Telephone tax

As reported in this Washington Post article, the government will finally stop collecting a certain telephone excise tax enacted in 1898 to fund the Spanish-American War. There’s some controversy over the legitimacy of the tax, so in an unusual move the government is allowing taxpayers to request refunds of the taxes they paid since March 2003.

Something in the article caught my eye: an explanation why taxpayers have to go through their own phone bills to add up the taxes they paid, rather than having the phone companies automatically refund them:

It would be very costly for communications providers to comb their records and tell consumers how much tax they’ve paid, said Annabelle Canning, assistant general counsel at Verizon Wireless. Verizon has 53 million wireless customers and provides traditional phone service to 30 million households. “It would take tremendous resources,” Canning said.

Oh, please. Which takes more resources: asking the phone company to write a small computer program that adds up taxes paid in its billing database, or asking 30 million individuals to do the same thing themselves? This is the same tactic used by rebate programs, which bank on customers forgetting to send in the rebate forms, or class action settlements, which almost always require class members to fill out intricate forms to claim their 75-cent settlement proceeds. If the value of the time required to claim something exceeds the value of the thing to be claimed, then rational people won’t claim it.