Taxing wireless service

When most people think of taxes, they think of income taxes and sales taxes. But there are also many services we buy that carry taxes as part of the bill. And if we ignore the fine print on the bill, we may not even know we’re paying a tax. NC State University economist Mike Walden discusses a good example – wireless telephone service.

“A very good example is a service that we are using more and more of, and that is wireless phone service. A new study by the Tax Foundation shows that nationwide, we’re paying an average of 17 percent in taxes on our wireless phone service. That is, if we took what we pay for the service, you are going to add a 17 percent tax to it.

“Now, that’s the total for federal, state and local taxes and fees. Now the federal tax for most areas is around 5.8 percent, so you do get variation because the rate varies by state. If you look at which states have the highest rates, Washington – the state of Washington – has a rate of 24.4 percent when you include all of the fee and taxes.

“Oregon is paying the lowest at 7.6 percent. North Carolina is right there in the middle; we pay an average combined rate for all the taxes and fees of 14.3 percent which makes us the 34th highest state in terms of the wireless tax.”