iPod Tax for Music and Video Downloads?
Will future multimedia downloads suffer the same fate as normal dry goods and be slapped by a sales tax? If you live in Wisconsin and purchase music online from Napster, iTunes, Sony, Yahoo and other online music stores or pay on demand multimedia search services, you will want to pay attention to this.
Wisconsin legislators are currently fighting over a proposed iPod tax which has the potential to soon be a national argument in the US. The issue is surround around consumers and the need for them to pay tax on movie or music downloads like those purchased from Apple iTunes. Apparently, now in some states such payment is voluntary, and not reporting such purchases is subject to fines. Wisconsin estimates that about 1 percent of people actually pay such “voluntary” tax.
CNet reports that Wisconsin Gov. Jim Doyle wants his state to start collecting taxes on digital music, videos and software. “It’s an issue of tax equity,” Jessica Iverson, a spokeswoman for the Wisconsin Department of Revenue told CNet. “If you go into a Main Street business and purchase a CD, you are paying tax.”
Economists are split, even across right-left divides, as to whether adding these kinds of taxes is a good idea. Some say that taxes on digital goods will hamper the growth of a potentially vibrant new marketplace, while others say that having taxes only on offline versions of the same goods distorts the operation of free markets.
For the most part, states can’t force the vendors to collect that tax unless they have a physical presence in the state, however. That means that consumers themselves are often technically required to tally up how much they’ve spent during the year and pay the tax voluntarily.