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Florida's hangup: High cell phone fees and taxes

If you think you're forking over too much of your paycheck to pay your cell phone bill, you're not imagining things.

Florida has the fourth highest average state-local cell phone tax and fee rate in the country at 16.55 percent, according to a study by the Washington-D.C.-based Tax Foundation.

"If you add in the 5.82% federal rate, Floridians are actually paying 22.38% of their wireless bill in taxes fees on average. The U.S. average combined federal, state, and local rate is 17.05%," according to the group's press release.

 Gov. Rick Scott is now promising that he will give Florida voters a $120 million annual reduction in the communications services tax, which collects revenue from a variety of sources, including cell phones. Lowering cell phone fees has been a state budgetary consideration in the past, but the effort hasn't gone anywhere. 

The Tax Foundation reports the following highlights of its study:

* The five states with the highest state-local rates are: Washington State (18.6 percent), Nebraska (18.48 percent), New York (17.74 percent), Florida (16.55 percent), and Illinois (15.81 percent).

* The five states with the lowest state-local rates are: Oregon (1.76 percent), Nevada (1.86 percent), Idaho (2.62 percent), Montana (6.00 percent), and West Virginia (6.15 percent).

* Americans pay an average of 17.05 percent in combined federal, state, and local tax and fees on wireless service. This is comprised of a 5.82 percent federal rate and an average 11.23 percent state-local tax rate.

* Four cities - Chicago, Baltimore, Omaha, and New York City - have effective tax rates in excess of 25 percent of the customer bill.

* The average rates of taxes and fees on wireless telephone services are more than two times higher than the average sales tax rates that apply to most other taxable goods and services.

* Excessive taxes on wireless consumers disproportionately impacts poorer families.

In its report, the group also states:

Wireless consumers continue to face excessive tax burdens when compared to the tax burden on other goods and services purchased in the competitive marketplace. The average rates of taxes and fees on wireless telephone services are more than two times higher than the average sales tax rates that apply to most other taxable goods and services. Consumers in seven states-Washington, Nebraska, New York, Florida, Illinois, Rhode Island, and Missouri-pay total taxes and fees in excess of 20 percent of their bills.

It is true that, compared to 2012, wireless fees and taxes have decreased slightly from 17.18 percent to 17.05 percent. This reduction occurred despite the fact that the national average rate of the general sales and use tax-the primary consumption tax used by states and localities-increased during the period. Overall, the disparity between wireless taxes and fees and the general sales tax declined from just over 4 percentage points to 3.7 percentage points.

Cell phones are increasingly the sole means of communication and connectivity for many Americans, particularly those struggling to overcome poverty. At the end of 2013, according to surveys by the Centers for Disease Control, over 56 percent of all poor adults had only wireless service, and nearly 40 percent of all adults were wireless only. Excessive taxes and fees, especially the regressive per line taxes like those imposed in Chicago and Baltimore, impose a disproportionate burden on low-income consumers.

The Tax Foundation, launched in 1937, describes itself as a nonpartisan research organization that monitors fiscal policy at the federal, state and local levels.