States Seeking Levies on Digital Downloads 249
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.'"
Back to the old 'underground' (Score:5, Interesting)
This is also getting out of hand. Next they will assign an arbritary value to OSS software ( well, lets see. windows is xxx and office is xxx and and and
Thats Why.. (Score:5, Interesting)
I don't get it (Score:5, Interesting)
For me and my state, adding that $.08 to cigarette tax would be much more productive. I wish they would do that instead.
Genius! (Score:4, Interesting)
This'll take about five minutes to be thrown out. *yawn*
By that rationale... (Score:5, Interesting)
Yet another reason to use Open Source Software (Score:4, Interesting)
This hardly affects me as a consumer (open source, and my pay-for entertainment ALWAYS comes on a disc) but being in the software industry I'd like to know - didn't the federal government have a ban (at least temporary, for the next several years) on internet sales taxes?
How would it get around this?
This is expected... (Score:5, Interesting)
Some of the processes to watch are: Immigration, offshoring, outsourcing, foodstuffs regulation, computer and internet regulation and taxation.
The world is very busy at becoming flat in many regards. Something tells me the French will always be a sore thumb, but everyone else is interested in commerce and becoming either wealthy consumers or those that supply them. Once the regulatory grip slips loose a bit, watch how farmers start selling their products both without the protection of the government, and without the stranglehold on how they can sell their products. Food has been used as a political tool for too long, as technology has been. The old guard are losing control of all the things that kept them in power for
As for taxation, without funds from taxation, governments become rather helpless groups of mislead individuals. This is just one *SMALL* sign that its time to revamp the tax schemes here in the US. The old ways are falling behind so quickly that it will be difficult to keep up... we need someone to start a wiki or something... A place where government types can go to learn about the brave new world they are facing and how they can effect a stable government within it.
Re:How will they possibly track this? (Score:2, Interesting)
They are spending money and we arent gettin a cut! (Score:2, Interesting)
Reminds me when I was 11, my friend was mowing a few lawns that summer for money. He didnt make much maybe $60 bucks. But the IRS guy that came by their house was telling him and his parents he needed to file taxes the next year. I'm sure the IRS guy was being technically legal, but it seemed more anal to me.
Re:How will they possibly track this? (Score:3, Interesting)
How about who owns what? With DRM'd music, and Right-of-First-Sale compromised, downloading some music is not quite as clear cut an ownership as buying a toaster. (I can re-sell a toaster, or a CD, but how can I re-sell a DRM'd music download?)
I suppose they could just call it a service and put a sales tax on all services. Maybe some states already do this (?).
Re:Personal Property (Score:4, Interesting)
Well, as one thing leads to another, you'll have taxes on subscription music services, then or general pay-for 'net subscriptions
SUVs are self taxing. (Score:3, Interesting)
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!.
Besides there are quite a few people who can justify owning one for hauling the family. Singling out SUVs has gotten so low-brow it makes me wonder why people want to follow such a stupid path.
As for cigarettes, states are looking elsewhere because all their taxes are having the effect they claimed they wanted : reduced smoking. Problem was when the smokers quit it meant someone left the voluntary tax roles. Lottery tickets certainly don't make up all that money so its got to come from elsewhere.
I look at the bright side, my state has a near 1 billion dollar surplus because it doesn't specialize in income redistribution which what most states running a deficit are doing. They have promised so much money and service to people they have no choice but to scramble for every last penny.
Instead of asking why they aren't taxing some people more you should really be asking why are they taxing it in the first place. Too many spend more time wanting to inflict financial burdens on others than the more logical idea of reducing them on all.
Re:then why do business pay taxes at all? (Score:3, Interesting)
If Washington, DC wants to tax online stores that are based there, more power to them. All it's going to do is drive high-tech business out into more friendly jurisdictions. But they're going to have a hell of a time trying to tax businesses that sell to DC residents, especially because those same residents will in all likelihood be lying through their teeth to avoid paying the same tax.
The whole dilemma with online purchases boils down to figuring out where the "transaction" really occurred. If I'm in one state and the server is in another and the company that owns the servers is in a third, which State's laws govern the sale? (Normally there is a contract at some point specifying which, and it's usually the state of the company in control of the online store, but I could think it could be argued that it should be otherwise.) And how about when the sale is done internationally? There it's easy to have situations where the buyer, seller, and the processing bank are all in separate countries; you could even introduce additional intermediaries if the buyer was using a PayPal or eGold type service.
The problem here is that the laws we've created to govern "transactions" are based around a model where two people get together and exchange money for goods or services in physical space. It just doesn't translate very well to the amorphous nature of the internet, where businesses can exist online without any real presence in the physical world, besides a few cubic inches in an equipment rack somewhere.
Re:then why do business pay taxes at all? (Score:2, Interesting)
If the "transaction" occurs where the company is, then my "company" is at the bottom of the Atlantic Ocean, far from the coast. Since there are no services that run out to there, the company's servers are hosted elsewhere and the company's mail is delivered to me (since the postal service doesn't deliver there). The "company" redirects all of it's profits to me (which I will dutifully report as income). That way, no business is being conducted within the jurisdiction of a taxing body, but I'm still reporting my income, so I can't be charged with tax evasion.