PROVIDENCE – Cell phone users are overtaxed relative to consumers of other goods and at risk of double taxation, the Tax Foundation asserts in its Fiscal Fact No. 259 released Feb. 18.
“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,” it said while noting that the wide number of taxing authorities and the wide variety of rates makes tracking “problematic.”
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Each state, and many localities, can impose cell phone taxes at either a percentage or flat rate; cell phones are taxed at a higher level than even alcohol or cigarettes.
In Rhode Island, the average state and local tax rate is 14.62 percent; the combined federal, state and local rate is 19.67 percent.
Massachusetts’ state and local tax rate is 7.82 percent, according to the study, and its combined federal, state and local rate is 12.86 percent.
Rhode Island ranked sixth while the Bay State came in at 36th.
U.S. cell phone subscribers have grown to 292 million in 2010 from 55 million in 1997; 2007 was the first year that Americans spent more money on their cell phone than their landline.
The average U.S. consumer’s combined taxes and fees come in at 16.26 percent, while state and local taxes stand at 11.21 percent.
