Just What Is A Tax Anyway?

I obviously write about taxes a lot in this space, but we really don’t ever discuss exactly what is a tax. It seems more to be one of those things that we understand on some level, we know it when we see it, but putting a specific definition to it can be difficult. That difficulty probably largely comes from the fact that we see taxes assessed in so many different ways in so many different places that summing them all up together becomes tricky.

This is something that is apparently working its way through the courts now as recently the Fifth Circuit Court of Appeals has ruled that the Universal Service Fund, which appears on cell phone bills, is a tax. This doesn’t seem big, but it also ruled that it is then unconstitutional because of that. See, the Constitution gives taxing authority to Congress, but the USF has been delegated to the Federal Communications Commission, which then subdelegated the taxing power to a private corporation. This private corporation then relied on the actual telecommunications companies to determine how much customers would have to pay for the USF – and it’s not as it the consumer has any choice on what that number is, it is one of those things that just shows up on your bill.

Of course, there’s a lot of legalese going on here and it’s only bound to get worse. The case is likely going to the Supreme Court for another ruling, and then I am not even going to pretend to be able to guess what could possibly change coming out of it.

One must think it can’t get much more convoluted, though, than going through this long line of powers, be they inherent or delegated, before they reach the actual phone users. And along those same lines, I figured that even if I can’t give a concise answer as to just what a tax is, that it couldn’t be bad to at least offer a reminder about how messy these ideas can be.

Warmly,

Josh Bousquet
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