Obama Wants to Tax Your Cell Phone

by on February 26, 2009 · 19 comments

Looks like we can count on another tax landing on our cell phones soon thanks to the taxaholics in the Obama Administration.  According to Jeff Silva of RCR Wireless:

Though details on the Obama budget are few and far between, some information was made available. The administration estimates that spectrum license fees would raise $4.8 billion over the next 10 years.

Don’t be fooled into thinking that wireless carriers will just eat those fees.  Those fees will be coming to bill near you soon in the form of another stupid government tax burden on our wireless phones.

You know, because we’re not already paying enough in taxes on our phones.

(P.S.  I’m actually a little surprised that the “progressives” in this administration would support this proposal since a tax on mobile phones will end up being about as regressive as taxes can get.)

  • dm

    I can remember when it was thought that spectrum auctions would bring in tens of billions of dollars…. now it's only $4.8 billion?

    I'm a bit surprised you object to the idea of a market in spectrum — I thought I'd seen the idea suggested here in the past couple of weeks.

    By the way, the claim that “details on the Obama budget are few and far between” is a bit dated (indeed, it was dated at the time Silva's article was published online) — the entire budget is online (in pdf form) and has been since this morning. I can also remember when the old “modem tax! modem tax!” email would resurface every couple of years. It might be worth your while to take a peek at the readily-available details in the budget.

  • MikeRT

    I'd gladly pay taxes that would raise 3x that much through my cell phone use if they would cut my income tax rate accordingly…

  • Paul Product

    Adam – Calling everything you'd rather not have to pay a “tax” may seem like a clever rhetorical device (“Oooh, yeah, Adam, I *hate* those durn *taxes*! Tell me more…”), but it's getting a bit stale. When oil and mining companies have to pay royalties for drilling and extracting resources out from under public lands, is that an evil “tax” too? (If the government decides to just sell federal land outright, is that a “tax” too? Obviosuly, the buyer isn't going to eat those costs, but will pass them on to consumers….)

    Even if this were a tax. $4.8bn over 10 years works out to be about 10 cents per month per wireless user (based on the current population of wireless users, — assuming any growth in the number of users over the next decade, that number goes down).

  • mwendy

    To Adam's defense – It all adds up, ceaselessly.

    I have a suggestion for those that don't mind paying more taxes. Why don't you pay all your “use” taxes on your Internet purchaes, which you're required by law in most states to do anyway. And, when April 15th rolls around, no one's stopping you from paying more on your 1040.

  • dm

    This doesn't defend Adam, it just repeats his mistake. Adam is talking about license fees — rents, in other words, for making exclusive use of a public resource.

    No one is compelling you to use a wireless device. If you don't want to pay the fee, don't trespass on the resource.

  • mwendy

    Telecommunications services are taxed as heavily (or more than) as liquor and tobacco. At some point (we're well past it actually) – it becomes unreasonable to suggest more for the resource.

    Again, if you want to pay more taxes, feel free. Seems you think – like our President – that we've been “trespassing on the resource” for far too long.

    I'll pass long george Soros' number – he can help you out.

  • dm

    Once again you confuse a service fee (a form of rent) for a tax.

    Let's make it a little clearer: “rents in Manhattan are high. At some point (we're well past it actually), it becomes unreasonable to suggest they go higher.”

    Somehow, it doesn't work when put like that, does it? And it wouldn't work if I capriciously decided to start calling rent a “tax”.

    No one is compelling you to live in Manhattan. No one is compelling you to use a wireless device. If you don't want to pay the rent or buy the service, then don't do so.

  • mwendy

    Dude (or dudette), if it comes out of the “Origination Clause” – sort of like the USF should be – if, in Cheech and Chong's terms it looks, smells and tastes like a tax – then it is.

    By your reasoning, no one who has a phone should be appalled by the high state of telecommunications taxes (extortion).

    It's appalling. We live through these telecommunications devies, and the Fed, state, local, municipality and special taxing jusridictions know so.

  • dm

    And how does a fee-for-services look, smell, or taste like a tax, exactly, other than the fact that the government is the recipient. Is a toll a tax? If the government sells surplus property, is the payment a tax? Is the fee for your drivers' license a tax? If the government leases a piece of land, is that a tax?

    Everything you're saying applies to landlords who raise rents. Are they guilty of extortion?

  • mwendy

    I can deal with the landlord. He'll go away if his service stink.

    It took over a hundred years to eliminate the Tax on Talking. At least those legislators then had the guts to call it a tax, and then accord themselves with the Constitution.

    Thankfully, some other smart (and brave) legislators (George Allen among them) excised that evil excise tax.

    Sure. You can pay the tax. Me, too. Do I want to? No. Using the legislative parlance of the day – can you bailout my new tax obligation?

  • dm

    Sigh. If the spectrum were owned by a private company, it's management would have a fiduciary responsibility to charge as much for it as it can get. Sure, people could kvetch that they'd like it cheaper, but them's the breaks.

    The difference with the government is that you can come in and say: “Hey, government, revenues aren't the only consideration, here. There are other considerations (e.g., promoting a new technology, cheap and easy communications make for some societal benefit)”. You can't do that with a private organization (well, you can, but doing so is called “socialism”).

    Probably the difference between you and me is: you look at this fee solely from the perspective of a customer, and you kvetch about high prices because you want your free lunch. I'm a customer, too, but I also know that I'm a stockholder, and as a stockholder, I'm happy to see the board exercising their fiduciary responsibility. If I don't want to pay the fee, I don't use the product, or limit my use of the product. Just like my car, just like my heat. No sweat.

    Because Adam used the word “tax” when he meant “fee”, you get your knickers in a twist. I assume that was his goal.

  • mwendy

    Presumably the fees – the cost of the spectrum in the first place – have already been worked into the equation, into the cost of my “free lunch”. Now, we have more on top of those values, if the reports are correct. If it's simply fees for the initial “purchase” of the spectrum, I don't have a problem with that, especially where a market mechanism has been employed to judge that value.

    There's a long discussion in the courts and FCC law on what is a fee versus a tax. To the end user – and to most shareholders – government actions such as reported result in a higher input, which have the same look, feel and effect as a tax. No shareholder, as a result of those actions, will “eat them” because it's the “right thing”. Fidicuary duty says otherwise.

    Let's call a tax a tax. Let's call it a tax at the federal level. At the state level. At the county level. At the municipality level. At the special taxing jurisdiction level. At the rights-of-way level. And at the franchise level.

    Boy, that's some “free lunch” we've got going.


  • http://www.joepuente.org Joe Puente

    The spectrum license fees that are being referred to are on those portions of the electromagnetic spectrum that have recently been made available thanks to the transition from analogue to digital broadcast television. Cell phones do not operate in those bandwidths. And licensing the use of these parts of the spectrum by established or up and coming wirelesss companies are no different than what television stations had to do when they were using them.

  • butternutz

    this is fucked up and i haven't had a cell phone in years! i'm glad i never cared for a cell phone!

  • butternutz

    this is fucked up and i haven't had a cell phone in years! i'm glad i never cared for a cell phone!

  • butternutz

    this is fucked up and i haven't had a cell phone in years! i'm glad i never cared for a cell phone!

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