Your Phone Isn’t A Luxury

Ken AshfordEconomy & Jobs & DeficitLeave a Comment

Back in 1898, the federal government imposed a 3% excise tax on all long-distance phone calls.  It was called a "luxury tax", because back then, only the wealthiest Americans could make long-distance phone calls.  In fact, most Americans didn’t have a phone.

Oddly enough, that "luxury tax" has been with us for 108 years, even though phones and long-distance calls are commonplace.   And throught our whole lives, we’ve been paying that extra 3%.

Until today.

After losing in a series of court challenges, the IRS is giving up trying to keep the long distance "luxury tax" alive.  In fact, since the lawsuits were brought three years ago, the IRS has to give you a refund for the luxury taxes you’ve been paying, with interest.  Here’s the IRS announcement.

Don’t worry — you don’t have to do anything now.  You’ll get to claim your refund on next year’s tax return.  You won’t need to rifle through old telephone bills either (you did keep them, didn’t you?) — the IRS assures us that they will employ a "straightforward system" that is "simple and fair".  (And if you believe that….)