It is no different than collecting taxes on any other service performed (eg cooking, barbering).
To my knowledge most states don't tax for services (especially not as highly as sales are taxed). Have you ever heard of a musician or lawyer (or even your aforementioned chef or beautician) having to collect any sort of sales tax?
H.264 is technically better format too. That's why it should be picked, not based on some religious free software views.
Not all concerns about the Freedom to use a technology are matters of obsessive fanboyism or faith. There are plenty of pragmatic concerns associated with IP that only the most reckless would choose to ignore. A technology can be 1000x better than anything else that exists but still be effectively useless or a huge risk to end-users or business management. As an end user, I don't want my choices limited by how many technologies a prospective vendor can afford to employ. As a developer, I want to be able to create or fix technologies I encounter without much bureaucracy, being hindered by secrecy or risking having all of my hard work phased out through planned obsolescence strategies. As a business owner, I don't want the items purchased by my business to be hindered by cumbersome, nuanced, legal agreements. In my view, the diversity and innovation facilitated by Free software is almost always better even in cases where proprietary counterparts have a few more features or slightly better performance. Essentially, the freedom to do what you want has its own innate value that, while hard to quantify, should be thoroughly considered before making *any* important decisions, both technology-related and otherwise. It's not always easy to predict when and how those restrictions might hinder your opportunities in the future.
What this country needs is a good five cent microcomputer.