Taxes far too often do more economic harm than good, and a proposed new tax on South Carolina cellphone users is no exception. It would increase the burden on already heavily taxed consumers to support an outdated communications technology used by only a minority of state residents.South Carolina conservatives should be outraged.
Levying a new tax on a modern communications tool that many South Carolinians have come to view as almost a necessity — cellphone service — to support an antiquated technology that consumers are increasingly abandoning — landline telephones — is misguided.
But that’s what Senate Bill 277, a proposal currently making its way through the state legislature would do. The revenue generated would be given to landline providers, companies that are already the recipients of sizeable government handouts.
The existing South Carolina landline subsidy program, funded by a tax on the people who choose to use landline service, generates about $40 million a year that the state passes on to providers, supposedly to ensure the continued availability of traditional phones.
These same companies also receive an estimated $100 million per year from a similar federal subsidy program, in spite of the fact that they have never been required to demonstrate that they actually need the money to perpetuate the service.
The proposed new tax wouldn’t change that. Still, without requiring proof of need, it would levy an additional tax on the 4.5 million cellphone accounts in South Carolina in order to subsidize a technology that serves only about a million users. And that number is growing smaller every year as consumers continue to drop landlines in favor of modern mobile phones.
South Carolina cellphone users already pay their fair share. More than 16 percent of the average South Carolina cellphone bill is tax, including state and local sales taxes, a state 911 fee, municipal license tax, and a federal USF charge that funds various FCC-mandated programs.
This plan is liberal tax policy at its worst, penalizing the many to benefit the few, with the government meddling in the free market to arbitrarily pick winners and losers, oblivious to the needs and desires of consumers.
I am a devout believer in conservative state and federal fiscal policies that minimize tax burdens on families, workers, and employers.
I am convinced that not only individuals, but also our economy and society benefit when money is left in the hands of the people who earn it, to save or spend as they see fit.
This proposed cellphone tax is not a conservative plan; it is neither necessary nor sensible. I urge all South Carolina state senators who call themselves conservatives to vote “No” on S 277.
Steve Forbes is chairman and editor-in-chief of Forbes Media.