More Digital Download Taxes On The Way

from the but-of-course... dept

With the economy in so much trouble, state tax revenues are being hit hard -- so, rather than figuring out ways to spend more wisely (what a concept), they're looking for ways to boost tax revenues, and are hitting up two popular online tax targets: taxes on physical goods purchased online and taxes on digital downloads. Of course, the whole (official) purpose of a sales tax was that it was supposed to be used to pay for the infrastructure that made it possible for you to drive to the store and purchase the product (e.g., the roads...). That's not always the case for online ordering (though, some will point out that local infrastructure plays a part on the delivery side). However, it's difficult to see any justification at all (other than a blatant money grab) for a digital download sales tax. But, state officials don't even seem to be looking for any real justification. They're just saying that they need more tax revenue.

Another point raised, in the article on taxing digital downloads, is that politicians don't seem to be distinguishing between digital goods and online services. The person quoted in the article suggests that's a problem, but I'd argue that the real mistake is in thinking that there actually is a "digital good." These days, pretty much all sales of "digital goods" are nothing more than a service. So if we believe that services shouldn't be taxed, then digital goods shouldn't be taxed either. They're the same thing.
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Filed Under: digital downloads, taxes


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  1. identicon
    A Dan, 17 Apr 2009 @ 7:40am

    Re:

    A 5-10% tax on $0 would still be $0. Since any content is being "sold" for free, there's no tax evasion.

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