When I read The News and Observer headline – “Tax Enriches Cellular Carriers” –I had to ask, ‘How does a tax enrich anyone but the government?’
The answer turned out to be simple. The government collects a tax on your phone bill then pays the money to telephone companies (in theory for providing phone service in rural areas where, unless you decide to live on a mountain in Montana, most people have had telephones for years.)
It works like this. Each time a cell phone company signs up a new subscriber it receives a subsidy. But that’s not all. If the cell-phone subscriber then decides to drop his landline the subsidy for the land carrier goes up too. So the land line company gets more for providing less and the cellular companies get more for signing up each new customer. Sound crazy?
The federal-state board that oversees the program agrees. Billy Jack Gregg a board member calls the program “bizarre,” likens it to “a machine that somebody’s created but nobody can find the ‘off’ switch to,” and adds it makes no sense at all to subsidize multiple carriers in a high-cost areas.
Gregg’s board recommended a correction three years ago but a handful of rural senators (no doubt cheered on by a battalion of telephone-company lobbyists) who know a good way to get votes when they see one killed it.
The total cost of the subsidy: $44 billion. Anybody know a corporate rip-off to beat that?
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