Wisconsin Governor Proposing Tax On Downloads

Christopher Reimer writes "Ars Technica is reporting that the Wisconsin's governor is proposing a tax for downloads. From the article: 'Wisconsin's Democratic governor thinks it's not fair that tangible items get taxed while downloads, like music, ebooks, software, etc., go completely untaxed. So, he proposes to rectify the situation by having Wisconsin's 5% state sales tax apply to Internet downloads.'"

Comments

Does this mean

[the_mighty_$]

Users will have to pay tax each time they visit a webpage on a subscription based website? Visiting a page does involve downloading, of course.

Originating state

[Visaris]

Wouldn't it be hare to figure out what state the downloaded files were comming from? I was under the impression that states could only tax items purchased which originated in their state, is this true?

Wisconsinite here.

[k96822]

Having lived here all but 1.5 years of my life, I can say this certainly doesn't surprise me. We know we're one of the most taxed populations in the union. We know our state government is corrupt and unethical. In a state that is almost entirely M$ dominated, it shouldn't be surprising the population is ignorant about the nature of the Internet. I'd be surprised if people put up a fight here about it.

as a resident of wisconsin...

[eobanb]

...I can truthfully say, I'm slightly scared by this, but at the same time, I have no idea how they'll enforce this. I caught this little gem in the article:

There would be no Internet sales tax police, however, because compliance would be on the honor system

Right.

Stupid, yet Illegal. Brilliant!

[Onimaru]

Okay, so this is obviously dumb, but I'll go one better. It's also probably unjustifiable and unconstitutional.

The general justification put forth for sales tax is that it's a tax on doing business in the state and using the existing infrastructure of that state so to do. The internet doesn't really do that.

Also, there's a good argument to be made that the Negative Commerce Clause prohibits this kind of action by a state or local government. In essence, Congress gets to regulate interstate commerce, not Wisconsin.

Every state needs money and here's the solution

[hotspotbloc]

Legalize and tax marijuana instead. Seriously, between the 13 billion the US spends on the prohibition of marijuana every year (1) and the 20 billion in likely tax revenue (2) the US is missing out on a much bigger fish that's much easier to catch. Chasing down people to pay $.05 for an iTunes or ebook purchase is manpower intensive and I suspect has a low rate of return. You might as well pass a "swearing tax" and require people to pay a dollar to the State every time they use one of the seven dirty words. Putting aside the "fairness" issue some taxes are just much easier to collect than others. Marijuana, like alcohol, could be required to be sold with a tax stamp, at say liquor stores, making enforcement and collections rather easy. At a $1 a joint you wouldn't need to waste your time with the nickel and dime stuff. That's over 30 billion a year that could be spent on schools, paying off State debt, returned to the taxpayer or a combination of all of the above while using the existing alcohol tax system for collections.

Besides, taxing interstate transactions is illegal under the "Commerce Clause" of the US Constitution (3) so it'll most likely be placed in within the State "use tax" category which has been very difficult in the past to enforce.

Putting aside the fairness issue taxing ultra low dollar electronic purchases IMO just isn't worth it.

(While many states currently do require a State issued drug tax stamp, because of marijuana's current status as illegal under prohibition few people actually purchase them. The "drug tax stamp" law is most commonly used to add the extra charge of tax evasion to a drug dealer and squeeze him for a little extra money and jail time.)

1. Marijuana prohibition facts
2. Thinking about Drug Legalization
3. Interstate Taxation and the Commerce Clause

sales tax is for GOODS not Serv ices

[DunbarTheInept]

The way most downloads you have to pay for work, you technically haven't bought a product. You've bought a service. Downloaded songs? You don't own your copy - you own the right to play the copy that you have stored but don't own. Software? You don't own the software, you just bought the right to use the copy of it you downloaded but don't own.

You should never, ever pay a "sales tax" on a DRMed download becuase you haven't actually really bought a product - you've bought a service, and those don't get taxed as sales tax.