"The Tangled Web of Taxing Talk: Telecommunications Taxes in the New Millenium".(Brief Article)(Abstract)

Cordes, Joseph J.; Kalenkoski, Charlene; and Watson, Harry S.

National Tax Journal, September 2000, pp. 563-589.

The telecommunications industry is subject to a number of taxes that are not applied to other industries. In this article, the authors examine the plethora of telecommunications taxing mechanisms to determine if the taxes are efficient. Throughout the United States, telecommunications providers are subject to 310 taxes on 687 different bases (with the bases being defined by the taxing body). By comparison, other general businesses are subject to 103 different taxes on 184 different bases. This results in increased complexity in compliance. Telecommunications firms operate in 10,857 different taxing jurisdictions and must use 55,748 different tax forms, whereas general business operates in 10,638 different jurisdictions but uses only 7,237 different forms. Telecommunications is taxed more heavily than general business, with the average burden being over twice as much for telecommunications. With this in mind, the authors assessed the current state of telecom taxes against the classic standards of a good tax: f airness, efficiency, and simplicity. First, it is important to understand that telecom taxes have two-tiered structure. There can be taxes on access fees and also taxes on usage rates. Access fee taxes tend to reduce the number of people who will access the phone system, while usage ...