If you feel like your cell phone bill gets bigger every time you see it, brace yourself: Rates are about to go up again. As Congress scrambles to balance the budget – even as spending has spiraled to a whopping $1.3 trillion for this fiscal year – they hit upon a realization. Texting is more popular than ever, with nine out of ten American adults owning a cell phone. Billions of texts are sent each year either as phone-to-phone or through mobile apps, which means that a tax on messaging would generate millions of dollars in new revenue annually.
You can’t tax email under current law. Under the Internet Tax Freedom Act (ITFA), there’s a prohibition against taxing email (that’s been the rule since 1998). And while the ITFA had been the source of some debate, on February 24, 2016, President Obama signed the Trade Facilitation and Trade Enforcement Act of 2015, making it public law (you can read Pub.L. 114–125 here).
There is no such prohibition on texts sent using cellular data. And Americans are already used to paying additional fees and taxes associated with cell phones. Nationwide, taxes make up 18.5% of the average U.S. customer’s cell phone bill with some states, like Washington, topping out at 25.58%. It’s easy to include additional taxes without making taxpayers angry because most don’t read their bills closely. Even if they did, taxpayers likely still can’t differentiate between service provider fees and federal, state and local taxes. Minority Leader Nancy Pelosi (D-CA) conceded as much, saying, “Let’s face it. Those cell phone bills are as long as our Congressional bills. We know from the tax reform bill and the omnibus that nobody – including us – reads those.”
That’s why today, House Majority Leader Paul Ryan (R-WI) announced the introduction of legislation that would impose a tax on cell phone text messages, noting that it would be “irresponsible” not to try and tax absolutely everything. The Stop Texting Fair Use Act (STFU Act) would apply to messages transmitted using the Short Message Service (SMS), messages containing image, video, and sound content (MMS), and messages sent using app-to-app services like Whats App and Facebook Messenger. For taxpayers who wonder how the latter would work from a data gathering perspective, no worries: If the Russian government can get your data, so can the Americans.
Here’s how the STFU Act tax would work. A base tax of $1.00 would apply to the first 1,000 characters per month. After that, an additional 10 cents would apply up for each additional 1,000 characters.
It might sound like a small price to pay but it can quickly add up. Studies suggest that 6 billion text messages are sent in the U.S. each day. If you assume 6 words per text, that would result in billions of dollars in new tax revenue per month. Fiscal hawk Sen. Rand Paul (R-KY) urged his fellow representatives to “Just do the math,” pausing and adding, “Literally, do the math. My calculator can’t do billions.” After several minutes and several meters of calculator ticker tape later, most of Congress agreed that the tax would raise “a lot of money.”
What about those ubiquitous memes, emojis, emoticons, and giphys? Emoticons, which represent moods and facial expressions using a combination of punctuation marks, numbers, and letters, are the darling of the texting world. Traced back to the 19th century, they have long been used in friendly notes and communications before digital forms of emoticons were introduced in 1982 by Scott Fahlman of Carnegie Mellon University. Once thought of as superfluous, emoticons are now a serious business with downloadable apps and customized, animated expressions used to convey a quick LOL or SMH. How to tax those – since they aren’t really words – was a surprisingly easy problem to solve. Sen. Chuck Schumer (D-NY) had the perfect solution. “If I’ve learned anything from former Representative Joe Barton (R-TX), it’s that a picture is worth a thousand words. Or characters, as the case may be.” With that, all non-verbal text inclusions – from memes to emojis – will be taxed at a flat ten cents. So one poop emoji or crying Michael Jordan basketball meme would set you back a dime. But totally worth it, right? 😉
As with all tax provisions, the committee agreed that the tax would need to be as complicated as possible. The rate would apply to phones registered to adults, so that text messages otherwise attributable to children would also be captured. Seniors – those over age 65 – would receive a 1,000 character exemption each month, largely because many in Congress felt that it wasn’t fair to reward younger texters who have an affinity for skipping vowels or using alternate spellings, amirite?
Also exempt? #SisterJean memes because, as Sen. John McCain (R-AZ) noted, “We all need a reason to smile” and the praying hands emoji which Vice President Mike Pence insisted should be exempt on religious grounds.
Additionally, in response to concerns about the Americans With Disabilities Act (ADA), the proposed Apple disability emojis with hearing aids, wheelchairs, and white canes, would not be subject to the tax.
Finally, with a nod to Trenton Garmon, typos would be ignored but only if they were followed up with a correction marked with an asterisk. For example, if you typed, “I am a gud lawyer,” that would only count as 10 characters so long as you followed up immediately with “*good.” A later amendment clarified that the asterisk, when used as a correction, would always be ignored in the character count. Other exemptions and loopholes would be written in at a later time when no one was paying attention and would be effective retroactively – Rep. Kevin Brady (R-TX) was firmly convinced that all of this information would fit on a postcard.
An amendment to impose a surtax on those who insist on useless group texts for the most simple of tasks – like choosing lunch – was immediately attached to the bill with Sen. Maria Cantwell (D-WA) mumbling, “I’m looking at you, Roberts. Every. Single. Time. Nobody will ever say yes to a group breakfast at Taco Bell.”
If this all sounds confusing, it is meant to be. Thankfully, you won’t have to worry about those calculations: Cell phone and app companies are responsible for monitoring your texting and making the appropriate calculations for the tax. When asked how long it might take to get such systems in place, Facebook founder Mark Zuckerberg simply laughed, noting that the company had been monitoring user text messages for years.
Rep. Ted Lieu (D-CA) raised the issue of whether Congress should be more concerned about taxpayer privacy. His questions about who might have access to the text messages and how the data might be stored were met with chuckles. In particular, Rep. Devin Nunes (R-CA) took several moments to regain his composure before querying, “Wait, you’re serious?” Suggestions included reviving former Vice President Gore’s “lockbox” idea and applying it to text message data. As Rep. Lieu tried to explain that he wasn’t sure that those putting forth the idea completely understood what they were saying, he was cut off by a number of Congressional officials who suggested that the lockbox could be attached to the Internal Revenue Service (IRS) IT systems. He immediately conceded that it was worth the dime to message a facepalm emoji to his staff.
The Trump administration has yet to formally comment on the proposal, though the President did seem to favor the proposal once he determined that tweets didn’t count as text messages.
It was widely agreed the matter would be discussed only on April 1, 2018, April Fool’s Day.
In case it wasn’t quite obvious, this is my April Fool’s Day post: There is no current proposal to tax text messages so feel free to pass the link to this post to all of your friends at no charge.
I have fun with my April Fool’s Day posts every year. You can read some of the prior posts by clicking below:
- IRS Announces National Search To Replace The Commissioner
- Congress Considers A Tax On Email
- IRS Introduces Tax Return Vending Machines
- Congress Bites at Pet Exemption
- IRS Offers Discount for Cash Payments
- Obama Administration Takes Heat for Planned Fat Tax
- Congress Proposes Federal Tax on Downloaded Music
- IRS Considers Tax-Exempt Status for Bloggers
- IRS Offers Bonus Charitable Deductions For A Limited Time