(The Center Square) – The end of landline telephones in Wisconsin will result in a 97% drop in the state’s telephone taxes.
A recent report from the Wisconsin Policy Forum looks at how the state’s telephone tax revenue has plummeted since the mid-1990s.
“Revenue from the state tax on telephone company property sank last year to its lowest level since the 1970s, a reflection of a shifting telecommunications landscape and a series of tax changes over time. Now, a recently adopted state law will almost eliminate the tax, which takes the place of local property taxes on telephone companies. Proponents say this approach makes sense in a world where traditional monopolies no longer hold sway, and levels the playing field now that the state has ended a related tax on other businesses,” the report states. “Telecommunications companies paid the state of Wisconsin just over $50 million in telephone taxes in 2023, a 26.6% drop from the prior year and less than one-third of peak collections in 1997. The fall in telephone tax revenues isn’t finished; a 2024 law will lower collections to an estimated $5 million by 2027 and beyond.”
Wisconsin brought in $176 million in telephone taxes in 1997.
Since then, the report explains, both the telephone market and Wisconsin’s tax policies have changed.
The biggest change in the telephone market is that people have moved away from landline phones and moved toward cell phones. Wisconsin lawmakers, however, included cell phone technology in its telephone tax over the years.
The Policy Forum report said the biggest change in tax policy is the Republican legislature exempted telephone companies’ property from the state’s tax rolls.
“The recent changes are part of a much larger shift in which, over several generations, the state has repealed essentially all local taxes on personal property such as equipment, furniture, and tools while retaining property tax levies on land and buildings. Other types of utilities, like municipal electric companies, pipelines, and airlines however, are still subject to personal property tax,” the report adds. “Shifting how telecommunications companies’ personal property is taxed shows that state leaders are treating telecom providers more like businesses in more competitive industries and less like utilities.”
The report doesn’t say what will happen when the state sees just $5 million in telephone taxes in a couple years. The Policy Forum does note that Wisconsin has a record budget surplus.
The other question left open by the report is how Wisconsin lawmakers will treat other companies, particularly cable TV providers, as they change their technology as well.
“For the benefit of both consumers and the various competing companies, elected officials have understandably been working to avoid or reduce differences in taxes and fees across different types of providers who now find themselves in essentially the same line of business,” the report adds in its conclusion. “Efforts to do so can reduce revenues for the state or local government, a potential concern since these funds could be used to increase broadband access or other worthy goals. They have also created a case where one traditional utility is now exempt from personal property taxes, while others continue to pay them. On the other hand, reducing taxes on telecommunications infrastructure may offer some benefits by making the state a more appealing place for future investments by telecom providers and by acknowledging the more competitive marketplace that now exists.”
