[star]The American Mind[star]

July 07, 2004

A Tax that Will Not Die

We can all agree that World War I is over, right? Then why are we still stuck with a "luxury" tax on telephone calls that origniated in during the Spanish-American War and was revived to pay for WWI? The answer is government inertia and the concept of concentrated benefits verus distributed costs. A 3% tax on phone calls winds up being a small portion of a consumer's total phone bill. For him the effort to lobby his Congressman to nix the tax isn't worth the benefits. On the other side are those inside the government who turn white when there's the possibility of reduced revenue coming to the federal government. These people, for ideological purposes or to protect their bureaucratic turf, lobby heavily to continue the revenue stream. This may have been what happened to the phone call excise tax. In 2000, the House of Representatives voted 420-2 to ax the tax, but the Senate didn't even take up the bill.

"IRS Eyes Net Phone Taxes"

"Public Choice Theory"

Posted by Sean Hackbarth in Economics at 03:32 PM | Comments (0)