Fortunately for all Californians, Sacramento’s misbegotten scheme to tax texts is over before it could start. The plan — which, for obvious reasons, drew immediate nationwide attention — took a simple premise way over the line. Its demise should be an object lesson in 21st-century governance.
For decades on end, California has applied a tax on utilities and near-utilities such as telephone service that helps ensure everyone, no matter how poor, has access to the basics of energy and communications. That sounds fair enough. And the policy quietly persisted until now, when regulators began to recognize that fewer and fewer Californians use traditional phone lines to make old-style telephone calls. That meant diminished taxes and fewer dollars to subsidize access to services meant to be kept as universal as possible.
So, the logic ran, because Californians have moved so heavily into texting to communicate, the place to get tax revenue for keeping calls universal was in Californians’ text threads. As rationalizations go, it wasn’t a terrible one.
But it had more serious problems — starting with the Federal Communications Commission. The FCC issued a swift ruling on texts, classifying them as an “information service” and not, like traditional telephone lines, a “telecommunications service.” In the face of the rule, the California Public Utilities Commission had little choice but to pull the plug on the text tax.
Even more important, however, was the bigger principle. Once you let taxation into people’s smartphones, there’ll be no logical stopping point. Invasive micro-taxes could be appended to virtually any transaction or communication — and not just for the sake of subsidizing basic talk.
So while the telecom industry worried that text taxes would unfairly punish their product while letting other communications apps such as Skype and WhatsApp fly free, the real concern facing Californians is that their regulators and lawmakers would in fact find plenty of reasons to tax those and other apps too.
At a time when Sacramento is struggling to figure out how to reform its tax code to escape overreliance on the volatile income taxes of the state’s super high earners, our smartphones need to be kept off limits.
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