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Why Washington Can’t Afford to Lead the Nation in Wireless Taxes

Washington State is the proud leader in many things: the number one producer of apples in the U.S., home of the first Starbucks, the leading lumber producer in the U.S. However, we are also number one in taxes on wireless service.

Recently, the Tax Foundation released its annual report revealing that U.S. wireless customers pay over $17 billion in taxes and government fees each year, a 4.5 percentage point increase from a decade ago.  Unfortunately, WA has taken the top spot as the leading taxer of wireless service in the country. 

As the world is increasingly dependent on mobile, these rising tax rates are especially worrying. Over the course of the past decade, people have been growing to favor mobile, with 48% of all adults in 2015 using wireless-only. As this number continues to rise, it is vital that use of wireless does not become prohibitive due to ever increasing taxes.

This excessive taxation poses a particular threat in an area as cutting edge and technologically savvy as Washington. We have long been home to some of the best and brightest minds in the technology field, but have more recently established ourselves as one of the top mobile app markets in the country and are the base for many of the leaders in the space. While this has been a huge boon to our state’s economy, increased taxes threaten that growth. If taxes carry on growing unchecked and our state continues to have the highest taxes in the nation, we risk driving out the very innovation that has grown to define our region as we know it. We need to ensure that we remain the country’s leader in technology sector employment by lowering barriers to investment.  Not skyrocketing tax rates on technology.

We have also seen a growing focus on the emerging internet of things, especially in the Evergreen State. In fact, the Internet of Things Congressional Caucus is co-chaired by our own Congresswoman Suzan DelBene. DelBene has said, “It’s important that our laws keep up with technology.” I couldn’t agree more. It is critical that our government enacts smart laws and implements taxes in a way that does not discourage technological advancement. Remarkable innovations made possible by the internet of things are directly threatened by the growing costs of wireless service and in a market known for technological innovation, we simply can’t afford to take that risk.

Another cause for grave concern over the rising taxes on mobile is the digital divide. It is well established that Hispanics and African Americans utilize mobile at higher rates than other ethnic groups. This fact alone underscores the very lasting and tangible negative effects that increased tax rates could have on an already dire problem. Increasing barriers to adoption by setting taxes at an untenable level will further exacerbate the divide between the technological haves and have nots.  While the digital divide today poses a significant challenge, additional tax increases will only make an already difficult task more difficult. We simply cannot further hinder our ability to close the digital divide for these communities.

The problems that Washington faces due to an astronomical tax rate on wireless service are clear and concerning. Continuing to drive up the cost of our wireless service will only limit access to cutting edge mobile technologies and deter growth and innovation in a field that has very real potential to change lives. These burdensome taxes also threaten our ability to bridge the digital divide that prevents some in our state from having access to all that the online world has to offer. These taxes are not good for innovation, they are not good for communities who are working to get online, and they are not good for Washington.

Categories Blog | Tags: | Posted on December 6, 2016

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