Finally Some Good News on Taxes

Finally Some Good News on Taxes

It was April 19, 1898; the House of Representatives voted 311 to 6, after a highly charged emotional debate, to go to war with Spain. For months tensions had been growing around the country. In February, the USS Maine had been bombed in Cuba and 266 crewman had lost their lives. America was headed into the Spanish American War.

The Congress needed a new source of revenue to build the ships and pay an army to fight the war. A luxury tax was envisioned on wealthy Americans. It was decided that a tax on telephone calls would be enacted and the Spanish American War Telephone Tax was born.

Last week, 108 years later, the tax finally died. Though the tax has been twisted and amended over time it is now finally gone. After July 31st it will no longer appear on your monthly phone bill.

For over a hundred years people have tried to eliminate the tax. I cosponsored such efforts in the fall of 2005. The federal government finally conceded and after more than a century it has been repealed.

What began as a tax on rich people, who were the only Americans using telephones at the time, eventually became a 3 percent federal excise tax on your long distance bills. That three percent is being charged to all of us who pick up a phone and make a long distance call.

There are few things harder to get rid of in Washington than a tax. The institutional resistance coupled with pure partisan politics makes eliminating a tax not only difficult but a very rare occurrence.

The Spanish American War Telephone Tax was modified in World War I and again in World War II. During the Vietnam War the tax was increased to ten percent of your phone bill. Today the three percent tax amounts to almost $6 billion annually.

Critics of the tax call it a 19th century tax on 21st century technology.

The tax will not be collected after July 31, 2006. More importantly on next years' tax returns the IRS will offer people a standard refund amount on 2006 tax filings for the last three years of tax payments. The standard deduction may average slightly more than $50 a year. However, that is $50 dollars that belongs in your pocket not the treasury of the federal government.

The last known surviving veteran of the Spanish America War was a man named Jones Morgan. Mr. Morgan lived in Richmond, Virginia. He passed away in 1993 at more than 110 years of age. His was a remarkable, long, and history filled life. The Spanish American War Telephone Tax outlived him by 13 years. May they both rest in peace.

BREAK IN TRANSCRIPT

http://www.house.gov/list/press/oh02_schmidt/good.html