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108-Year-Old 3% Telephone Tax On "Wealthy Americans" Who Own Phones Ends

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A 108-year-old tax on the wealthy who own phones in order to pay for the Spanish-American war finally ended yesterday. This "temporary" tax was implemented on only the rich in America... those who own telephones. It finally was put to rest yesterday, but only for long distance. The tax remains on local calls.

The "tax the rich" mentality always seems to backfire in some way as it eventually applies to those in the middle classes and then on the poor. Funny how that works eh? The other funny thing is there was no champion in the government willing to put this tax to rest sooner, neither on the Democrat or Republican side of the aisle.

The 1898 tax was initially set at 1 cent per call and repealed in 1902 only to be reinstated in 1914 for World War I. Since that time it was increased to 3% as recently as 1990. The House of Representatives voted a few years ago to repeal it, but our lovely member in the Senate -- who never seem to do a damn thing for the people of America except continue to push through ridiculous garbage -- managed to stall and ignore voting on it.

The recent repeal bill was pushed through in May against fierce opposition by Senators Rick Santorum (R-PA), Mike Crapo (R-ID) and Gordon Smith (R-OR). Prior to this bill members of Congress in January were actually trying to increase the scope of the tax to include Internet telephony, cellular and broadband like DSL connections.


As of Tuesday, all phone companies selling long-distance phone service are legally required to eliminate the 3 percent federal excise tax on long-distance service, which had been established in 1898 as a luxury tax on wealthy Americans who owned telephones.


After a long legal battle and strong urging from Congress, the Internal Revenue Service and the Department of the Treasury decided in May to discontinue the federal 3 percent excise tax on long-distance telephone service effective Aug. 1.

It also decided not to apply the tax to wireless, voice over Internet Protocol service, prepaid telephone cards and other bundled services. The IRS also said it would allow taxpayers to claim a refund in 2007 for taxes collected on those services retroactive to February 2003.

The last portion of the tax, pertaining only to local telephone service, remains in effect.

I believe the concept of income tax as a whole was a temporary thing as well. "Congress - We're looking out for you!"

Tipped by: Say Anything

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Posted by Digger on August 2, 2006 12:01 PM (Permalink)

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