Working Paper: NBER ID: w7281
Authors: Jerry Hausman
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.
Keywords: No keywords provided
JEL Codes: H22; L51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Taxation of wireless services (L96) | Economic efficiency loss (D61) |
| Taxation of wireless services (L96) | Suppressed demand for wireless services (L96) |
| Suppressed demand for wireless services (L96) | Economic efficiency loss (D61) |
| Taxation of wireless services (L96) | Cumulative tax burden (H22) |
| Cumulative tax burden (H22) | Impact on consumer behavior (F61) |
| Taxation of wireless services (L96) | Economic drain (F69) |
| Prospective taxes (H29) | Efficiency loss (H21) |