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Efficiency Effects on the U.S. Economy From Wireless Taxation

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  • Hausman, Jerry

Abstract

This paper measures for the first time the economic efficiency effects of the taxation of wireless services, which are taxed by federal, state, and local governments at relatively high rates in the range of 14-25 percent. The paper concludes such taxes are a much greater drain on the economy than their direct costs. The taxes identified in this paper cost the economy $2.56 billion more than the $4.79 billion they raise in tax revenues. These taxes are raised from wireless consumers and thereby suppress demand for service, imposing an efficiency loss on the economy of $0.53 for every $1 currently raised in taxes. Prospective taxes will impose an efficiency loss of $0.72-$1.14 per additional dollar of tax revenue raised.

Suggested Citation

  • Hausman, Jerry, 2000. "Efficiency Effects on the U.S. Economy From Wireless Taxation," National Tax Journal, National Tax Association;National Tax Journal, vol. 53(3), pages 733-742, September.
    • Handle: RePEc:ntj:journl:v:53:y:2000:i:3:p:733-42
    DOI: 10.17310/ntj.2000.3S.06
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    References listed on IDEAS

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    1. Hausman, Jerry A, 1981. "Exact Consumer's Surplus and Deadweight Loss," American Economic Review, American Economic Association, vol. 71(4), pages 662-676, September.
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    Cited by:

    1. Ward, Michael R. & Woroch, Glenn A., 2010. "The effect of prices on fixed and mobile telephone penetration: Using price subsidies as natural experiments," Information Economics and Policy, Elsevier, vol. 22(1), pages 18-32, March.
    2. Peter C. Reiss & Matthew W. White, 2006. "Evaluating Welfare with Nonlinear Prices," NBER Working Papers 12370, National Bureau of Economic Research, Inc.
    3. Garbacz, Christopher & Thompson, Herbert Jr., 2005. "Universal telecommunication service: A world perspective," Information Economics and Policy, Elsevier, vol. 17(4), pages 495-512, October.
    4. Harald Gruber, 2012. "Sector Regulation and Investment Incentives: The European Experience," Chapters, in: Gerald R. Faulhaber & Gary Madden & Jeffrey Petchey (ed.), Regulation and the Performance of Communication and Information Networks, chapter 6, Edward Elgar Publishing.
    5. Ward, Michael R. & Zheng, Shilin, 2012. "Mobile and fixed substitution for telephone service in China," Telecommunications Policy, Elsevier, vol. 36(4), pages 301-310.

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