$15 Federal License Fee for Telephone Users?
December 1958, The Telephone News Article

If you have read as many vintage electronics magazines as I have, one thing that is obvious is how many of the same issues that plagued the field since the middle of the last century are still with us today - only in a much worse way by now. Government meddling, regulation and taxation are amongst the top offenders. Both the electric power industry and the communications industry have been hit hard, and huge costs to consumers is the result. Itemized bills from the utility companies do not give the full picture of what a large percentage of your monthly premiums go to feed the government beast. You might see some line items for taxes, surcharges, contributions and user fees, but those being paid for you by the providers (i.e., absorbed in the base charge) are hidden. One of the more recent, highly publicized example was the "Gore Tax" (Universal Services Fund) that added $1 to everyone's landline bill to provide subsidized Internet (most people had dial-up at the time) and other services to schools, libraries, and "the underprivileged." Once most people had dumped landlines, the FCC started adding fees to cellphone bills to pay for high speed Internet service (E-Rate) to the aforementioned users. As always, those of us who pay our own way without burdening others are forced to provide freebies for a largely undeserving (IMO) host of citizens and non-citizens.

$15 Federal License Fee for Telephone Users?

- Our Customers Are Already Paying It!

Suppose the Federal Government passed a law making every telephone customer pay $15 a year for a license to use his telephone.

Far-fetched? Not at all. Telephone subscribers across the Nation already pay this average sum each year for the privilege of making local and long distance calls.

Of course, telephone users do not receive licenses for their money. The fee is paid in excise taxes - ten percent of the amounts paid for all local and long distance service. Business houses, manufacturers and other large telephone users pay thousands of dollars in excise taxes annually. Last year, in Pennsylvania and Delaware, this tax amounted to a staggering $33,518,886!

Our Companies collect the money and pass it along to the Federal Government. None of it ever comes back as direct benefit to our Companies or our customers.

The excise tax on telephone service was inaugurated as a temporary, emergency measure. During World War II it served two purposes: to raise revenue and to discourage the use of service which could not be expanded to meet civilian demand.

The war emergency has passed. The civilian demand has long since ceased to interfere with military needs. The temporary excise tax remains.

The tax is unfair, discriminatory and unrealistic. It penalizes one segment of the public; it singles out the telephone from other household utilities - gas, water and electricity - which have no such tax; and it is imposed much in the same way as the tax on luxuries - liquor, jewelry, furs and night clubs.

The tax is an unwarranted burden on our subscribers, and regardless of whether it costs a customer thousands of dollars, $15 or even one dollar, we believe it is unfair and we oppose it.

And now comes a new and more harmful proposal. The Joint Federal-State Action Committee proposes that part of this tax burdening the telephone user - 40 percent of the amount levied on local telephone service - be handed over to the states. The states, thus subsidized by the telephone user, would be required to devote these funds to the erection of sewage disposal plants and for vocational training. The balance of the excise taxes on telephone service would still remain in the Federal Tax structure.

This proposal would in effect make this unfair, discriminatory tax a permanent part of the states' tax laws. In such circumstances the possibility of repealing any part of the "telephone excise tax" would seem remote.

Our customers justly resent this unfair tax on their telephone service and should have the facts to carry their case effectively to the State and national lawmakers. And each of us owes it to our customers, neighbors and friends to give them these facts that are so vital to their pocketbooks.

Posted April 4, 2024
(updated from original post on 10/29/2017)