This paper measures for the first time the economic efficiency effects of the taxation of wireless services, which are taxed by federal, state, and local governments at relatively high rates in the range of 14%-25%. The paper concludes such taxes are a much greater drain on the economy than their direct costs. The taxes identified in this paper cost the economy $2.56 billion more than the $4.79 billion they raise in tax revenues. These taxes are raised from wireless consumers and thereby suppress demand for service, imposing an efficiency loss on the economy of $0.53 for every $1 currently raised in taxes. Prospective taxes will impose an efficiency loss of $0.72-$1.14 per additional dollar of tax revenue raised.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
7281.
Length: Date of creation: Aug 1999 Date of revision: Handle: RePEc:nbr:nberwo:7281
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Find related papers by JEL classification: H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
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