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Will We Talk More if We Text Less?

Why taxing texts is a nonstarter

Aaron Harber //January 22, 2019//

Will We Talk More if We Text Less?

Why taxing texts is a nonstarter

Aaron Harber //January 22, 2019//

The California Public Utilities Commission’s recently aborted plan to tax text messages, if resurrected, will fail miserably on multiple fronts but highlights a number of public policy issues which need greater attention.

The proposal was to place a tax, in the form of a surcharge, on texting in an effort to bolster funding to subsidize telecommunication services for lower-income citizens. The cost likely would have been well under $1 per month, per line.

Because the Federal Communications Commission ruled text messages are an “information service” rather than a “telecommunications service,” it is unlikely the CPUC will be able to easily enact the tax.

It was destined to die anyway because it could only be applied to messages sent via a phone carrier’s own service (known at SMS or Short Message Service and MMS known as Multimedia Messaging Service). That meant messages sent via the internet using such services as Messenger – owned by Facebook – or WhatsApp – also owned by Facebook – could not be taxed.

The obvious conclusion is almost everyone would abandon traditional text messaging and, instead send the equivalent text messages via an internet-based service. Almost all of these services or apps are just as convenient as texting and often offer additional features – all at no charge.

The CPUC’s ignorance of this reality shows why we need elected and appointed officials with a better understanding of technology. Had they recognized the already-available alternatives, the proposal never would have been made. Instead, we have public-policy makers who have no idea what the ultimate ramifications are of their technology-ignorant decisions.

In addition, the proposal, as made, would be a regressive tax as less financially fortunate people pay a higher proportion of their income for the tax. And, because numerous phone services already tax texting as part of a bundled service package, many cell phone customers would not even be subject to the new tax – thus defeating its purpose and potential to generate significant new revenue.

On average, Americans each send and receive a combination of more than 100 texts every day. This means we send more than 1 trillion messages per month or 12 trillion messages a year. At the same time, the number of actual voice calls made or received (excluding robocalls, marketing calls and similar voice spam), is now under four per day per person.  So, we’re texting like crazy and barely speaking with each other.

Officials with little or no understanding of technology will continue to fail on multiple public policy fronts because technology is a crucial part of almost everything government does and, therefore, every decision appointed and elected officials make. Unfortunately, the vast majority of them know little about technology. This is a huge flaw in our system of governing today. 

This case also illustrates how the CPUC’s technological ignorance failed to take into account the reality that, ultimately – and probably in short order – technology would be developed to outsmart and evade the any similarly-designed tax it proposes.  In this cat-and-mouse game, uninformed and uneducated officials will be outsmarted every time.

Another point highlighted by the CPUC’s attempt to add a new surcharge is that many public officials hide behind terms such as “surcharge” when, in fact, these simply are new or additional taxes. The word “tax” is so loathed politically that calling it anything else – a “fee,” an “assessment” or a “surcharge” – is the preferred linguistic route.  It’s time for transparency to be returned to the public policy arena. So, if we are making people pay the government money so it has additional revenue to spend as it pleases, let’s just be honest and admit it’s a tax.

Despite the aforementioned failings of the CPUC, one good outcome of taxing text messages might be that, to save money, some people would reduce their texting and use their phones to actually call someone. What a concept!