Get Ready for the Digital Tea Party, Download Tax Enacted

There are federal taxes, state taxes, county taxes and road taxes; we count out an additional $.07 purchasing a candy bar at the gas station, and don't get me started on gas taxes. We each file a series of confusing forms every year, and pray we don't have to write the government a check.

Now, states want to make it that much more frustrating by taxing our digital downloads.

Some are calling it the iTunes Tax or iTax. Yes, that means music, movies, television programs and in some cases software. This includes iTunes, Amazon MP3 and UnBox, Napster, Vongo, Audible and a slew of other digital media providers.



About two years ago CNET News reported that states were starting to pass some kind of digital download tax. (Does this remind anyone else of the Stamp Act or the Townshend Acts?) This year five states enacted the tax (Yeah for Nebraska, Tennessee, Indiana, South Dakota and Utah!) bringing the grand total to 17 states, plus D.C., with digital download taxes.

Legally each state has to pass some kind of bill or reform to enact this taxation. Some are modifying (or bending) laws currently on the books to include digital content. For example, Utah taxes "Computer-generated output." A digital download is considered an output even if it is not a tangible piece of material because the primary object of the sale is the output.

Did that give anyone else a migraine?

The other states have similar legalese some even categorize the downloads as software; each piece of legislation just as confusing as the next.

In a time when wages are stagnant, the economy is in a slump, the housing market is in decline and gas prices are through the roof, whose bright idea was it to start taxing people when they are at their most desperate times? That's right politicians that need to dig their state out of deficit.

Unfortunately, this tax answer only affects the honest people already willing to pay for their digital media. In this day and age it's entirely too easy to just BitTorrent or Limewire anything you want off the Internet for free. And this is only going to reinforce the practice.

I'm not saying everyone should turn to P2P networks in revolt a la John Hancock and Sam Adams, but maybe some of these legislators should ask their teenage kids where they really get their music.

Although iTunes has sold more than 5 billion songs, something tells me Limewire has more downloads.

You can see reviews for music download services here at TopTenREVIEWS.

And you might also like these other blogs:

Android, G1, Google Guts Phone, Whatever Coming this September?

LCD TVs Will Be Even Cheaper, as If You Needed Another Reason to Buy One

Even Guitar Hero and Rock Band Are Music Pirates According to Warner Music

Apple Can Erase Your Apps, Steal Your Lunch Money Without Asking

Who Wants Yahoo Coupons? Yahoo Fire Sale at Rhapsody