News and Commentary

California Drops Plan To Tax Texting

The California Public Utilities Commission (CPUC) has scrubbed a scheduled vote from its January meeting agenda to levy a tax on text messaging after the Federal Communications Commission (FCC) ruled that such messaging is not taxable.

In the ruling, the FCC said text messaging is an “information service,” not a telecommunications service, and therefore not subject to taxes or surcharges under California state law. The Federal Telecommunications Act limits state authority over information services.

“Prior to this FCC ruling,” the CPUC wrote in a statement posted on Twitter, “text messaging was not a classified service under federal law. … In light of the FCC’s action, assigned Commissioner Carla J. Peterman has withdrawn from the CPUC’s Jan. 10, 2019, Voting Meeting agenda the draft decision … which proposed to clarify that text messaging service should be subject to the statutory surcharge requirement.”

California state regulators had proposed to charge cell phone users a fee for text messaging as a means of collecting taxpayer money to pay for programs to make phone service cheaper to low-income residents, the San Jose Mercury News reported.

No fee was ever set, but the News says the fee “likely would be billed as a flat surcharge per customer — one of those irksome fees at the bottom of your wireless bill — not a fee per text.” And cell phone users might have had to retroactively pay the fee for the last five years, the News said, noting that the new fees could bring in upwards of $50 million a year.

The plan didn’t go over too well. “It’s a dumb idea,” Jim Wunderman, president of the Bay Area Council business group, told the paper. “This is how conversations take place in this day and age, and it’s almost like saying there should be a tax on the conversations we have.”

State residents also object, calling the planned tax “dumb” and “unfair.”

“To have them charge us something else is just dumb,” a Bay Area resident told KNTV. “I think it’s very unfair, especially for the people that can barely pay for their cell phone plan already.”

Earlier this year, Democratic lawmakers in California put forward a plan to force some businesses to give half of the savings they accrue from the newly-instituted tax cuts back to the state.

State Assemblymen Kevin McCarty (D-Sacramento) and Phil Ting (D-San Francisco) want to impose a tax surcharge on companies in California “making more than $1 million,” according to SF Gate. The surcharge instituted by their proposal, ACA22, would transfer the funds accrued by the state to state government programs for middle-class and low-income families.

“Trump’s tax reform plan was nothing more than a middle-class tax increase. It is unconscionable to force working families to pay the price for tax breaks and loopholes benefiting corporations and wealthy individuals,” Ting said in a statement. “This bill will help blunt the impact of the federal tax plan on everyday Californians by protecting funding for education, affordable health care, and other core priorities.”

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