Tax Group Targets Spanish-American War Tax

Tax Group Targets Spanish-American War Tax
June 1, 2005

Americans for Tax Reform (ATR) announced on March 10 that it would make repeal of a 107-year-old federal excise tax on telephone service a major priority in the current session of Congress. Since then, support for the proposal has been increasing.

The tax--a flat 3 percent on every telephone bill--was enacted in 1898 to fund the Spanish-American War.

"More than a century ago, the federal government sold the American people a bill of goods by telling them this was a 'temporary' tax to fund the Spanish-American War," said ATR President Grover Norquist.

"I'd say 107 years is plenty for the life of a so-called temporary tax. What's even more insulting is that the tax doesn't even go to any specific purpose, but instead just goes into the general fund."

In a letter to all 535 members of the U.S. Senate and House of Representatives, ATR said "repealing the Spanish-American War tax is a major priority of the taxpayer movement, and ... support for repeal might be included in ATR's annual congressional ratings."

"At the time, it was billed as a luxury tax," noted Norquist, "since only the wealthiest Americans owned telephones. Today, however, the telephone is a ubiquitous part of the everyday lives of businesses and consumers. This tax hurts almost everyone."



Congressman Promises Repeal Bill

Rep. Gary Miller (R-CA) has promised to introduce legislation to repeal the tax.

"The Spanish-American War 'luxury' tax on telephone services has long outlived its purpose, and I am committed to its repeal," Miller said.

Rep. Virgil Goode (R-VA) on March 14 became the first member of the 109th Congress to sign and return to ATR a form stating his intention to end the tax. By March 23 seven members had made the promise.

"Representative Goode showed real leadership by being the first to voice his support for repealing this ridiculous tax on telephones," said Damon Ansell, chief of staff for ATR. "Since Virgil Goode signed our form, several other prominent members of Congress have also done so, including Republican Jim Sensenbrenner of Wisconsin and Republican Chris Cannon of Utah."

Each of these Congressmen has said "Yes" to the following question: "If legislation to repeal the 3 percent Spanish-American War tax on telephones came to the floor, would you vote in favor of repeal?"

Rep. Jim Ramstad (R-MN) said, "The telephone excise tax is an absurd relic that should have been repealed a century ago."



Repeal Vetoed in 2000

The House and Senate passed joint appropriations legislation in 2000 that included the Spanish-American War Tax repeal, but then-President Bill Clinton vetoed it.

"The Spanish-American War tax has long [outlived] its purpose. Not only is this telecommunications tax outdated; it places an undue burden on American consumers and is particularly harmful to seniors living on a fixed budget," Sensenbrenner said. "For these reasons, I supported repealing the archaic Spanish-American War tax in 2000 and encourage its immediate repeal."


John W. Skorburg (skorburg@heartland.org) is a visiting lecturer in economics at the University of Illinois - Chicago and associate editor of Budget & Tax News. Tom Readmond (treadmond@atr.org) is a federal affairs manager in charge of communications with Americans for Tax Reform.