How Much Do You Spend in Fees and Taxes For Cell Phone Service?

I read an article in today’s WSJ about “free” cell phone services for the poor. These services are paid for through taxes on regular cell phone bills. The article inspired me to calculate how much my family spends on cell phone taxes and fees on a monthly basis. Here’s what I found:

For us, the $28.54 (roughly $342 per year) represents an 11.9% tax (we have four cell phones on our plan).

I found it kind of funny that the taxes and fees are broken down into two different sections. The first section is under “Credits, Adjustments and Other Charges” and the other section is called “Taxes.” You can put them in whatever section you want but the bottom line is they are taxes and fees.

14 thoughts on “How Much Do You Spend in Fees and Taxes For Cell Phone Service?”

  1. It’s pretty crazy, and part of why I have gone with prepaid providers that past 2 years. I save a ton of money now.

  2. Regulatory Cost Recovery Charge (RCRC) is not a government fee or tax. This is just your phone company screwing with you, and trying to make it look like an ‘official’ government tax while padding their profits.

    Phone companies like to advertise their prices, EXCLUDING these fees that THEIR MBAs dreamt up, to dupe you.

    It would be like a fast-food joint tacking on a separate ‘FDA Recovery Charge’ on their burgers to cover the costs of them complying with FDA regulations (to not poison you) — and them advertising their $1 menu which would be the price _excluding_ the fees.

    The other fees in that top section are similar, in that they are not taxes from the government on YOU, the consumer.

    The last section ($18.93), however, is the various government taxes on you, mandated by either state or federal government law.

  3. Just to add to what BG said – State Cost Recovery Fee is probably similar to the RCRC – i.e., just a way to increase the price. Just like an airline “Fuel Surcharge” – a way of passing on costs to customers without increasing the published price.

    My phone company introduced an even better one:
    Regulatory, Compliance and Intellectual Property Fee. So what is an Intellectual Property fee – they have to license patents to run their business? What’s next – a “Salaries Fee” to cover employee salaries.

    The providers did this with a very specific purpose – to try to say that it is not their fault your bill is so high.

    The Universal Service Charges however ARE government-mandated taxes. Those are collected by the government and used to subsidize phone service in remote areas where the phone companies could not offer service except at high prices no-one would be able to pay. And now of course extended to free cellphones for poor people. Because after all our nanny state has decided that everyone needs a cellphone.

  4. @#3 Mark re: “Because after all our nanny state has decided that everyone needs a cellphone”

    Funny timing that you would write this, as this just happened to me when popping in to our Aldi Tuesday night to buy milk and cheese…There were 2 Linc card women (food stamp system in IL), one of whom was yapping on her phone, and I had to wonder, am I paying for that, too?

    If you have a body and mind that still works, go find a job (yes, they ARE still out there) and stop taking my tax money, thinking you’re entitled to it. Food stamps should not last more than 6 months, unless you’re disabled or elderly. End of story.

  5. I use a Tracfone, (which cost me $9.99 and automatically doubles every timecard I buy for it, not to mention the internet codes I use to add even more minutes) so I wouldn’t know about all those other taxes and fees. But have you checked out your cable bill lately?

  6. As for the taxes vs cell phone fees, you can put them all under one category: theft.

    “Food stamps should not last more than 6 months, unless you’re disabled or elderly.”

    A principled approach would say:
    Food stamps should not last more than 0 seconds, unless a private voluntary organization passes them out then they can choose how long they do it. It doesn’t matter what situation you are in, let the private organization decide how to do it.

  7. Mark said: “…The Universal Service Charges however ARE government-mandated taxes…”

    They are not taxes on the _consumer_, they are taxes on the _business_.

    Everyone knows that the crap you buy has tons of taxes embedded in the price, covering property taxes where the goods were produced, taxes on income, and whatever other taxes/fees federal/state/local government unleash on businesses.

    Do I need every tax/fee someone paid in the supply chain itemized to me on my bill? No.

    Is the business being deceptive?: Maybe, especially if they are advertising prices that exclude these fees to trick consumers.

    “…and Intellectual Property Fee.”

    That is hilarious.

    Jon) I recently sold my soul for an extra 2-years. But before I did that, I investigated the prepaid plans and found they would all cost me more than I spend now (based on my and my families usage patterns).

    As for the free cellphones (and minutes) for the poor — it sounds more like a government subsidy/handout to the phone companies. These people are now ‘customers’ of the cell phone companies, when they otherwise wouldn’t have been (because they don’t have the money to purchase it). I’m sure if I dug deep enough, I’d find some corporate lobbyist behind this scheme (because that is the ONLY way laws are passed anymore).

  8. On the Universal Service Fund:

    “The current system does little to encourage an expansion of coverage to areas that are currently without wireless service, and only leads to additional wasteful spending. As (FCC) Chairman Genachowski pointed out in his remarks this morning, the USF as it is now configured is wasteful and inefficient, paying some companies almost $2,000 a month for a single home phone line. He also stated that USF is outdated, unfair, has created a rural-rural divide, is not sufficiently accountable and is broken.”


  9. @BG,

    Yeah, since I work at home I usually just use Google Voice, it’s pretty rare that I need to use anything other than that (and I’m pretty frugal, so I’ll use someone else’s home line before I’ll use my cell). I know some people have more use of their phones, which is cool, but for me, don’t need it much.

    Can’t expect government to be efficient and I’m sure it was a lobby too or over zealous bureaucrat. Here where I live, most house are on acre lots and there is a population of about 10k people. The city decided to get a federal government grant to get a city bus, then decided to continue the program with state grants, they are having a hard time stopping the program even with only, on average, “1.47 passengers per hour” (the bus operates 24 hours total per week), they just believe that it will pick up and more people will ride. Given the town size and population I don’t know why anyone would ride it. Politicians, they can never kill a program. But whoever is riding it is basically getting a personal chauffeur. But they don’t want to switch to a model that isn’t set at certain times, like the free market does (taxi cab). They want cheaper taxis? Get rid of all the taxes and regulations.

  10. Nebraska has the highest cellphone tax in the nation and Omaha puts an occupation tax on top of that. I’m paying about 30% just for taxes. I have to have it for my job so I’m stuck. States out this way like regressive taxes on the little guy.

  11. Jon – I support taxi regulations. I want to know that the random driver I’m trusting with my life has passed a drug test and maintains a current driver’s license at the bare minimum. It is also in the public interest to do so, in order to reduce crashes that injure non-paying passengers. “Cheaper” taxis (and other services) are not always a good value.

  12. $11.65 last month. It actually varies a little, which I always find strange.

    Regulatory Programs Fee* – $1.61
    CA Relay Service and Communications Device Fund $0.15
    California High Cost Fund – B (CHCF-B) $0.22
    California Teleconnect Fund $0.06
    City Utility Users Tax $7.02
    Emergency Telephone Users Surcharge Tax (911) $0.21
    Universal Lifeline Telephone Service Surcharge $0.88
    Federal Universal Service Fund $1.37
    Regulatory Fee $0.13

    I will note that when I moved from unincorporated County land back into “the city” (nb – before I happened to live in a random unincorporated parcel, but really still nowhere anyone would think was unincorporated), my taxes went up 5$ month…all from the city. Note that that single city tax is by far the largest portion of this. Anyway, this is for just one phone, my personal one. your 911 seems far more expensive than mine, even if you consider 4 phones versus 1!

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