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Connecticut Considers Digital Download Tax
SonicSpike writes in with a story about the latest state contemplating raising revenues by taxing the net. "Downloading music, movies, e-books and Apps could soon cost Connecticut residents more as lawmakers consider a tax on digital downloads. The bill, proposed by the General Assembly's Finance, Review and Bonding Committee, would have consumers pay the 6.35% sales tax on any electronic transfer. Supporters say the bill would level the playing field for brick-and-mortar retailers in the state who are already required to charge Connecticut sales tax to consumers who purchase these products in their stores. About 25 states around the country have already begun taxing digital downloads."
Couldn't you just use an access point across the street ( and likely in another state) and bypass the whole problem?
Faster! Faster! Faster would be better!
"Supporters say the bill would level the playing field for brick-and-mortar retailers in the state who are already required to charge Connecticut sales tax to consumers who purchase these products in their stores."
An argument could easily be made that the playing field is already level. The advantage of ordering online is one of cost, with typically lower prices and less of a drain on local infrastructure (it costs the state / local government more to provide fire / police protection / emergency medical services / roads / etc. to a few dozen brick-and-mortar stores than to a single warehouse), and possibly hard to get items (ones which cannot be carried locally, for lack of space in a store; commercial space being at a premium). The advantage to brick-and-mortar stores is time, with the more popular items you are typically looking for already in stock, hence the price premium ("I need this item today").
As such, the advantages on both sides balance each other out fairly well.
This tax, of course, is then a simple cash grab. Going off a stereotype of legislatures, we will assume that the state coffers are beginning to, if not already are, empty. As such, someone took a look at things that are considered popular enough to tax (demand is unlikely to change, so it's *free* money they can skim off the top, without impacting the industry; this is also an economics-FAIL, but the people in charge love to hear things that confirm their bias), and barfed up a semi-palatable reason for this new tax.
I am John Hurt.
I realize the world doesn't work like this. But in my opinion if they're going to tax the purchase it should then fall under all the rules of buying from a Brick and Mortar store too, such as the First-sale doctrine. After all, if I buy a book from a brick and mortar I'm legally allowed to sell that book to someone else. On the other hand, when I download from iTunes I have no way to sell that item, because I didn't purchase it, I "licensed" it. Which the businesses love to remind us. If I'm then being taxed as if I'd purchased it, then the states should require the companies by law to treat it like any physical purchase and allow me to transfer the ownership of it.
PayPal is.
Actually, microeconomics theory shows that the prices would drop and the corporations would make a higher profit. Some companies will be willing to slightly lower the prices. This will pressure other companies to lower prices until an equilibrium is reached. Eventually, the abolished taxes will go partly to the consumers and partly to the producers.
That works when you aren't in a monopoly or cartel-controlled market, which all of ours are now.
Thanks to the polices of the State that encourage this behavior.
That would never work. After all, people never regularly cross the border into Pennsylvania or Delaware to buy fireworks or fill their trunk with tax-free cigarettes. Nope, never happens.
Random Thoughts From A Diseased Mind (Not For Dummies)