More states join iTunes tax debate
A growing number of states are considering taxing songs from iTunes to relieve their strained budgets, though at least one state may buck the trend in the hopes of appearing more tech-friendly.
A state legislator in North Dakota last week introduced a bill to explicitly exempt digital goods such as digital music or movies, digital books, or ringtones from the state's sales tax and use tax. A hearing on the bill is scheduled for next week.
At least 17 states currently collect taxes on digital goods, and a handful more may join them. A bill was introduced last week in the Mississippi state legislature to impose taxes on digital goods, and lawmakers in North Carolina are considering a digital goods tax as well. New York Gov. David Paterson has proposed the tax in his state, and legislators in states like California and Wisconsin may take up the issue again this year despite a lack of support for it in the past.
The extra revenues that could be gained from taxing digital downloads may be appealing to state lawmakers, but Stephen Kranz, an attorney at Sutherland law firm who represents members of the digital media industry, called digital download taxes "a short-sighted approach to digital tax policy."
"It punishes people who can't move and discourages companies" from moving to states that impose such taxes, he said.
That's because under the legal concept of "nexus," a state generally may only tax a company that has a physical business presence within the state's borders-- though a state may apply a "use tax" for goods coming into the state from elsewhere.
While North Dakota has not taxed digital goods in the past, Dwight Cook, the state senator who introduced the tax exemption bill, said he wanted to make that point clear to technology companies.
"I think it's important we send a message to the world of digital products that this is a state that's favorable to their interests," he said.
At least one major technology firm has been drawn to North Dakota--Microsoft first established a presence there when it acquired the company Great Plains Software in 2001.
"I don't completely understand the high-tech world, but I do understand they use a lot of electricity and they need a lot of water, and we certainly have both," Cook said.
Cook decided to introduce the tax exemption legislation after learning more about the issue from the Streamlined Sales Tax Project, a multistate effort to develop uniform standards for taxation. In 2007, the project adopted a specific definition of digital products, along with procedures for how they should be taxed.
Stephanie Condon is a staff writer for CNET News focused on the intersection of technology and politics. She is based in Washington, D.C. E-mail Stephanie. 
Mp3's and mp4's both suck anyway.
The result is not rocket science... Highly skilled and well paid workers who USED TO contribute to the local and state level tax revenue are either under-employed or, worse, UNemployed. Many hundreds of thousands of workers, gone. You do the math. Again, it isnt rocket science. These same people who were paying into the system are no longer buying anything - other than what they absolutely need. The federal government also feels that lost revenue.
What do you expect? Forget about the WASTE... the welfare programs, for one moment put that crap aside. Where do you think the money for roads, street lights, police, bridges, and everything else that you use each and every day - that is crumbling apart comes from? Where do you think the money for prisons and jails and courts and all that has to do with crime prevention and deterrents comes from?
We have a huge problem in this nation and its partly due to greed and its partly due to over-spending AT ALL LEVELS. Greed in that our "all-knowing" idiot CEOs think they can save some money buy hiring programmers in India for 1/3 the rate of US programmers, yet their banks STILL failed! Why? More greed. Giving loans to people who would NEVER EVER have qualified to live in a house at their current pay. Some schmuck called Mozilo thought EVERYONE should be in a home and he saw fit to make that happen - at what expense?
So when you all whine about being taxed to download your copy of a copy, crappy quality, music (if you can call it that these days) - just remember WHY its happened. I am especially talking to this current generation who's fruitcake parents never said NO to them, never taught you sacrifice and how to make a choice between WANTS and NEEDS. You and your spoiled rotten generation and the one prior to it have learned what MY generation heard first hand from their parents about THE great depression.
And let me tell you, this is NOTHING like the 1930's folks. You whiners wouldnt be able to stand 5 hours of the 1930's without committing suicide or, in your cases - talking medication.
If we dont go back to what WORKED for ages, we're done. TWO parent households. Man and woman - not anything else. ONE parent working, ONE parent home. BOTH parents demanding the child RESPECT their elders - their teachers, the police, their neighbors, etc. We need to build products IN America, FOR America and BY Americans. None of this illegal alien ********.
Otherwise, the writing is on the wall folks. Read it and weep. Or, in your cases, you read it and you're whining.
... Seriously?
- by solitare_pax February 3, 2009 2:36 PM PST
- Why not just start taxing the air we breathe?
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