When it comes to taxes on cellphone bills, Ohioans pay among the lowest rates in the nation.
According to the Tax Foundation, a Washington-based tax policy research group, only residents in nine states pay a lower combined rate of local, state and federal taxes than Buckeye State consumers. The foundation averaged Ohio’s state and local portion at 8.5 percent to go with the 9.1 percent federal tax posted on the monthly bills.
That means an Ohio resident who has a $100 monthly cellphone bill pays about $210 in taxes a year. That’s about $50 less than the national average and $94 less than what their neighbors in Pennsylvania would pay.
In fact, according to the institute, all of Ohio’s neighboring states levy higher taxes for residents to use their cellphones.
The foundation averaged Ohio’s rate by taking the 1.8 percent sales tax rate in Columbus, the capital, and the 2.3 percent rate in Cleveland, the state’s largest city, said Ulrik Boesen, a senior policy analyst for the foundation. That averaged to be 2 percent on top of the nearly 5.8 percent state sales tax rate, along with a 0.1 percent regulatory fee and a 25-cent charge per number for wireless 9-1-1.
In actuality, the tax rate is lower in some counties. Three counties – Butler, Stark and Wayne – have combined state and local sales tax rates of 6.5 percent, and 16 more have a tax rate lower than 7 percent.
Ohio law allows counties to add up to nearly 2.3 percent to the state tax, capping the combined rate at 8 percent. Only Cuyahoga County, home of Cleveland, charges that rate.
Boesen said the foundation typically supports consumption-based taxes, like a sales tax.
“They are generally the least distortive taxes if they are well-designed,” he said. “Effective consumption taxes do not punish investment or savings and have the least effect on consumer and business decision-making. A well-designed sales tax has a broad base taxing most consumer goods and services at low rates.”
While the foundation’s average state tax rate did not change for Ohio from 2018, Ohioans are still paying more this year thanks to a 36 percent increase in the surcharge the federal government mandates wireless carriers pay.
While Pennsylvania ranked seventh-highest in the nation for tax rates, the rest of Ohio’s neighbors ranked below the weighted average of 21.7 percent. Indiana came in 24th in the nation at 21 percent, and Kentucky tied for 28th at 20 percent. West Virginia (19.3 percent) and Michigan (19 percent) came in 32nd and 33rd respectively in the study, which also included Puerto Rico and the District of Columbia.
— Courtesy of The Center Square