California's 'iTunes tax' faces opposition
April 8th 2008
Mercury News reports that the issue of taxing music downloads before the California legislature is facing opposition. A bill presented by Los Angeles-area representative Charles Calderon doesn't directly call for the taxation of iTunes downloads, but seeks to remove the distinction between physical goods and digital ones.
"The notion of taxing tangible, physical property is really an industrial-era construct when we made widgets and sold widgets," Calderon said. "Now it's not about widgets, it's about information, and selling information and moving information."
If Calderon prevails, California's 8.25% sales tax would raise the cost of a 99ยข iTunes download to $1.07.
But his measure is opposed by legislators, especially Republicans, that reject any tax increases to solve California's $8-billion deficit problem.
"One of the growing parts of our economy, tech online and Internet, is something we should encourage without having these types of taxes," said Assemblyman Guy Houston.
Also, because changing how digital goods are categorized would subject them to tax without the legislature specifically authorizing a new levy would likely see the measure immediately challenged in court.
iTunes downloads are already subject to state sales taxes in Illinois and New Jersey.
Editor's note: South Dakota is the credit card issuing and fee collection center of the universe because it doesn't impose much if anything in the way of taxes on that business.
Thereupon, I suspect the value of iTunes, etc to California--Hollywood, Silicon Valley, etc--is greater if it remains untaxed...
What's your take?
