Hanging Up on High Taxes

By Tod Phillips
Contributing Writer, [GAS]

The past holiday weekend turned out to be a fairly profitable affair for me, mostly because I found a little extra time on my hands and used it to dig through some recent phone bills. What started off as a simple tax analysis turned into something else altogether. I now figure the exercise is going to save me around $700 this year.

Recently, I began using Skype for most of the calls I make from my home office. My idea had been to try it out, see if it worked for me, and then (hopefully) cancel the long distance service attached to my office line.

The timing couldn’t have been better; thanks to an article in the Wall Street Journal, I realized that I’d embarked on a course of action that would save me even more money in excess(ive) taxes. I guessed that – once I’d included long distance service charges – my net savings would be around $240 a year. Not too bad. And since Skype appeared to be working well, I’d made the decision to cancel my long distance services by the 1st of July.

As usual, I was late getting started, and didn’t find the time until Friday…which turned out to be a holiday, of course, so I wouldn’t be able to change my billing until Monday. Frustrated, I decided to take a closer look at recent phone bills and figure out exactly how much I’d be saving.

It was a real eye-opener. Turns out that by the time I add the Universal Service Fund fees, federal access charges, phone company “recovery fees,” and all of the other taxes, my office line is being hit with a whopping 27.8% tax rate.

It all accounts for roughly $15 per month. Now, that may not sound like a big deal to some. Others may feel it’s a small price to pay for what some of those fees supposedly cover. For me, it’s the principle of the thing: why pay taxes when I don’t have to – particularly on something as over-burdened as phone service? At almost 28%, the taxes on my office line are higher than the income tax rates for all but the highest-earning U.S. citizens.

I’ve just spent another $30 over at Skype, and now have a brand new office phone number – for an entire year. I’ve had friends and family test it, and the quality is great. I have caller ID, voicemail and call forwarding included. Sans taxes, sans access charges and sans Universal Service Fund payments, the new number has cost me roughly what I would have spent in two months by just paying the taxes on my standard telephone line.

In a few minutes, when the billing offices over at my phone company open, I’ll be giving them a little call (using Skype, of course). But thanks to the Independence Day holiday and a little extra time on my hands, it won’t be to cancel my long distance service. I’m telling them to disconnect the line entirely; from now on, I’ll be Skypin’ it from my office – and pocketing about $60 every month.

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4 Responses to Hanging Up on High Taxes

  1. Remember to make sure that you still have access to either a landline or cell line for emergency dialing when you make the jump to Skype, as 911 doesn't work at all. It doesn't even handle the calls like a traditional VOIP line and at least get you to someone that can help. Before anyone else reading this makes this jump, they need to make sure that they understand that 911 will not work on that service.

    • In the US any phone connected to a hardwired landline can access the emergency 911 system, regardless if you are paying for a landline or not. Any cellphone will connect to the emergency 911 system if you are paying for their service or not. It is a law I believe. But try it, just don't hang up without saying anything, their will be Cops and maybe a fire truck or two show up at your house.

  2. Or just buy a MagicJack. You make all the calls you want to any U.S. number, but for $20 per year instead of per month. And 911 works perfectly.

    I went ahead and took advantage of their 5 years for $60 deal. That's just over $10 a year for unlimited national calling. Nothing can compete with that.

    And the quality of the calls is much, much better, at least for me.

    Skype is still a ripoff. You should do an article on MagicJack.

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