Adios to a Phone Tax

ADIOS TO A PHONE TAX
[SOURCE: Wall Street Journal, AUTHOR: Editorial Staff]
[Commentary] Treasury Secretary John Snow said the Internal Revenue Service will no longer collect the 3% federal excise tax on long-distance phone calls and will offer refunds for the past three years. The WSJ would like to think the Administration was acting out of principle. But the reality is that the courts -- most recently the Second Circuit Court of Appeals in a decision last month -- have forced its hand with repeated rulings that the tax on long-distance is illegal in a telecom world in which calls are no longer priced based on distance. The IRS will continue to collect the tax on local calls, but Sec Snow to his credit did express support for the idea of Congress passing legislation to repeal the tax entirely. That would be the best outcome, and not just because a future administration might opt to begin collecting the tax again and restart the court battles. Another argument for full repeal is that so long as the tax exists, so will the political temptation to expand its scope and turn it into yet another revenue stream for the federal till. A Joint Tax Committee report issued last year suggested extending the excise tax to "all data communication services," including cable modems, cellular and DSL Internet connections. Like the alternative minimum tax, the federal excise tax was intended to target "the rich," who at the time were the only ones who could afford a telephone. Yet our tax code still considers phones "luxury" items today. The last time Congress came close to ending this charade was 2000, when majorities in both the House and the Senate voted for repeal, which President Clinton vetoed. The Republican Congress, which may not be Republican much longer, might consider giving it another shot before November.
http://online.wsj.com/article/SB114894015305465661.html?mod=todays_us_op...
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