Americans rightly wonder why politicians have so much trouble just “getting things done.” The latest and greatest example of this has just played out in Washington right now, though with attention focused on the Florida vote recount disaster, this particular farce did not get nearly the attention it deserved.
One of the casualties of the budget wrangling between Congress and the White House is a tax cut that should have been a no-brainer. In fact, lots of people are probably under the impression that the 3 percent federal excise tax (FET) on all telecommunications services was already repealed. But in the end, even this tax, one that had no constituency, whose repeal had no opposition, looks like it is on the books in perpetuity.
When this federal excise tax the so-called “Spanish-American War Tax” was enacted in 1898 as a “temporary luxury tax” to help finance the Spanish-American War, only a privileged few owned a telephone. The war is long over, and today over 94 percent of American families have telephone service. They all would get tax relief from this repeal, but the heaviest burden would be lifted from lower-income families who have to use a greater portion of their income to pay this tax. In addition, repealing this tax will lower the cost for Internet access over phone lines, helping bridge the digital divide and encouraging the growth of our important telecommunications infrastructure.
As the head of a senior citizens group, let me put this issue into historical perspective. Having worked on or around Capitol Hill for 38 years, since 1962, I’ve seen a lot of taxes come, but not many go. The time for this tax to go has surely come. Considered a “luxury” when few owned telephones, this little-noticed 3 percent tax now garners over $5 billion annually for Uncle Sam. It is clearly regressive in that those on lower and fixed incomes, such as senior citizens, pay a disproportionately higher part of their available funds. Thus, it makes it more expensive for seniors who maybe calling children, grandchildren, friends or calling their pharmacy. The telephone is often the only link with the outside world for homebound senior citizens.
Having sailed through both houses of Congress with nary a whisper of opposition, one would have thought this tax was headed for the law books. Some 420 congressmen and 97 senators supported repeal of this outdated and regressive tax. Finally! A tax is actually repealed! Could it be?
The tax passed Congress in a variety of vehicles. The tax passed the House as its own bill. The Senate passed the tax repeal as an amendment to the death tax. When all amendments were stripped from the death tax bill, the Spanish-American War tax became attached to the Treasury-Postal Legislative Branch Conference Report. This bill passed the Senate but, even though the White House said the repeal of this tax was a “worthy policy objective,” President Clinton vetoed the bill that contained this tax cut. He vetoed a tax cut for virtually all Americans.
Now, the repeal of a tax with overwhelming bipartisan support will potentially forever stay on the tax books because of an administration that puts bad politics ahead of good policy.
This federal excise tax is comparable to the federal estate or death tax. Both taxes were imposed to finance war efforts, but somewhere along the line, as it so often happens in Washington, they became a convenient source of revenue.
Pundits lament the cynicism of the American public. But when the simplest change in policy one that has overwhelming bipartisan support cannot even be met, who can blame them?We welcome your opinions. Please email your letters to the editor to firstname.lastname@example.org. All letters may be edited for clarity and length. Please include your name, daytime telephone number, city and state.
Jim Martin is president of the 60 Plus Association, a nonpartisan senior citizens’ organization.