Average taxes on wireless bills in California reach a record 18 percent

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The good news: Thanks to increased competition, wireless companies' rates have dropped nearly 7 percent since 2008. The bad news: Average federal, state and local taxes and fees for California customers reached a record 18 percent, meaning that the government's slice of your wireless bill is now at least twice as high as the state sales tax imposed on most other goods and services. For consumers, one troubling element is that these so-called utility user taxes aren't intended to support a municipal service, such as sewer cleaning or garbage collection. They're a tax on a service provided by private companies, which charge their own usage fees.

Even though smartphones have become necessities and a crucial component of the digital economy, they're still taxed in large part as a luxury item. Blame that on the Spanish-American War. In 1898, the federal government imposed a 3 percent excise tax on telephone use to help cover a face-off with Spain over the future of Cuba. Phones were relatively scarce at the time, so the tax was intended to be a levy on wealthy Americans. Uncle Sam didn't get around to doing away with the phone excise tax until 2006 -- more than a century after the United States and Spain decided to call a halt to their five months of skirmishing.


Average taxes on wireless bills in California reach a record 18 percent