Hang Up on the Telephone Tax (Rep. Gerry Connolly)

Buried in the telephone bills of many Americans is a federal excise tax that was implemented in 1898 to help fund the Spanish-American War. That war ended on December 10, 1898 with the signing of the Treaty of Paris, but this 3 percent telephone tax still lives on 111 years later.

Republican Congressman Glenn “GT” Thompson of Pennsylvania has joined with me in sponsoring legislation — H.R. 2203 — to repeal this tax on local telephone service, toll telephone service, and teletype exchange service for the disabled. Ironically, the tax was enacted as a tax on the wealthy because in the late 1800s having a telephone was considered a “luxury,” but actually it is particularly regressive and unfair because it targets those citizens who can least afford it.

Lower income citizens, the disabled, rural residents with poor cell service, and older Americans and families, all who tend to rely on landline telephone service, are the ones who now pay the tax. It also unfairly affects small businesses and individuals who have landlines for their fax machines.

Long distance, cellular telephone, and bundled services such as Voice over Internet Protocol were exempted in 2006. But the pesky tax still remains for millions of Americans.

The telephone tax was repealed and reenacted a number of times over the years, usually in times of war. Now it has no specific purpose and it goes to the general fund. The tax has cost American taxpayers more than $300 billion. If repealed, it would save taxpayers more than $1.2 billion over the next decade.

We are working to gather cosponsors for the bipartisan Telephone Excise Tax Repeal Act of 2009 so we can eliminate this antiquated remnant of a tax once and for all.

The time to hang up on this telephone tax is long overdue.