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States Seeking Levies on Digital Downloads
evdubs writes "15 states and the District of Columbia currently tax online media, with others eager to begin their own taxes. The RIAA estimates that domestic sales totaled $503 million last year, but that figure doesn't include movies, e-books, online video games and other forms of digital media. Perhaps the most interesting point in this article is the way states, looking to start taxing online media, are trying to use the interpretation of previous law and apply it to digital media. In Washington, politicians are using their definition of software (already taxable), 'a set of coded instructions designed to cause a computer...to perform a task,' to justify taxation of online media because 'they cause some action by a piece of hardware to play them.'"
It makes me wonder how they could possible determine who owes what. If someone from the UK purchases digital goods from me in Michigan - how would they know the difference? It will require that businesses volunteer the info - not likely
I'm not entirely opposed to the idea here, but exactly what value are the taxing entities (states, districts, etc.) providing in exchange for the taxes collected? I could see the Feds providing structure and market enforcement via the FCC and FTC, which could possibly justify a federal levy, but where does an individual state get involved? That part I'm having trouble seeing.
Of course, there's the other perspective which has state governments looking for any means to plug massive budget holes, so to that extent they're probably just following the old John Dillinger line as to why he robbed banks - because that's where the money was.
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So are they trying to tax items you download if the company has a physical presence in the state or no matter what? The old brick and mortar way of solving taxation, which is how catalog orders were handle since catalogs came about, is something states have been trying to squash for years. Seriously, if they are following the old model, I really have no problem with it. Many of us are already dodging sales tax on the purchases of items from Amazon and the like.
Now many states have tried to get around the old method of taxing by creating "Use Tax." I saw this nifty little item when I filed my taxes this year. They basically want to charge you sales tax on items you purchased online and, in some cases, other states. The latter one bothers me because it is absurd to be taxed twice simple because you either moved or purchased items while travelling on vacation. The initial one is almost as absurd, since it relies heavily on them getting the truth out of you. If you do not claim to purchase anything online then it is sort of hard for them to say you did, short of tracking all your CC purchases.
The states have complained for ages it seems about the loss of money from online purchases. I personally think that while states might lose money, it actually helps overall economy. If people have to pay a few dollars less and not pay tax on an item (especially higher priced ones), they are more likely to purchase the item. Now if this item requires disposable or extra items (i.e. batteries, DVDs, etc.) you are more likely to get people purchasing those locally as well. In the end, the states still get money, they may just miss out on a small portion of it every now and then. Instead of sales taxing us all to death, raise liquor, tobacco, or hotel taxes to cover expenses. I enjoy the hotel taxes because I do not have to pay my local governments, the tourists do.
"Some days you just can't get rid of a bomb."
If you go that route, then most software wouldn't qualify, as programs frequently needs an OS to run.
Digital media does NOT cause any action to occur.
None of the currently used media file types have any *code* in them that causes actions to occur.
The computers that have media players on them, have settings defined that tell the computer what to do when that media type is selected.
Someone should explain the difference between media and the device.
I can strip the entries out of the registry, and drop media files and even double click them all day long and *NOTHING* will happen, except that I'll either get a sore finger, or break my mouse.
Who is general failure, and why is he reading my hard drive?
Much better than taxing the gas guzzling SUVs that exploit loopholes in the law or taxing cigarettes. Yup, very logical.
This guy is way out there
So now what... music patents?
From what I understand about online music, we cannot copy it because we are merely "licensing" the right to play it, not own it. This though is in contrast with the statement from Tennessee which says ""Music is included because music downloads fit the definition of personal property,"
Does this mean then that we now own music we download, and can freely do with it what we wish!?
If so, tax away.
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What a load of crap. I see two issues here which don't appear to be addressed by the authorities levying the taxes.
1) No justification for the taxation is provided. There should be some underlying benefit to "We the people" for any taxation. i.e. I pay a hefty tax every month on my communication bill for various services provided to society, two of which are funding for communication access for the disabled and funding for communication access to rural areas. Levying a tax on downloaded media just because they can is not justification and depending on what they are considering a download it could be construed as double taxation since I already pay several taxes on the communication itself.
2) One of the concepts which jump started the United States of America was the concept of "No taxation without representation". Now I realize we have representatives in government who were voted into their positions by the people, however, if these representatives are not representing the interests of the people who voted them in and instead are representing the interests of the government or corporations then they are no longer representatives of the people. Before the American Revolutionary War the British argued that Americans did have "virtual" representation in parliament and therefore there was no need for American representatives to participate in the British government. We all know how that one turned out and virtual representation is no excuse today either.
I actually don't mind paying taxes, I think I enjoy many benefits from taxation here in the States, but I'd like to have some justification for new taxes beyond creative interpretation of existing laws.
burnin
Why shouldnt items purchased via web be taxed? Its no different than calling a retailer in a different state to make a purchase. Sales tax is due in that transaction - so why not via http?
Because the theory behind sales taxes is you're paying the government's costs for making that transaction posible. Courts, roads, infrastructure, etc.
When I buy something out of state and have it shipped or downloaded, my state government HASN'T DONE ANYTHING to support that sale. Why should they get a cut? At most they get a cut via taxes on my ISP bill, and (in the case of something shipped) fuel and business taxes on the shipper. There's a reason the Constitution prohibits interstate taxation of commerce, and this "use tax" bullshit needs to be called what it really is and struck down. If anyone deserves the sales tax on a sale, it's the state the seller is incorporated in (Which is currently prohibited, but there's better ways to get that revenue from the seller than a line-item sales tax)
This
Isn't it the boost in government spending (read "waste") that is creating the budget shortfalls? Just like raising gas taxes, property taxes, sales taxes, cigarette taxes, liquor taxes -- it all happens because once lawmakers get their hands on those billions, they can't help but spend it recklessly, to the point of drilling an enourmous hole in the budget that John and Joan Taxpayer have to fill. This is just local government trying to find a way to cover its own ass by papering over the hole, when we all know any revenue generated by these taxes is going to simply be frittered away.
Maybe these state governments should try balancing their budgets first before bludgeoning their citizens over the head with more taxes.
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Let's face it, it isn't college students and minimum wagers that are paying for the downloading of music. A person that buys their music from iTunes has the money to do so. Most of the outrage that comes towards taxing it comes from those who aren't paying for their music collection. These taxes will all be added because the majority of people have no idea what bills are being passed.
Slightly OT: I don't understand why more Americans don't go to the local library. Most of the music on my iPod was taken directly from the CD. I control the quality. The libraries have a very good selection of music, including huge box sets that cost over a hundred dollars from stores. If the library in your neighborhood doesn't have a cd you are looking for, they will check the county branches, and then even at the state level, and then send an email when the item arrives. I don't mind waiting 1 to 2 weeks to hold a cd in my hand and generate my own copy. Sitting at the computer searching mp3 sites, or bit torrent for an obscure song is a waste of time when the libraries databases are avaiable in the same browser.
"music downloads fit the definition of personal property", according to a Kentucky government spokesperson.
Does that mean that when you pay for a download and it disappears after a month or you can't move it to a different device, that the Kentucky government will prosecute the company responsible for violating your property rights?
Conversely, if the software makers can argue "this-software-is-licensed-not-sold", how could there be a sales tax?
The first because the Senate no longer represents the will of the State's legislature and second because the Federal Government encroaches on the power of the states too much.
How would this help out with concern to the current story?
Simple, many states are stuck with underfunded or unfunded Federal mandates. So the states look in ever nook an cranny for money. Yeah we would still have states taxing everything but the air we breathe but it would be far easier to avoid those states instead of being stuck where all of them are surragate collectors of taxes to fund Federal mandates that the Federal government had no real basis for doing.
* Winners compare their achievements to their goals, losers compare theirs to that of others.
Governments think they are entitled to money. This attitude needs to change.
Let's get drunk and delete production data!
"I look at it this way, if someone wants to buy the big SUV, pay the premium for doing so, and then to top it off pay for all that extra gas I say LET THEM!."
Except if you look at it from a supply and demand perspective, all those people driving turbo diesel 8.0 liter trucks getting 9 mpg and consuming all that gas is raising gas prices for everybody else too. If supply remains the same and demand goes up, then price goes up.