund (TIF) fee costs Texans hundreds of millions every year and raises business costs. In fact, your cell phone taxes are more than double those in neighboring Louisiana.

If true, why is 16% of a wireless cell phone taxes, fees and surcharges? What infrastructure does the government provide for wireless telephone companies beyond what they provide regular brick-and-mortar companies? I understand Leviathan wants to tax those products with inelastic demand, and the cellphone (for good or for ill) seems to have inelastic demand. However, when do we tell Leviathan "enough is enough"? We finally obtianed a repeal of the Federal phone tax that was instituted to pay for the Spanish American War!! How about more of the same at the local and state levels?

As for Texas Taxes, I am not that concerned. In my case, the Tiebout model will prevail.

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