Congress May Lighten the Load — A Little

by Robert J. Wagman

Congress will likely pass at least one tax bill this year, and if 50 members of Congress have their way, small-business phone bills will be a little lower in the future. A bipartisan group, led by Reps. Robert Matsui (D.-Calif.) and Rob Portman (R.-Ohio), is attempting to repeal a special 3-percent temporary federal excise tax that is collected on all telephone bills. The House Ways and Means Committee has already approved the bill, and it should be presented to the full Congress soon.

The “temporary tax” was imposed in 1898, during the Spanish-American War, when only a few of the relatively rich had telephones and they were considered luxury items. Calling themselves the “Repeal the Tax on Talking Coalition,” the proponents of the repeal include a broad coalition of major phone companies, cellular companies, and the interest groups that represent them, as well as groups representing small businesses and consumers. They argue that the 3- percent federal excise tax is regressive ­ hurting low-income minorities, fixed-income seniors, and especially small businesses. They also argue that the tax discourages the use of computers and threatens the development of innovative wireless technologies.

Proponents of eliminating the tax are trying to link it to any extension of the moratorium on Internet sales taxes, or to any ban on such taxation. The tax raises between $5 billion and $6 billion annually ­ not exactly small change.