Efficiency Effects on the U.S. Economy from Wireless Taxation

22 Pages Posted: 20 Mar 2000 Last revised: 29 Nov 2022

See all articles by Jerry A. Hausman

Jerry A. Hausman

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: August 1999

Abstract

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.

Suggested Citation

Hausman, Jerry A., Efficiency Effects on the U.S. Economy from Wireless Taxation (August 1999). NBER Working Paper No. w7281, Available at SSRN: https://ssrn.com/abstract=198988

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