The Conceit Behind California’s Bad Idea to Tax Text Messages

California routinely makes national headlines for its big government policies. This week is no different, as bureaucrats move to impose a texting tax on state residents in the name of providing mobile services to the poor.

In a November proposal by the California Public Utilities Commission, Commissioner Carla J. Peterman laid out the “proposed decision” exploring the potential effectiveness of the tax.

According to that 52-page report, California’s budget continues to increase even as tax revenues fall:

“A review of California’s total reported intrastate telecommunications industry revenue, which is used to fund universal service, shows a steady decline in revenue from $16.527 Billion in 2011 to $11.296 Billion in 2017. At the same time, California Public Purpose Program budgets show a steady increase from $670 million in 2011 to $998 million in 2017…”

“A Tax on the Conversations We Have”

California’s Public Purpose program, which adds a surcharge to consumers’ bills for utilities like gas in order to provide universal services to those who can’t afford them, would be tasked with facilitating the proposed text tax. And though the analysis refers to “industry revenue,” the funds would come from taxing individual wireless customers.

Mercury News, a San Jose-based news outlet, noted that while it is still unclear how much consumers would be forced to pay, the fee would “likely would be billed as a flat surcharge per customer” as opposed to a per-text rate.

While the Commission’s analysis acknowledges opposing arguments—including carrier companies’ assertions that the tax “would not preserve and advance universal service because it does not broaden the base of universal service consumers”—the commission ultimately advocated the additional tax burden.

Parties supporting the collection of surcharges on text messaging revenue argue that it will help preserve and advance universal service by increasing the revenue base upon which Public Purpose Programs rely,” they write. “We agree.”

Business advocacy groups like the Bay Area Council, the California Chamber of Commerce, and the Silicon Valley Leadership Group estimated that the proposed tax could generate $44.5 million in tax revenue per year. However, “they add that under the regulators’ proposal the charge could be applied retroactively for five years—which they call ‘an alarming precedent’—and could amount to a bill of more than $220 million for California consumers,” Mercury News reports.

“It’s a dumb idea,” said Jim Wunderman, president and CEO of the Bay Area Council business advocacy group. “This is how conversations take place in this day and age, and it’s almost like saying there should be a tax on the conversations we have.”

Wunderman also questionedthe necessity of additional taxes, referencing California’s current budget surplus:

“While perhaps well-intentioned, the specific programs that the commissioners are hoping to fund with your tax dollars already has around $1 billion to spend. These programs are not in need of greater funding from texting or any other source, and even if they were, there is already an approved, transparent process at the commission to raise the necessary funds without the need to create new taxes.”

Further, the proposed fees make even less sense considering the rise in popularity of internet-based messaging services like Facebook Messenger, Skype, WhatsApp, and Telegram, which would not be subject to the tax. In fact, the tax could very well push consumers further toward these internet-based apps to avoid extra costs.

Harming Californians in the Name of Helping Them

The November document is not legally binding, but it does assert the Commission’s alleged power to impose a texting tax.

Whether or not the proposed tax becomes actual policy come January, the simple fact that it has been suggested at all illustrates the misguided yet pervasive belief in California that government omnipotence can create prosperity.

It’s precisely this type of thinking that has caused the Golden State to squander one of the largest economies in the world, driving away businessesand individuals alike and inflating costs of living with the imposition of convoluted, interventionist policies. Because of restrictive zoning laws and bureaucratic regulations that make housing inaccessible to the middle class and the poor, for example, California continues to claim the highest rate of poverty in the country despite the billions of dollars it spends on welfare and social services.

Despite the best—and heavy-handed—efforts of politicians and bureaucrats, the people they claim to represent continue to suffer under their policies. This should all come as no surprise. As economist Friedrich von Hayek observed:

“To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm.”

Source: The Conceit Behind California’s Bad Idea to Tax Text Messages - Foundation for Economic Education