WASHINGTON – Rhode Island’s state-local cell phone tax rate is nearly 15 percent, the sixth highest in the United States, according to a new report by the Tax Foundation.
Rhode Island’s state-local tax rate for cell phones is 14.68 percent, the sixth highest in the U.S. behind Nebraska (18.67 percent), Washington (18.62 percent), New York (17.85 percent), Florida (16.59 percent) and Illinois (15.94 percent). Massachusetts ranked 35th with a state-local tax rate of 7.85 percent.
Comparatively, the U.S. simple average was 10.15 percent and the U.S. weighted average was 11.36 percent, according to the report: “State and Local Governments Impose Hefty Taxes on Cell Phone Consumers.”
“Making cell phone calls and using wireless services for additional purposes may be getting easier, but paying cell phone taxes is not,” said the Tax Foundation report. “State and local governments should not single out one product for stealth tax increases as they are doing with wireless services. Such actions distort market decisions and risk slowing investment that contributes to economic growth.”
According to the report, states favor cell phone taxes because it allows them to “raise revenue in a relatively hidden way.” The report went on to say that the state of Texas actually sued cell phone provider Sprint because the company listed a state tax as a line-item in its bill rather than hiding it from customers.
“Cell phone users are overtaxed relative to consumers of other goods and at risk of double taxation. Finally, the wide number of taxing authorities and the wide variety in rates makes tracking problematic and burdensome,” added the report.
Rhode Islanders pay a 20.5 percent combined federal-state-local tax rate for cell phone use. Comparatively, the U.S. simple average is 15.97 percent and the U.S. weighted average is 17.18 percent.
The report relies on data produced by KSE Partners’ Scott Mackey. The Tax Foundation is a nonpartisan, nonprofit organization, which has monitored fiscal policy at federal, state and local levels since 1937.