The Council on State Taxation released its much-anticipated 2004 State Study and Report On Telecommunications Taxation today. The bottom line:
State and local taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. es imposed on telecommunications services continue to more than double the average tax levied on general business…
“Tax laws in the states are antiquated and take money out of the pockets of every American telecommunications consumer,” said Stephen Kranz, Tax Counsel for COST and an advocate of tax simplification. “The fact that we require telecommunications providers to file over 170 tax returns per day demonstrates that the time for unequivocal tax reform is long past.”
Some highlights:
• The average state and local effective tax rate on telecommunications services is 14.17% compared to 6.12% for general business nationwide. • Telecommunications providers must file 47,921 returns per year compared to 7,501 returns for general businesses. • Compared to general business, telecommunications providers have 1,103 more transaction tax baseThe tax base is the total amount of income, property, assets, consumption, transactions, or other economic activity subject to taxation by a tax authority. A narrow tax base is non-neutral and inefficient. A broad tax base reduces tax administration costs and allows more revenue to be raised at lower rates. s and 6,683 more taxing jurisdictions with which to contend.
Which states have the worst cell phone taxes? From the study, a breakdown of effective total tax rates on telecom services by state:
Total Local, State and Federal Effective Telecommunications Taxes Compared with General Business Taxes by State, 2004
|
State |
Effective General Business Taxes |
Effective Telecommunications Taxes |
| VA | 4.50% | 33.77% |
| MD | 5.00% | 31.31% |
| TX | 8.25% | 29.29% |
| NE | 6.50% | 29.22% |
| MO | 6.92% | 27.79% |
| WV | 6.00% | 27.46% |
| KS | 6.75% | 26.33% |
| IL | 8.00% | 24.95% |
| MI | 6.00% | 24.15% |
| OK | 8.45% | 23.97% |
| WA | 9.03% | 23.26% |
| NC | 7.50% | 22.83% |
| RI | 7.00% | 22.81% |
| FL | 7.00% | 22.15% |
| GA | 7.00% | 21.90% |
| PA | 6.83% | 21.33% |
| NY | 8.44% | 21.29% |
| AR | 8.38% | 19.73% |
| KY | 6.00% | 18.86% |
| SC | 5.50% | 18.65% |
| MS | 7.25% | 18.63% |
| UT | 6.25% | 18.36% |
| DC | 5.75% | 18.24% |
| CO | 8.00% | 18.15% |
| TN | 9.25% | 17.86% |
| OR | 0.00% | 17.20% |
| LA | 9.00% | 16.78% |
| CA | 8.10% | 16.28% |
| WY | 5.50% | 16.09% |
| AL | 8.00% | 15.93% |
| AZ | 7.85% | 15.75% |
| ND | 6.00% | 15.52% |
| IA | 6.50% | 15.44% |
| IN | 6.00% | 15.16% |
| OH | 7.50% | 14.55% |
| AK | 2.50% | 13.53% |
| MA | 5.00% | 13.30% |
| MN | 7.00% | 12.76% |
| NJ | 6.00% | 12.74% |
| NM | 6.31% | 12.59% |
| SD | 5.86% | 12.58% |
| NH | 0.00% | 12.31% |
| HI | 4.00% | 12.04% |
| CT | 6.00% | 12.01% |
| VT | 6.00% | 11.27% |
| WI | 5.60% | 11.13% |
| DE | 0.72% | 10.88% |
| ME | 5.00% | 10.37% |
| ID | 5.00% | 10.16% |
| MT | 0.00% | 9.88% |
| NV | 7.25% | 7.97% |
Source: Council on State Taxation
Share