Majority of House of Representatives signs on to end 108-year-old tax on talking

WASHINGTON – H.R. 1898, which would repeal the 3% federal excise tax on telecommunications, a 108-year-old “temporary” tax enacted to fund the Spanish-American War, gained its 218th co-sponsor this week. A majority of the House is now cosponsoring the legislation.

While the Spanish-American War tax was originally billed as a luxury tax in 1898, when only the wealthiest Americans had telephones, the telephone has long been a necessary part of American life. The tax is also highly regressive, as it represents a greater share of the income of low-income and minority households. Consumers can find this tax listed on their phone bills as “Federal Excise Tax.”

The Treasury Department recently ended the tax on long distance service, but according to the congressional Joint Committee on Taxation, this still leaves approximately 80% of the tax in place.

“Americans should not have to look at their phone bill every month and see a charge for 'Federal Excise Tax,' the clever government description for the Spanish-American War tax,” said Americans for Tax Reform president Grover Norquist. “Now a majority of the House would not only vote to repeal the tax, but have proactively signed on as cosponsors. This is a real benchmark in the battle to finally end this tax.”

The Senate companion to H.R. 1898, S. 1321, sponsored by Sen. Rick Santorum (R-PA), has been reported favorably by the Finance Committee and awaits a full Senate vote. However, the Constitution requires that the House pass tax legislation before the Senate may act.