then that is the tax basis.
Buying a phone under a contract is not really a discount, just a deferred payment scheme designed to make it look less expensive. Therefore, the sales and other taxes are appropriately applied to the full price - since that's what's being paid. (Just as it would be if I bought with a credit card at full price - and, in fact, this is the same as buying with a credit card but with an unknown interest rate on a usually two-year term. In fact, it's worse that a credit card, because after I've paid for two years, if I keep the phone and continue paying - the interest continues as well - the monthly cost doesn't drop.)
If the service provider or phone manufacturer wanted to further disguise the fact that there is not a real discount, they could pay part or all of the tax from the contract proceeds - but so far they haven't found that necessary, as the misplaced anger is directed at the government for having the "audacity" to tax the actual price.
I'm considering writing about the fact that when you buy a discounted or subsidized mobile phone in CA, you pay sales tax on the "list price." CA is the only state that has this provision in its code, and it strikes me as unfair. It's an old issue but with the new, expensive smartphones we're all buying it's even more of a problem. I'm looking into it.