America's increasingly competitive communications sector also remains one of its most heavily taxed. As Progress and Freedom Foundation President Jeffrey A. Eisenach asks,
. . . in a world in which building out the telecommunications infrastructure is policy goal Number One—why would we place discriminatory taxes on telecommunications? And we're not talking about small taxes, either. We're talking about levels of taxation between 20 and 40 percent, depending on the state and the locality . . . . We're talking about a level of complexity that is just stunning. There are 38 different kinds of taxes paid by telecommunications companies just in the telephone business . . . . The tax structure that we have is not only too high, it's also regressive. Virtually all of the taxes that we levy on telecommunications providers are excise taxes or line taxes, line charges, equivalent of poll taxes. And so they go directly against our objective of making Internet access and the information revolution available to people regardless of their income.31
Among the taxes that most deserve the attention of Congress and members of the ACEC are the following:
The federal three-percent excise tax on telecommunications.
Discriminatory ad valorem taxation of interstate telecommunications.
Internet tolls.
High state and local telecommunications taxes and complicated auditing and filing procedures.
Internet access taxes.
Even if the ACEC and Congress do not reach agreement on the issue of Internet sales taxation in the short term, they should, at a minimum, undertake immediate action to eliminate or reform these costly telecom industry tax burdens.