April 16, 2009

More state legislatures want to know: How come we don't tax ebooks?

by

More and more “recession-weary, tax-hungry politicians” think they’ve got a great idea for a source of new revenue — accordiing to Stephanie Condon in a CNet News report, “A growing number of states are considering laws to tax digital goods, such as iTunes songs, Amazon MP3s, or electronic books.”

Concurrent with the movement to simply tax online sales, such as New York’s so-called Amazon Tax (see the earlier MobyLives report), the movement to tax digital goods is gaining momentum. A bill just introduced in North Carolina, for example, seeks to “modernize the sales and use tax statutes by treating music, movies, books, and computer software that are delivered electronically the same as those that are purchased in a tangible medium.”

But there’s some pushback, says Condon. For one thing, “at a time when governments say they want to encourage broadband adoption and the development of a low-carbon economy, opponents say taxing digital goods sends exactly the wrong message.” For another, some opponents say states don’t have the right to tax digital goods.

But Condon says “at least 18 states claim they have the authority to collect taxes on digital gooods, and more are likely to join them.” A digital goods tax goes into effect in Mississippi in July, and similar legislation has just been introduced in Minnesota and, as mentioned, North Carolina.

Dennis Johnson is the founder of MobyLives, and the co-founder and co-publisher of Melville House.

MobyLives