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Wisconsin Passes Digital Download Tax
McGruber writes with news that the State of Wisconsin has passed legislation to extend sales tax to digital downloads. The new law will go into effect on October 1st. Estimates suggest that the 5% tax on "downloads of music, games, books, ring tones and other video entertainment" will bring in $6.7 million annually. "[Wisconsin Governor Jim Doyle] has been fighting for the change for years. He and other state officials say it is a matter of fairness: Internet vendors shouldn't have a tax-exempt advantage over Wisconsin's brick-and-mortar retail stores." Similar legislation has been proposed in North Carolina, and we've previously discussed New York's foray into taxing sales made online in addition to downloaded purchases.
Between this and the recent story about how they're going to require home routers to maintain logs, we're completely fucked. Everything decent about the internet has been shot in the ass.
Fuck, this shit sucks.
In addition to this, the current legislature wants to increase the state sales tax another 0.5%, add a tax to car insurance sales and put toll booths on the Interstate. This after they voted themselves a 5.5% wage increase.
I'm a little confused how they're going to enforce this law against companies that have no physical presence in the state? I did not see that addressed in the article.
Option 1: Start using PayPal with an out-of-state relative's address
Option 2: Get a PO box over state lines, and open a bank account there while you're at it.
I am curious, though - they expect to make $6.7m per year... how much of that will disappear into enforcement and accounting? Doesn't really seem like there's enough return on it to balance the hordes of pissed-off constituents.
Quo usque tandem abutere, Nimbus, patientia nostra?
Glad to see that WI is working to help stimulate the economy by pulling more money out of it!!
Has something changed recently that makes all these states think Quill Corp. v. North Dakota no longer applies? Are they just following New York's lead and hoping the opinion is reversed? This is 17 year old case law; I don't see what would have changed to warrant reversing the precedent.
$_ = "wftedskaebjgdpjgidbsmnjgcdwatb"; tr/a-z/oh, turtleneck Phrase Jar!/; print
have fun taxing my torrents you money hungry pricks.
What if you order/download something from another state? Do the taxes still apply?
Between this and the recent story about how they're going to require home routers to maintain logs, we're completely fucked. Everything decent about the internet has been shot in the ass.
Fuck, this shit sucks.
Slashdot has been shot...Where?!
Shai Schticks:"You don't make peace with friends, you make peace with enemies"
And your Linux since it isn't a purchase. ;-)
Only if the governor gets to spray it in your face though.
It's only 'fair' if they also tax Out of State Mailorder.
Got issues?
What's really interesting about this trend is that in most states where sales tax is charged, the taxing department calls it a sales and use tax. The consumer is actually responsible for paying the 'use' tax on most items purchased either out of state where a lesser tax was paid or on items where no sales tax was paid.
It seems like some states are trying to force the collection of the usage part of the sales and use tax onto the retailer.
Do what thou wilt shall be the whole of the Law - Aleister Crowley
I live in Wisconsin, and I gotta say, this doesn't bother me at all. After all, 5% of $0 is still $0. I mean really, who pays for downloads these days?
On a more serious note, I think this is just fine. If your state has a sales tax, it should apply to all purchases, not excluding online purchases. Seeing as how commerce is quickly moving from brick-and-mortar stores to online shopping, I think it's only fair that the state get their cut.
So does that mean anyone downloading torrents are now have a legal charge of tax evasion to worry about? What about a file I send to to a relative? Do they pay tax to download it?
Here come the internet police
Given that the RIAA/MPAA's position is that you don't actually *own* the music and movies that you "buy", one could argue that no sale took place, and therefore a sales tax should not apply.
A tax on auto insurance? That's a regressive one. Oh, do they want more uninsured drivers on the road? Lovely. I can see how everybody wins with that proposal.
The World Wide Web is dying. Soon, we shall have only the Internet.
This have further fascinating implications. For instance, the US goes into a situation that drives the US national debt up to 10 trillion(for the rush fans out there, we are talking the total debt, not the yearly deficit: on in this case the total debt is about 80% of GDP which happens when you run a 5% yearly deficit for 8 years, assuming that you start with a 40% debt). Every one complains that the soldiers in the situation do not have enough equipment, but they really can't because at the same time we are spending too much money, we are also cutting the taxes(another note for rush listeners, the DOE is about 13% of the budget, while military and terrorism spending is spread along 3 departments, about 25% of the budget, including a new spending item, department of homeland security, which was added by a conservative government to the tune of 2% of the budget).
Now, if we as people would reduce out garbage so it could be picked up every other week(food wastes for composting picked up every week) or our driving of big cars so the roads would not get so torn up, or sent kids to school with supplies and computers and food so that schools would not have to provide these items, then maybe we could complain about taxes. But since we like to spend the money, then we have to pay the money. That is the true conservative model. Not the foo foo french model where only the peasants pay the taxes, and the aristocracy gets to buy a new pair of silk stocking every day of the year.
"She's a scientist and a lesbian. She's not going to let it slide." Orphan Black
Good luck with that.
Love,
anyone who ever used the internet *ever*.
It seems that the the National Wireless Community Network (NWCN) has just been born. Comcast, At&T, eat your heart out. So far there have been a hodgepodge of wireless community networks, and many competing dynamic mesh routing protocols to choose from. With this news things are sure to get standardized now. Once there is a decentralized mesh network of WiFi onion routers, the legislators only recourse will be to make all the WiFi networks illegal or to force the source of the download (e.g. China, North Korea, Cuba) to collect US taxes for each US, State, and local Government all while tracking the private US Citizens SSN's for tax purposes. What a choice. I'm glad I'm not a politician.
I don't get it. You trying to be funny?
It's not like cheese is capable of downloading things from the internet anyway.
A Magic the Gathering Article and Forum Aggregator
Doesn't this violate the Interstate Commerce Clause? States do not have the power to regulate commerce between states. The only downloads this should apply to need to be originated and terminated in Wisconsin, in which case I believe that normal sales tax would apply.
You want to tax digital downloads? Fine. Then give this Texan representation in your legislature. Otherwise, fuck off.
Ok it's not technically a double tax but...
Here's just a thought to get people talking. If you purchase an iTunes card with a value of say $50, you will pay sales tax on that as well. Being from the Midwest, I know that everyone already here wants to tax anything plastic as well under a guise of "green" since it lasts forever in a landfill. So you may end up paying a tax on that as well.
Now the average rate for sales tax in the Midwest is about 7.25 depending on where you are. So let's start doing a little math.
$50 for the card, plus 3.63 for sales tax. Plus if there's a green tax they tend to cost about 1% so that's an extra 50 cents. Out the door roughly $54.13 for that card. Now when I use it, or if I give it to someone else as a gift and they use it in Wisconsin they'll pay the 5% per download. Let's just assume $1 for each download, and we have each song costing $1.05. You get about 47 and a half songs with that gift card I just gave you there. Wisconsin did nothing for the upkeep of any of the infrastructure to get me that download. Probably did nothing to help the artist in anyway, and odds are have done nothing in general to said person to listen to the music (other then telling them to turn it down while in the car!)
I guess IMO states, nations, etc that tax the transaction to purchase something more then once annoy the crap out of me and really are just saying "WE NEED YOU TO FUND US IN EVERY WAY. YOU'LL PAY OR ELSE!"
if my wife asks a question, and I'm not paying attention, and then I answer wrong does it still count
aside from those that just don't want to deal with easy workarounds; diff addys, rerouting your purchasing traffic, etc., I'm surprised we're not just used to being taxed to death. In WA, we're taxed on so many things I can't tell what we're not supposed to be taxed on, etc. So when I see no tax, I'm amazed and delighted. :)
When I grow up, I wannabe the middleman in an economy based on making the same money twice. If I live that long.
There is nothing to FEAR but NOTHING itself; and I fear there is a whole lot of nothing going on. --scorpivs
Because it's so easy, in a down economy with high unemployment and a crappy housing market, for someone to leave their job and sell their house and move to a new state.
Warning: Apple/Nintendo fangirl. Likes her electronics cute & cuddly. May be rabid.
Goose, meet axe.
---- Booth was a patriot ----
He and other state officials say it is a matter of fairness
That is such bullshit. If you want to make it "fair", eliminate the sales tax on brick & mortar operations.
What? That wouldn't be fair to the State you say? Well, how about you find some fiscal responsibility so you won't need so much tax revenue in the first place. If you want to talk about fairness, that would be a far better place to start than simply finding another taxation opportunity.
Bloodsucking leeches, all of them. Although I'm not really being fair to the leech. At least that little bloodsucker will give you an effective anticoagulant in exchange for a bit of your circulatory fluid, maybe help prevent a heart attack or a stroke. Goddamn tax-intoxicated politicians, on the other hand, are far more likely to cause a heart attack.
The higher the technology, the sharper that two-edged sword.
Finally, a legal excuse to steal music!
Technically in most states anything you purchase in another state and bring home is subject to your state's taxes too. So really this is already in place.
No one claims it since its hard to track so we all feel safe ignoring it. However, its easy to track these purchases if you use giant services like paypal, or master-card to pay the bill. The small time operators taking money orders will sneak past, for now.
---- Booth was a patriot ----
Can someone point to one good reason why digital download sales should be tax exempt? Seems ridiculous to me. Quit whining and pay your darned taxes! its only fair.
No taxes on our torrent downloads, either.
You are welcome on my lawn.
Between this new trend, and the proposed legislation that users will have to maintain their router logs for 2 years, the next step will be metered internet access where you pay a tax per KB of data transferred. I mean, you are "purchasing" the use of that data through your ISP right, so it's sales-taxable?
Then, since users will be confused and able to circumvent, the govt will issue standard routers for all citizens to use which maintain your tax meters and also monitor all of your traffic to make sure you aren't violating the new Internet SAFETY act which is "meant" to prevent child porn and molestation.
Welcome to the future.
THE MAGIC WORDS ARE SQUEAMISH OSSIFRAGE
How many times does it have to be said, the power to tax interstate commerce is EXCLUSIVELY reserved for the Federal Government.
This is an over-reach by a state once again. Here in RI we have the self reported 'use' tax. Under the legal theory they can't charge you if you buy it, but can if you use it.
Almost makes me want to buy a few million dollars worth of gear and store it away.
Because even while the economy sputters the Federal, State, and local, governments are expanding. Where is the sense in that? Why shouldn't people complain? Better yet, the pay of government jobs keeps going up faster than inflation in many areas and exceeding the private sector as well.
Take a look at this chart, http://www.ppinys.org/reports/jtf/governmentemployment.html
Now, explain how we can keep adding so many government jobs and not expect the burden to become too much? We are creating more non wealth producing jobs than wealth producing jobs.
So we have this big slow down, with many private sector jobs lost, yet government keeps growing. http://www.cnsnews.com/public/Content/Article.aspx?rsrcid=41780
We are simply running amok. The real problem with government paid jobs is that are nearly impossible to do away with them. We cannot keep expanding a segment of the work force which only consumes wealth. We will either have to tax everyone to the limit of sanity or accept the fact that government isn't here to wait on us for our every need.
People here decry government surveillance on one hand and cheer new government jobs because the later is giving them something. Hey, I got news for you, both are the same thing. They are imposing into your life by restricting your rights or restricting how much of your work you can take reward from, by that last I mean : How much they are willing to let you keep to spend as you see fit.
* Winners compare their achievements to their goals, losers compare theirs to that of others.
>
THere are enough Californian up here already.
NB: as for the price of gasoline, it make little or no difference.
The price , as near as anyone can tell, if mostly determined by refinery run rates
in Washington.
U voted for the governer & state congress, so U get what U vote for. The people want more taxes.
Really, with the economy the way it is and so many states having huge budget deficits, I believe this is only the start of the crazy taxes politicians will come up with.
Perhaps the best solution that politicians should consider is cut spending instead of trying to pull more money out of the private sector. Isn't that what ordinary citizens are expected to do when they receive a pay cut? Aren't politicians representatives of us ordinary citizens?
Go to the Dept of Labor's website. Pull down the numbers for private sector jobs vs government jobs.
Jan 2008-Jan 2009
Government Jobs Created: 148,000
Civilian Jobs Lost: 3,648,000
Anyone see an issue here?
sigh
He's asking what your malfunction is, Pyle.
How does the government actually monitor the compliance with the law? Do they have the right to subpoena financial records from any company doing business in any other state or country? Or does the tax just apply to online businesses that operate from ISPs physically located in Wisconsin? Does it fall on the merchant to recognize that an order is being shipped to WI, and then they withhold the appropriate tax and voluntarily send it to the state? If that's the case... hahahahahaha... good luck with that one, especially if there isn't an effective enforcement mechanism in place.
Ok, supposing I'm a single person software developer, and I decide to sell software (aka "a Digital Download").
With this law I would have to flag any Wisconsin residents, collect sales tax from them, and send it to Wisconsin.
How is this going to work if I'm in a different state ... Barring any presence, and interstate commerce, etc ... I'm not a bloody resident of Wisconsin ... what would happen if I just said F. O. to Wisconsins' tax collectors? Obviously I wouldn't go there to vacation anymore.
Now, one step further, what happens if I was a resident of another Country?
Heh ... the tag "goodluckwiththat" is entirely correct.
a grab for power, money. backdoor or indirect DRM and a shot against net neutrality.
Scientia et Potentia
An interesting statement. So, you think it's only "fair" that everything should be taxed? One cold argue that a tax on brick and mortar stores pays all the services the state provides: a road to get to the store, police to watch the store, and... what else does the state provide? For the on-line stores? Would it be fair to make the internet sellers pay for the services only the brick and mortar stores need?
Okay, so the state provides schooling for the poor. But then, why do rich people pay income tax? Isn't that meant to redistribute wealth, to let the poor have the same opportunities the rich had?
Let's put is this way: taxes are never fair. They are an unavoidable evil. Robert Heinlein said it best, "The power to tax, once conceded, has no limits; it contains until it destroys." ("The Moon Is A Harsh Mistress", 1966)
I'm sorry but isn't a digital download is a license and a service... Isn't there already sales tax on stuff like that? And if so why doesn't it apply...
I'm sorry but no sales tax sounds kind of weird... but maybe that's just because where I live there's 25% sales tax on everything!
Including services, downloads, licenses etc... I'm pretty sure I pay 25% sales tax when I buy mp3's online...
"Internet vendors shouldn't have a tax-exempt advantage over Wisconsin's brick-and-mortar retail stores."
Umm, what? We're not talking about selling physical products, we're talking about selling data. Are there any brick and mortar stores in WI that let you come in and pay to download things to your USB drive using a connection at the cash register or something?
What exactly will Wisconsin do with this tax revenue? Will they now start providing their ALL of their citizens with Free Health Care?
I suspect not. What exactly CANT wisconsin do that they're already doing with their current taxes?
If we're going to tax our citizens more, then lets provide them with more services!
When i'm buying something, i want to know what i'm getting, and it better be worth it.
Wiki France.
Say I live in Wisconsin and purchase something online. What stops me from saying I live in another state or country without such tax? How does the state of Wisconsin collect such taxes from businesses/corporations that fall out of their juridiction, (different state or country).
In Wisconsin the law states that we are required to pay taxes on out-of-state purchases anyway, even if the vendor does not collect it for us. The only problem is they can't enforce it. If the vendor doesn't have a physical presence in the state, it is nearly impossible (and generally not worth it) for the state to prove you bought something from them.
The companies with a physical presence will collect the sales tax, as the state will have at least some access to their records.
So yes, we cheeseheads don't usually pay taxes on stuff we order online.
He and other state officials say it is a matter of fairness: Internet vendors shouldn't have a tax-exempt advantage over Wisconsin's brick-and-mortar retail stores."
Of course. Its all about fairness. The extra 7 million dollars really haven't weighed on the decision at all.
Send your spendthrift head of state this
Even better, boycott Wisconsin and buy Real California Cheese. Not only will it hit the governor right in his revenue stream, (Just like it did, I might add, when people did the same thing until they voted out Proxmire.) you'll be getting better cheese. After all, everybody knows that the best cheese comes from the best milk, and that comes from happy cows.
Good, inexpensive web hosting
now by using p2p software to download copyrighted music, you run afoul of tax laws. this needs to be fought tooth and nail.
My state has had a sale tax law for years. Whenever I buy anything and don't pay tax in the other location, I'm required by state law to pay the sales tax in my state with my annual tax forms.
I never do. Screw them.
I contacted my state treasurer concerning penalties for late tax payments - I pay all at the end, not quarterly because it is more convenient and I don't like loaning them money. Anyway, they said not to worry about the penalties because they had no way to determine I actually owned any, nor any simple way for them to calculate them for me easily. I've been checking a box on my state returns for them to calculate the penalty for the last 8 years. They never have.
I'm damned if I'll help some organization that is that screwed up waste more of my money.
YOU ARE SUPPOSED TO BE PAYING TAXES ON ON-LINE PURCHASES. THEY'RE CALLED USE TAXES.
http://en.wikipedia.org/wiki/Use_tax [wikipedia.org]
Here is the deal:
- If you don't pay them, your state can send you nasty grams in the mail saying "We see you have filed zero dollars in use taxes, please pay them." These notices are fairly common. IOW, the state tax departments are saying "Look, we aren't stupid, you're buying stuff on line, pay your tax". Now who here wants to keep records of the crap they buy JUST so you can pay use tax at the end of the year?
- With a mandated sales tax, it means YOU don't have to keep records for paying end-of-year taxes. They just add it on to your purchase like any other state(if your state has a sales tax). I don't know about you but I'd much rather pay the friggin tax up front then worry about the stupid EOY paperwork.
One thing to make life easier for consumers AND businesses: only allow one tax rate per state. example: Wisconsin has a moronic tax system where every county can charge differing rates something up to like 1/2% on top of whatever the state charges. Some counties are 5%, some are 5.5%, or like 5.25%. So to make it easier on on-line retailers, just legislate single tax rates per state for those that have a sales tax. End this moronic madness now.
and give the net a clean look. I think that will be good.
"It's a revenue gap that will certainly grow in such harsh economic times where only the best retailers with the lowest overhead will survive, and the rest will be left struggling."
Maybe it was all a dream, but I would have sworn the USA had a capitalist economy.
Stupider like a fox! - H.S.
nowhere did the idea of NOT consuming came up! sad, sad thing that it is out of the question to opt out of unnecessary taxes by not having to pay them. Do you really need that (insert digital info here) to listen to/play with? what was i thinking? how could i be so unamerican and not buy buy buy. have to keep it all going right? oh, wait, some people suggest by passing not one but two laws, dl for free (P2P/bittorrent)and and violate copyright LAWS and not pay the tax. good call. Remember people - the one option is to pass on your need for the crap your children will just dispose of.
The US Constitution, via the Commerce Clause, simply does not allow states to tax interstate commerce. The US Supreme Court has further clarified this: "[N]o state has the right to lay a tax on interstate commerce in any form... and the reason is that such taxation is a burden on that commerce, and amounts to a regulation of it, which belongs solely to congress. This is the result of so many recent cases that citation is hardly necessary.â [Leloup v. Port of Mobile, 127 U.S. 640 (1888)] In the case above, the State of Alabama tried to levy a tax on a franchise operator of Western Union for out-of-state wire transfers and telegraphs, but with a shake of the naughty finger, got slammed by the supreme court. They'll do exactly the same if Wisconsin tries to levy a tax on downloads and file transfers originating from out of state, and that can actually include Apple iTunes Music Store unless those music and media servers are hosted within Wisconsin. Regarding the "Use" tax, the constitution exempts that as well with the equal protection clause and the 16th amendments. The state cannot tax one person for one thing and not tax another person for the exact same thing, so the use tax would apply to ALL residents, or none. All of the States use that field on their tax returns to try to "trick" residents into paying sales tax on mail order and outside articles, but it's not enforceable because they'd have to demonstrate that the "use" tax was levied on all citizenry. To make a "use" tax a substitute for a "sales" tax is functionally equivalent to a Sales Tax, and prohibited by the Commerce Clause. Some very strong proponents of a Federal Sales Tax have completely ignored these precedents and constitutional constructs and seldom confess the need for a major constitutional amendment. Without one, a Federal Sales Tax is impossible as is any uniform state sales tax on mail order and on-line purchases from without the resident's state. They keep extending the moratorium for one reason, because no one has initiated a call for an amendment. Some have asked why these constitutional provisions exist. If you look at the history of the formation of the United STATES, you see 13 colonies that had to agree to federalized powers while preserving a considerable degree of state sovereignty. It mostly had to do with the rivers that often divided states where smaller states didn't want larger states to usurp control over commerce or control the waterways, which were serious concerns for commerce, where control by one state could decimate a neighboring or downstream state with embargoes and such.
Want my log files? Motherfucker?
Deep Packet Inspection?
Other states should put huge taxes on stuff shipped out of Wisconsin. Watch cheese sales plummet. Milk it for all it's worth.
I just moved here a few years back, and its time I dont buy a fucking thing made here. PERIOD. And this governer is done. out! BURN HIM! /flame over.
will bring in $6.7 million annually.
Of which $12.3 million is already spent.
1. I live in Wisconsin.
2. Technically, this isn't new. As people said before, there is a place on the Wisconsin Income Tax form where we are supposed to self-report all purchases made out of state(including mail order, online, etc.).
3. I really don't mind.
I buy all of my music from iTunes. I've never bought a whole album online. So, the $.05 cents per download(or soon to be $.04 or $.06 with the new $.69/$1.29 pricing) is still better than the $.71+ if I had to buy the whole cd from the local brick and mortar store.
How would this affect places like Netflix, where I pay a monthly subscription fee to stream movies? Do I pay sales tax on the $8.99? That's still much better than the $.16 I pay at the local video store for EACH movie.
In the grand scheme of things, I still come out ahead. The state still loses out on some amount of revenue, though I'm a tiny bit poorer than if this tax levy hadn't been passed.
And reduce the federal retention from each state.
the business fills in one tax for downloads to federal government and one tax for the physical presence/goods taxes where they are.
Then states can argue with the feds about how much of the digital taxes are a deduction from them and whether the rate is proportionate or not.