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Wireless tax hits Nebraskans hard

Wireless tax hits Nebraskans hard

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If your cellphone bill seems unreasonably high, you’re not alone, especially in the state of Nebraska.

The Tax Foundation, a nonpartisan tax policy research group, published a report Tuesday that found Nebraska has the second-highest state-local wireless tax in the country, at 18.67 percent. Combined with the federal universal service fund (USF) rate of 6.64 percent, some Nebraskans are paying 25.31 percent in taxes on their cellphone bill.

That number does vary based on local sales and business taxes.

The 18.67 percent was calculated using the average sales tax in Omaha and Lincoln (1.63 percent) and the business and occupation taxes (6.13 percent).

The local sales tax rate in Columbus is 1.5 percent.

The state sales tax is 5.5 percent and Nebraska also charges 4.37 percent for the universal service fund, which is almost seven times higher than the amount recommended by the Federal Communications Commission. There are also charges for 911 calls and telecommunications relay service (TRS), the service that facilitates telecommunication for the hearing impaired.

And those TRS charges apparently add up.

Simon House director Lucy Lutjelusche said although that organization focuses on more basic needs, such as food, shelter and electricity, she made an exception to help a hearing-impaired man pay his phone bill because the TRS charges alone added up to $40 that month.

“How can we charge somebody who has a disability that much money?” she said. “He is disabled. He is deaf and that is his only means of communication.”

Lutjelusche said for many low-income people a cellphone is their only means of communication to contact work, family and friends. For some, it’s also the only device they own to access the internet, which is the primary method to find and apply for jobs and assistance.

“A lot of agencies are going to online applications,” Lutjelusche said. “So not only do they need a phone, but they need a phone with internet.”

Sometimes that means they have to forgo other needs to pay their cellphone bill.

“The sad part about it is it’s a monthly bill — it’s not one you pay every six months. And if it’s high, I know a lot of people will hold back on spending money on food, on their electricity, on medication,” she said. “So they come to us looking for help with their basic needs so they can pay for their cellphone bills.”

Columbus Emergency Relief executive director Rosetta Jantzen said she teaches a “Getting Ahead” class designed to help people with low incomes have greater financial security. One of the topics she covers is how to identify industries that prey on the poor. She said some cellphone companies fit that definition.

“A predator is someone who preys on someone who doesn’t have another option,” said Jantzen. “When you push a contract onto somebody when they don’t know they have another option, they pay hundreds of dollars for cellphone service.”

The U.S. Census Bureau’s American Community Survey found that 12.6 percent of Nebraskans earned below the national poverty level in 2015. That means more than 1 in 10 Nebraskans earns less than $11,880 for an individual or $24,300 for a family of four each year.

And it isn’t because they’re not working.

James Goddard, director of the economic justice program at Nebraska Appleseed, said Nebraska has one of the highest rates of people with multiple jobs in the country. Those people are still struggling to make ends meet.

“Having access to a smartphone and cellular phone is really important if you’re low-income or high-income,” said Goddard. “Every dollar counts if you’re lower-income. That is going to hit lower-income families in a harder way.”


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