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Get Ready to Pay Higher Taxes on Gadgets

A story on SmartMoney.com today pointed out that not all taxes are going to work out in favor of consumers in 2011.

State and local governments are pressed for cash, having run through the Federal stimulus money that came their way this year. Declining home values and more out-of work residents have helped to shrink the tax rolls of states and municipalities. And they have a lot of ground to make up.

To do so, many are raising taxes and fees on the recurring bills for the things consumers use every day — like cell phones and cable service — and on the ever-more-popular downloadable e-book.

Quoted in the story is independent tech analyst Jeff Kagan, who says: “Governments are putting their hands into a variety of pockets, and they’re looking at what’s new and hot.”

On average, the story says, 15% of a monthly bill for a cell plan is made up of taxes and fees. But in some states, that amount is above 23%. And municipalities can tack on their own taxes and fees, too.  Those can add up to several dollars a month.

Other tax targets include e-books and cable television service.

Some 1.3 million e-readers are expected to be sold this holiday season, according to Forrester Research. And proud new owners should anticipate that the books they download could face double-taxation in some cases. You might be taxed in the state where you live and in the state where the e-book seller’s server is housed. That could add up to more than $1.50 in taxes on every book downloaded.

Readers, which of these new taxes will hit you the most? Is there a taxation level where you’d consider ditching your cell phone or cable service?

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    • Furrealz? That’s marvlouelsy good to know.

About The Tax Blog

  • The Tax Blog brings together a team of award-winning tax journalists from the Dow Jones network and around the web to examine the tax issues, changes and legislation that affect families, investors and small business owners. Our contributors include Tax Report columnist Laura Saunders (WSJ), Tax Guy columnist Bill Bischoff and senior reporter Jilian Mincer (SmartMoney.com), retirement-focused reporter Anne Tergesen (WSJ), wealth management writer Arden Dale (Dow Jones Newswires), TaxWatch columnist Eva Rosenberg and personal finance reporter Andrea Coombes (MarketWatch), and reporter Alyssa Abkowitz (SmartMoney). They’ll provide the latest news and insight, mine the tax code for tips and loopholes, and answer your questions about tricky tax situations. Contact the The Tax Blog with ideas, suggestions or tax questions at thetaxblog@dowjones.com.

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