Beware California's hidden cell phone tax

San Francisco Chronicle ^ | 5/6/5 | David Lazarus

[SmithL]

Gillian Cropp, a San Francisco medical researcher, ordered a new cell phone from Nextel. When it arrived in the mail the other day, she discovered that she owed $74.99 for the handset (which she expected) and $19. 12 in sales tax (which she did not).

That's a nearly 25 percent tax.

Or is it?

Cropp learned -- after wading through a series of Nextel service reps - - that despite paying a discounted amount of $74.99 for her phone, she was being taxed for the more than $200 full retail price.

"I was incensed," she said. "If you get a reduction on the price of a car, you don't still pay taxes on the full price. It's not right."

It is, however, a California regulation.

[SmithL]

I remember when this was implemented about 10 years ago. When they closed all the military bases in Northern California, I found myself between jobs. I spent a summer working at Radio Shack, selling phones for a penny. When they imposed this tax, I thought it might hurt the sales of phones. Silly me.

[newgeezer]

Some legislators are very good at identifying and solving problems. I'm sure Californians are adept at choosing the best problem-solvers.</sarcasm>

[26lemoncharlie]

Taxation, Taxation, Taxation! Rip you off somehow!!

[KarlInOhio]

The price of the phone bill subsidizes the discount on the phone. If Kookifornia taxes cell phone bills like Ohio does, that means they charge taxes on both the undiscounted price of the phone and the part of the bill used to subsidize the discount. If would be a far better deal to just pay for the phone and get on a cheap contract which doesn't subsidize the discount on the phone.

Forget the mafia, government is where the real crooked money can be made.

[AppyPappy]

For some reason, this reminded me of a funny incident I overheard while waiting for my wife to cease shopping. A woman was at a cell phone kiosk trying to get her phone reconnected. The kiosk worker was trying to argue that she needed to pay her bill. She was arguing that paying her bill was irrelevant because she just needed a phone. Neither one could follow the logic of the other. She didn't see why not paying the bill was relevant to her phone situation. And she proved it by rattling off all the people she needed to call.

It was truly enjoyable.

[edcoil]

This happened to me as well when I purchased new phones for the family. The phone was $79.00 with new service only and the second phone was "free". In the little print it said the phones value were $350.00 without a new service so, on the new phone and the free phone I had to pay tax on the $350 each or the "preceived value" because I never would have purchased a $350 phone.

I recently lost my phone and went to buy a replacement and they wanted $400.00 - I went on ebay got one I liked better for less then $100.00.

Maybe market forces will work if we stop buying the new phones and they bring the price down.

[Antonello]

The 'discounted' price is actually just your cost after an instant rebate. This is no diffrent than anything else you would buy under rebate conditions. It is not unique to cell phones.

[af_vet_rr]

Taxation, Taxation, Taxation! Rip you off somehow!!

Try living in Texas where so-called Republicans are hell-bent on turning many already paid for roads into toll-roads, and when confronted, refuse to acknowledge it's an additional tax, even though it is.

[26lemoncharlie]

The Problem is that we are electing Pro Politicians, instead of electing regular everyday working people. Lawyers, Politico's are not the ones that we need in office, we need working stiffs, Unemployed Godfearing Americans that believe in and will uphold the US Constitution!! Lawyers and Politicians are like Whore's!!