House Passes Wireless Tax Fairness Act of 2011

By Pat Heck, Mike Evans, Mary Baker, Cindy O’Malley, Karishma Page, and John Godfrey

Earlier this month, the House passed H.R. 1002, the “Wireless Tax Fairness Act of 2011,” which would impose a temporary, five-year moratorium on new taxes or fees that discriminate against mobile services. The bill, which was introduced by Congressman Zoe Lofgren (D-CA) and Congressman Trent Franks (R-AZ) and had the support of 235 cosponsors, passed by voice vote under suspension of the rules.

The legislation is aimed at “new discriminatory” wireless taxes or fees, defined as a new tax imposed by a state or local jurisdiction on: (1) mobile service and is not imposed or imposed at a lower rate on other services or transactions involving tangible personal property; (2) a mobile service provider and is not imposed or imposed at a lower rate on other persons that are engaged in other businesses; or (3) mobile service property and is not imposed or is imposed at a lower rate on property that is devoted to a commercial or industrial use. The bill is intended to address what has been characterized as a discrepancy between taxes and fees on wireless customers when compared to taxes on other goods and services.

State and local governments have opposed the legislation over concerns about the fiscal impact of the measure and preemption of their taxing authority. Despite the opposition, the bill enjoyed broad, bipartisan support in the House. Similar measures have been introduced in the House in previous Congresses, but this was the first time such a proposal has come to the House floor for a vote. The House Judiciary Committee approved the legislation in July.

Prospects in the Senate are less clear. A companion measure, S. 543, was introduced in March 2011 by Senators Ron Wyden (D-OR) and Olympia Snowe (R-ME) and currently has 13 cosponsors. Although the bill has the support of some of the members of the Senate Finance Committee, it has not been scheduled for consideration.