California Regulators Want to Tax Texts You Sent 5 Years Ago

Although they might not have the legal power to tax texts at all.


Tero Vesalainen/

The State of California wants to tax text messages. And not just the messages that people send after the tax passes: The California Public Utilities Commission, which cooked up the proposal, wants the levy to apply to texts sent up to five years ago.

The concept of taxing cellphone and landline use isn't actually new (see: all those surcharges at the bottom of your phone bill). But a fee specifically associated with text messages is.

The reasoning behind the new tax is relatively simple. The state's Public Purpose Program (PPP) currently funds communication services for low-income earners as well as deaf and otherwise disabled residents. The budget for that program has risen from $670 million in 2011 to $998 million in 2017. Over that same period, the telecom revenue that's subject to PPP surcharges has dropped from $16.5 billion to $11.3 billion. That's not surprising: As Engadget explains, people simply don't make as many phone calls as they used to.

The proposed fee wouldn't be imposed on a per-message basis. Instead, it would be an added surcharge based on what kind of texting service a user pays for.

Some important details of the plan are unclear. "Does the sender pay? Does the receiver pay?" asks Jim Wunderman, president and CEO of a California business group called the Bay Area Council, in an interview with USA Today. "What if you move out of state but you keep the California number? What if you drive down to Reno, Nevada and get a phone? Can you avoid the charge then? These are all things that would be really hard to resolve."

It's unclear what the text tax's impact would be on a per-customer basis. But the Bay Area Council, the California Chamber of Commerce, the Silicon Valley Leadership Group, and other business advocacy groups tell the San Jose Mercury News that it would cost consumers as a group roughly $44.5 million a year.

And not just future years. "Wireless carriers who have not reported and remitted surcharges on text messaging within the last five years shall identify the amount of intrastate surcharges owed on text messaging services and propose a payment plan in their advice letter filings," the proposal states. In plain Engligh, that means the proposal would retroactively apply to the past five years. Taxpayers would be on the hook for roughly $220 million right off the bat.

The tax would not apply to internet messaging services such as Facebook Messenger, WhatsApp, and iMessage—platforms that many people use instead of traditional texting. That raises the question of unequal enforcement. "Subjecting wireless carriers' text messaging traffic to surcharges that cannot be applied to the lion's share of messaging traffic and messaging providers is illogical, anti-competitive, and harmful to consumers," the CTIA, a telecommunications industry trade group, argues in a legal filing.

It's not even a given that the California Public Utilities Commission has the legal right to do this. Thanks to a rule adopted by the Federal Communications Commission yesterday, text messages are now considered an "information service," which the commission may not have the authority to tax. According to the CTIA's legal filing:

The FCC has explicitly stated that "revenues from information services…have never been included in the contribution base," and states may surcharge information service revenues only if the FCC has specifically authorized such surcharges and prescribed a jurisdictional allocation methodology for the service at issue. Because text messaging is an information service as to which the FCC has never authorized state surcharges nor prescribed an allocation methodology, the surcharges contemplated…are contrary to federal law.

The utilities commission will vote on the proposal on January 10.

NEXT: Jeff Flake: America 'By No Means Immune' to Authoritarianism

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. LOL, DIAF fascists

    1. DIAF? Can’t we just do the modern version of tar & feather? You know, a quick blast with saturated steam so their skin sloughs off then encrust them with salt. It seems only fitting for anyone who would pass an ex post facto tax.

      1. Shotgun blasts to the face will suffice.

  2. California Public Utilities Commission has the legal right to do this.

    Why is a non-legislative entity trying to pass any tax?

    1. That was my very first thought. I guess they are trying to get people used to the concept of taxation without representation.

  3. In other news: California to levy a tax on breathing. And don’t try to get out of it by dying! There will be an exit tax levied for that.

    1. To be fair, they will only tax exhaling, because it emits carbon dioxide. It is to save the planet.

    2. Yet the decaying body releases methane, much worse the Carbon Dioxide. Please pay that tax before expiring, by the pound please.

  4. Since there is not an easy way to identify ‘California’ texts based on the phone number, all texts world wide will be taxed; in the name of fairness.

    1. Given that the Supreme Court voted to allow states to tax out of state purchases, your joke isn’t all that far-fetched anymore.

      1. I’m sorry, did it look like there was a sarc tag?
        The Supreme Court has rule that any state can tax any damn thing they please, regardless of political boundaries, and that the federal government can mandate that citizens make specified purchases. What is left?

    1. Is there a difference?

      1. Yes. Onion has to sound plausible; truth does not.

    2. The Onion is dead. They can no longer compete with reality.

      1. The Onion officially lost the Parody Battle when the soda straw bans came out.

      2. Trump wins Presidency!

  5. The politicians in CA must be pretty confident that their constituents are not as brave as some of the French people.

    1. If so, they’re right.

    2. They aren’t.

      Say what about the French, but they have no qualms about revolting and installing a new government. They’ve done it a bunch of times while we only did it once.

      1. Yeah, but that one started over the government trying to tax us to pay for a war they had already fought.

  6. “What does ‘ex post facto’ mean anyway?” – California government officials.

    1. A long, long time ago, the US Supreme Court decided that the constitution’s ex post facto prohibition only applies to criminal statutes. Ex-post-facto taxes are fine and dandy.

      1. Why is one type of crime different from the other?

        1. Because one is being committed by government almighty.

  7. California has such beautiful weather. It is really too bad the worst sort of statist cocksuckers run that place (enabled by their statist cocksucker constituents).

    1. Seems like one large insane asylum

      1. Yes, it is really too bad. Weather, landscape, etc. Could be a paradise, and probably once was. But, if not for CA and a few other places, those people would be where I live.

        1. Don’t forget the drought, fires, earthquakes and insane cost of living and traffic.

        2. They don’t have to be anywhere in the US. We could all get to together and force them to leave. I would rather protect my freedom then endure millions of thieving progtards.

  8. It would not be surprising if this eventually came to the entire US via the Universal Service Fund. During the Obama Administration, the USF was expanded to help subsidize things other than regular phone service (Internet access, etc.). Now, the fee is still levied only on phone service. However, it’s pretty obvious that phone service is declining. It was sustainable to have a fee on phone service that just went to subsidizing phone service, but it’s not sustainable to subsidize something growing with something shrinking. The USF rate on phone service keeps growing by leaps and bounds, but that can’t last forever.

    I argued with shortsighted people about this, who for some reason claimed to believe the FCC and proponents when they said that in no way would the fee go on information services. I just don’t see how that’s possible in the long term if the USF is used to subsidize information services.

    1. Well, I suppose the E-Rate program started under Clinton, but it was expanded along with other non-phone service programs paid via USF funds under Obama.

  9. So if you have a bundled service which includes unlimited texting, one could argue that if on the service as proposed above that the texting is free in the bundle and therefore 5% tax on 0 = 0. Of course the flip would be to take what I pay for the whole bundled service that includes the texting and tax that…but if it is a “texting tax” wouldn’t that open the cellular provider and the state to a class action of overcharging for the text tax. And if the cellular provider says that is a free service?

    1. You’ve obviously never met the IRS, or heard of something called “Original Issue Discount”

  10. Anything that follows “CA Regulators want” is always stupid

  11. I don’t understand the argument that phone service is declining. How many people have cell phones that are WiFi only?

    I know people don’t make calls, but they still buy calling plans in order to access data plans. Don’t they?

    1. For the most part.

    2. Maybe they meant land line phone service is declining

  12. There’s no such thing as too many taxes, and taxing texts is a good idea.
    California should also launch an exhaling tax.
    It will only affect those weaklings who still insist on the barbaric practice of breathing.
    This way, the wise and enlightened in Sacramento will be able to fund more needless and wasteful projects that enrich themselves and their cronies to no end.
    Besides, California needs more taxes to drive away the parasitic bourgeoisie once and for all.
    Only Hollywood, Big Tech and anyone who works for any government entity should be allowed to work in that socialist paradise.
    Nothing but good will come from this.

    1. If you don’t want to pay the breath tax, stop breathing.

  13. Will someone please round up the entire California State legislature, tie them to their chairs and gag them if need be, and explain to them Article 1, Section 10 of the United States Constitution?

    States are NOT ALLOWED to pass any ex post facto law or bill of attainder. They CANNOT levy a tax on the past!

    1. It would be a lot easier to round them up and deposit them all in a landfill, face down.

      More satisfying too.

    2. With all due respect, A1S10 reads “ex post facto Law,” which, I believe, the SCOTUS has said refers only to criminal law, not tax.

      I think this is stupid, mind you. However, it is the case.

  14. This is what happens under one party rule. There are no competing ideas and ideals. Just one that eventually becomes static to the detriment of liberty.

    How can you be a vibrant body politic when one party has a monopoly?

    1. Hey, if everyone agrees…. and by everyone, we mean 60%

    2. To answer your last question: You can’t ~ as evidenced by the current federal system makeup.

    3. Replying to your last sentence: You can’t ~ as evidenced by the current federal system monopoly.

    4. CA is two wolves and a sheep deciding what to have for dinner.

  15. A new tax is a liberal wet dream

  16. I thought it was audacious to tax texts, and then the Cali regulators show how pathetic I am to think so small when they announce the new tax applies to events that happened five fucking years ago. I got your audacity right here, Senior Rubbish. And we don’t need no steekin badges!

    1. I just hope they tax emojis extra

      1. Sin tax emojis into defacto prohibition?

  17. “The state’s Public Purpose Program (PPP) currently funds communication services for low-income earners as well as deaf and otherwise disabled residents. The budget for that program has risen from $670 million in 2011 to $998 million in 2017.”

    No one is about to find out whether those numbers are gamed. Let’s just find a new way to collect money.

  18. Ex post facto laws are strictly prohibited by the US and state constitution.

  19. I cannot wait for Calexit. Then everyone will be required to obtain a passport to go visit the Utopian model of existence, which will greatly curtail travel and tourism. Double-bonus, everyone within Caltopia will be required to obtain a passport to enter the remaining 49 states, greatly curtailing their exodus.

    1. So you support the wall, just a much longer one?

  20. “The State of California wants to tax text messages. And not just the messages that people send after the tax passes: The California Public Utilities Commission, which cooked up the proposal, wants the levy to apply to texts sent up to five years ago.”

    Retroactive laws are prohibited by the Ex Post Facto clause in the Constitution.


      Bernard H. Siegan

      Contrary to its existing practice, the United States Supreme
      Court was once a strong guarantor of economic liberties. This
      was the period (1897-1937) of “economic due process.” The
      Fifth Amendment and Fourteenth Amendment provide that
      neither the federal nor state governments shall deprive any
      person “of life, liberty, or property, without due process
      of law.” The Court interpreted these prohibitions to mean
      that government could not, except in specified or extraordinary
      circumstances, prevent individuals or corporations from freely
      engaging in the production and distribution of goods and services.
      However, since 1936 the Supreme Court has abandoned this
      interpretation; economic regulations now are subject to a very
      low level of review …. At the time the Constitution was
      framed and ratified, the term “ex post facto law” was applied
      to both penal and civil retroactive laws. In the criminal law,
      it was accepted that an ex post facto law was one that rendered
      an act punishable that was not punishable when it was
      committed. The term also described civil laws that operated
      retroactively to the detriment of a private owner of an interest
      acquired or existing under prior law. ….”

      But we are no longer in the period of economic due process. 70+ yrs ago maybe,.
      Wait til the greens decide to tax you for the CO2 you have exhaled in your lifetime in the name anthropogenic global warming climate change.

  21. I am 100% sure this is intended to push people away from messaging services and into the (CA owned) companies like FB Messenger, WhattsApp, It is not an accident that this applies to texts and not data plans.

  22. “But the Bay Area Council, the California Chamber of Commerce, the Silicon Valley Leadership Group, and other business advocacy groups tell the San Jose “. this statement shows what the real problem is and where it originates. Kalifornexico should be split into two states. take a 30 mile wide corridor centered on the golden gate bridge thru sacremento and everything south of the san gabriels, west of the 15 freeway and call that kalifornexico. The rest of the state would be the great state of Jefferson.

  23. The argument for retroactively assessing taxes is that they’re simply “affirming an existing law” which has already been in place, but they’ve only just recently figured out that they should have been assessing test messages too. They also make the argument that text services, because they aren’t end-to-end IP encoded, are not information services. The service providers have 90 days to send a letter detailing how much they “should have been” paying and propose a payment schedule.
    The “genius” of “affirming an existing law” is that people can’t simply change their behavior (by switching to What’s Ap or some other messaging system) to avoid the increased fees. They’re being taxed for behavior they’ve already done.
    Lovely. Hopefully, someone with some sense is going to put a hold on that until it’s determined that their self-serving reading is incorrect. They do make a fairly accurate case that the poor who have their services subsidized will not have to bear the effects of this finding. That leads to the conclusion that anyone not subsidized gets more than proportionately socked to support those who are. This being California, that shouldn’t surprise anyone.
    I suspect that this problem in the form of a solution will result in an additional “solution” when people who are not already subsidized find that they’re no longer able to afford cell-phone service: Some “caring soul” will suggest expanding that coverage to bring even more folks under the government umbrella.

Please to post comments

Comments are closed.