Californians being taxed for the unsubsidized price of the new iPhone 3GS
Why is Apple making me pay the tax on the unsubsidized value of the iPhone, in the state of California?? Presumably because Apple will have to pay the state of California that amount when their taxes come due.
So then why is California making me pay for the unsubsidized portion of my new 32gb iPhone 3GS?
The only thing I can come up with is that somehow AT&T, who should be paying this tax, lobbied their way into our state government and convinced the taxmakers to move that tax burden on to the customer, and off of the company.
Clearly it’s not just AT&T, and possibly not at all AT&T, but somehow I feel like consumers are getting screwed and big corporations are getting away without paying their fair share of taxes on subsidized goods.
My new iPhone 3GS was $299 with a two year contract, and I paid $64.66 in tax. Here in Los Angeles, we enjoy a 9.25% sales tax, and 9.25% of 699.00 is $64.66.
So clearly, that 32gb shiny new iPhone costs $699.00, and that’s what AT&T is paying Apple for each one of those babies.
When I checked out of the online Apple store, I paid $299.00 for the phone, plus $64.66 in tax, for a total of, well you do the math.
Since I bought it from Apple, and signed that nice little two year contract in iTunes, which follows from above, that AT&T has to send Apple $300 for my phone…essentially buying that $300 part of my phone for me. Thanks AT&T!
But wait. Because AT&T bought half of the phone from Apple for me, shouldn’t they have to pay taxes on it? I think so. After all, I’m signing a contract that commits me to a two year service contract, and they will handily make back their $300.
Reports from other states say that customers are paying sales tax on the subsidized portion of the phone, and so AT&T must be picking up the bill for the rest. So, it appears this is mostly a California issue…although I believe a few other states are affected. Clearly this isn’t AT&T or Apple screwing us, it’s the California government, some kind of loophole that allows AT&T to squeeze $35 more out of each of us.
Personally, I’m calling AT&T to complain.





Fucking Los Angeles. What a bunch of shit heads.