The Washington Times reports that billions of dollars in service fees have been charged to cellular phone customers to pay for rural landline expansion in California and other states. Subsidies are charged to the cell phone companies, who have the option of passing the cost to their customers — and they usually do.

In Texas, which contracts with a private administrator, the state’s 15.6 million cell-phone users were substantial contributors to the $1.9 billion collected for universal services since 2003, of which $1.3 billion was distributed in high-cost subsidies. Although carriers aren’t required to pass along the costs to customers, they almost always do. Last year, nearly 80 percent of these subsidies were paid to AT&T, Verizon and two smaller carriers.

$600 grand in the pocket for collecting subsidies? I’m in the wrong line of work.

“We’re mostly concerned that high-cost universal service funding has been used predominantly to subsidize inefficient wire-line carriers,” said Miss Kuo of MyWireless.org. “[But] we also have seen significant waste in how that funding is distributed.”

In California, much of it disappears into corporate treasuries to be used at the companies’ discretion; some sits in the bank, and some has even vanished into the state’s general fund. During the 2002-2003 fiscal year, the legislature “borrowed” more than $278 million from the state’s high-cost surcharge funds to help balance the budget. That money has never been repaid.

When government taxes private companies, the costs are passed on to the consumer either overtly or covertly. This is a interesting yet nauseating scenario where government and corporation both benefit from taxing the customer.