Q: What phone tax is the U.S. Treasury disconnecting?
A: The federal government enacted an excise tax on long distance phone calls more than a century ago to help pay for the Spanish American War. The three percent surcharge was considered a luxury tax at the time since only the wealthiest American could afford long distance calls. But 108 years after the war ended, the “temporary” federal tax nickels and dimes virtually all American households on their monthly phone bills. And the tax adds significant burden to business consumers who rack up hefty long-distance bills from month to month. Finally the U.S. Treasury is pulling the plug and dropping its appeal of court orders to stop collecting the archaic phone tax. This long-distance tax was bringing in $5 billion a year for a war that ended a century ago.
Q: Are other telecommunication taxes in line for repeal?
A: As chairman of the tax-writing Senate Finance Committee, I keep vigil over the federal tax code to uproot unfair, duplicative or outdated taxes. I also use my leadership position to serve as a watchdog for hardworking taxpayers. By keeping close tabs on the Internal Revenue Service, I work to help ensure a proper balance exists between enforcement and collection with taxpayer rights. Believe me, it takes a wide net to trawl through the federal tax code’s bewildering rules and regulations. Although it doesn’t take long to identify when something smells fishy, like the century-old excise tax on long-distance phone calls, it obviously can take a while to unhook Uncle Sam. I’m glad the U.S. Treasury agrees it is time to hang up on the long-distance tax. My committee now is taking a look at deleting the federal tax on local phone service, too. Taxpayers long for a simpler, fairer tax code. That includes phone customers fed up with extra taxes tacked on to their monthly phone bills, too. As a senior member of the Budget Committee, I’m keenly aware of the need to curb deficit spending. But I disagree with the big spenders who suggest a larger tax revenue stream will solve unbalanced budgets. Ask successful dieters: It's called portion control. And as the chief tax-writer in the U.S. Senate, I don’t want the federal tax code stifling innovative services in the telecommunications industry that consumers demand and advance job-creating, economic growth all across rural and urban America.