"Consumers pay more than $37 billion a year in communication taxes and fees," said coauthor David Tuerck, executive director of the Beacon Hill Institute and professor and chairman of the Department of Economics at Suffolk University in Boston, Massachusetts.
"Many of these taxes and fees are hidden in phone and cable bills. Because they are so high, they distort consumer decisions and business investment decisions, costing billions more every year in lost consumer benefits," Tuerck said.
The research team collected information on cable television, wireline and wireless telephone, and Internet access for 59 U.S. cities.
The study found:
- Cable TV and phone service (wireline and wireless) customers pay taxes and fees averaging 13.52 percent, twice as high as the national average sales tax on other goods.
- Taxes and fees on communication services nationally add up to $37 billion a year.
- Communication taxes and fees are highly regressive. Families in the lowest quintile of earnings pay 10 times as much as families in the highest quintile, as a percentage of their income.
- Taxes and fees vary dramatically from city to city, with consumers in some cities paying more than three times as much as consumers in other cities.
- In some cities, taxes and fees on wireline telephone service are higher than taxes on beer, liquor, and tobacco.
- Economists estimate the value of services lost due to high taxes and fees on communication services add up to a "deadweight loss" to society of $11.4 billion a year.
The authors recommend that local governments reform cable franchise laws. They further recommend that state officials and the national government consider policies to preempt local franchising authority and to prohibit discriminatory taxation of communication services.
