NCPA - National Center for Policy Analysis

A Tax From The Spanish-American War Is Set For Repeal

May 17, 2000

Congress passed a "temporary" excise tax on telephone calls in 1898 to help pay for the Spanish-American War -- at a time when there were only 2,000 telephone lines in the entire country. Except for three tax-free hiatuses, it has been on the books ever since then.

Now it appears headed for repeal.

  • The tax amounts to a 3 percent charge on phone bills and costs the typical household $50 a year.
  • It contributes $5 billion to the Treasury each year.
  • Initially, the rate was 1 cent for each call costing 15 cents or more -- but it has fluctuated over the years to as high as 25 percent of the bill.
  • Many times when the tax was scheduled to expire, Congress managed to salvage and extend it.

The House Ways and Means Committee is expected to approve a bill today containing the repeal. It is expected to pass easily in the House and supporters have high hopes it can make it through the Senate.

Source: Irvin Molotsky, "After a Century of Talking, Tax Plan Has a Familiar Ring," New York Times, May 17, 2000.


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