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Is AT&T's texting plan a regressive tax?

Is AT&T's texting plan a regressive tax?


In a recent article for the MIT Technology Review, Christopher Mimms likens AT&T's text messaging plans to a regressive tax, arguing that the scheme levies disproportionately high fees upon uneducated and minority consumers from low-income households.

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AT&T store logo symbol stock (1020)

There's been plenty of controversy surrounding the recent changes to AT&T's smartphone data plans, but journalist Christopher Mimms believes there may be a more pernicious dynamic at work on the lower end of the price spectrum. In an article for the MIT Technology Review, Mimms likens AT&T's text messaging plans to a regressive tax, arguing that the scheme levies disproportionately high fees upon uneducated and minority consumers from low-income households.

To build his case, Mimms points to a 2011 study from the Pew Research Center's Internet & American Life Project, which found that the most voracious text messagers tend to be uneducated minorities who earn less than $30,000 a year. From 2008 to 2011, however, SMS costs for a wide swath of AT&T customers actually doubled, despite the fact that text messages pose relatively negligible costs for the carrier. Compounding the situation, Mimms hypothesizes, is the assumption that poorer households are less likely to pay for more expensive smartphones (and the free texting apps they would offer), and more likely to opt for cheaper pre-paid plans, under which texting is more costly.

Based on these trends, Mimms concludes that AT&T's strategy amounts to a regressive tax — one that rises as income decreases — and that the revenue from this "tax" effectively subsidizes service for higher-income users. The obvious counterpoint, of course, is the fact that consumers always have the choice to switch to another provider, whereas literal taxpayers can't change their residence with quite the same ease. (The author seems to preemptively address this issue early in the piece, writing that he's highlighting AT&T as "but one example," though the rest of the article remains very AT&T-centric.) Metaphorical inconsistencies aside, Mimms draws a thought-provoking parallel, and raises socio-economic questions that, in most of today's tech coverage, tend to get overlooked.

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