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back to article Land of cheese adopts internet download tax

With many US states scrambling to fix major budget shortfalls, legislators are taking an added interest in taxes on digital music, videos, and software. Wisconsin today followed in the footsteps of New York State by passing a stimulus bill that includes a measure for adding sales tax to digital downloads starting October 1. The …

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Ed

Bah

The can tax my internet when the pry my mouse from my cold dead hands.......

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Go

So, can we drive through Wisconsin now?

Oh, dear... And after they've worked so hard to make ends meet with their "revenue enhancement" speed traps and traffic enforcement policies...

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Pirate

I agree

"By taxing it you're legitimizing it," said Michael Long, chairman of the New York Conservative Party told the AP. "You're sending a message to the children, you're sending a message to the teenagers, if you're taxing it – how can it be wrong? I don't know how you can sink much deeper."

By taxing it you are legitimizing it, just as taxation on cigarettes legitimizes those. So clearly federal, state and local authorities that take their cut are no better than the people that make them.

In fact I believe they get more profit from cigarettes than the people who make them as they don't bare the same manufacturing costs and get a larger percentage of the sale price than the supplier.

Don't talk to me about health care costs, because I'll challenge you to find a doctor or hospital willing to send their bills to the government if you do. Somehow I doubt smokers or second hand smoking victims have a secret national health insurance that the rest of us don't.

You really want to make the government squirm? Ask them what they spend that tax money on, and I think you'll be disturbed at how little of it goes towards anti-smoking campaigns or anything that would help those who suffer from second hand effects.

Oh this was about porn? Exactly the same thing. You take your cut you are no better than the supplier. Ok it is a little different because I applaud the sale of porn and I would welcome being the victim of second hand porn (carpal tunnel and blindness excepted).

Anyway it's an interesting concept and I feel a letter forming right now to let the idiot, I mean conservative politician, fully understand what he's saying.

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Giant Sucking Sound ...

of media webserving right out of New York State, and any plans to build new data centers as well ..

in the long run they lose tax reciepts, not gain from this .. big time .. idiots ..

how about the subscription fee for online Wall Street Journal ? .. WSJ smart enough to move online operations out of state .. what a hoot as physical newpapers fade in readership and revenue to tax ...

pfffffffffffffffffft ..

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Clever Americans

China has the Great Firewall. Much cleverer to just tax things. This way you either discourage it or make money out of it. A bet both ways.

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Anonymous Coward

$11 million?

How much will the IT systems cost to collect that? $110 million? I've worked gov IT. This is stupid.

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Paris Hilton

All is vanity, a chasing after the wind...

You can either tax the purchaser or the vendor.

For the purchaser, short of taxing all credit card transactions, how do you know if its for a digital download or not? Then you have to deal with paypal etc.

For the vendor, you'll be restricted to those in the area you control. I can hardly think of any more mobile business than those selling digital downloads. Cue the mass exodus of all digital download vendors.

How is this going to work?

Paris, digital download victim...

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The net result...

is exactly what these states don't want: continued business investment outside their borders.

States can only enforce retail taxes on vendors with a physical presence within their borders selling to people physically located there. Even with NY's broad definition of such, they can't do anything if a company simply does not locate within their borders or chooses to move away. Businesses that can move away will, businesses not located within these states will stay out, and businesses within these states will lose money to their "cheaper*" competitors.

So while they may be able to grab some quick cash at the expense of those companies unable to pull up roots fast enough, the long-term result will be fewer jobs in their state, less in income taxes, less in sales taxes, and less in respect from their own constituents.

*Yes, most states have a "use tax" side of it which means you're supposed to pay whatever vendors didn't collect, but it's not worth the amount of money it would take states to investigate, so they allow you to just pay a (vey small) percent of your income.

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Eh? Refresh my memory ...

People don't pay money for porn^Wmusic or porn^Wvideos or porn^Wporn, anyway, do they? Or are the cheese-heads different from the rest of the USA and don't realize that all of the above is available for free, and often legally? I s'pose it's possible ... it IS nearly Canada, after all ...

So my question is, how can you tax something with no monetary transaction taking place? A tax per gig of IP traffic? I'll go back to dial-ups, and Usenet over UUCP and/or BBSes in a heartbeat ... most of my IP traffic is text only, but it's the principle of the thing ...

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Paris Hilton

Double Take

"digital download tax will also cover internet pornography..... there's a cream for that"

Had to read that twice to get the correct meaning and eliminate the double entendres, or is it a triple entendre.

Anyway, Paris, our Queen of Cream

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AC
Thumb Up

but

What's this got to do with the french ?!

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Anonymous Coward

Not sure how it's going to work

Sure, it's easy to say tax downloading music & software, and even porn, but who's going to know?

As far as I'm aware, everything in a computer boils down to 1's and 0's.

Everything is stored as 1's and 0's, you just need some software to take the 0's and 1's of a binary file, make it look like ASCII and then go back the other way. Given a bit of time I could do that, I'm not sure I CBA, but if I'm going to get taxed because what I look at is not the right format then eventually it's going to be a profitable bit of software.

It may as well be a tax on IP traffic as suggested by others, then who's going to be taxed? The individual or the ISP?

All a bit bizarre if you ask me, typical govt. though

1. "We've not got enough money, let's tax something"

2. "What shall we tax?"

3. "What's being used a lot?"

4. <Insert whatever's in vogue here>

5. "Great let's tax that!"

6 PROFIT !!

Poor yanks, at least for the moment, I'm sure this lot will come up with something equally absurd.

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OFI

Payment

@Jake: I thought the idea of this 'tax' was to add it onto the cost of ISP subscriptions?

This is a pretty daft tax though..

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Anonymous Coward

@ed

"..pry my mouse from my cold dead hands......."

If you have your mouse in both hands then you aren't getting any benefit from the internet.

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Anonymous Coward

Answers

The tax could either be collected from the vendor as a standard charge or from the buyer declaring it on his or her taxes (having seen a BBC article on a correspondent filing his US tax return, they do seem to go into that much detail). To make it a level playing field for all retailers then a sales tax should be charged in each state (whether the money stays in the state where the seller is based or goes to the purchaser's is another matter) or people should be banned from either purchasing or selling outside their state via the internet . The internet has obviously blurred state & international borders. I don't know if imposing solutions like that proposed would work. It would be patchy at best (not a reason not to do it!).

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Dead Vulture

Can't we get a filter...

so we don't have to trawl through this irrelevant Merkin stuff?

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Alien

I live in Wisconsin....

I was quite happy with them making traffic stops on the people from outside the state to make up for the deficits. Really if they wanted to make more money they would raise the tax on alcohol, especially for bars. I live in a small college town and on the mainstreet there are 16 bars. Incidentally on the street one over there are 4 churches, so I guess that's a good ratio. I know most towns in the state are very similar, and then you have the bigger towns and the cities where it's even more true. So I bet if your raised the alcohol tax by even .25 to .5 you would get a decent amount. And it's easily taxable. From what I understood from studying the state in College, if Wisconsin was a country we'd have the 3rd highest consumption of alcohol in the world. I can't imagine too much has changed.

It is sad, and it kind of sums up what I've thought about the politicians in this state for a long time, they don't have a clue... But I do pay attention to politics and I do vote, and I try and vote for the ones that are a bit less clueless then the others.

"It's Czechoslovakia , it's like going into Wisconsin!"

"I got my butt kicked in Wisconsin one time"

-Stripes-

Alien cause we have a UFO landing strip in one of the small towns here in the western part of the state. Yes. It's true. Did I mention we have a lot of bars?

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Downloads already are taxed

Anything you buy out of state (either physically or download) is already taxed.

You have to add up all those amazon/ebay/itunes buys and pay the sales (use) tax on it - they only difference with stuff sold by merchants in the state is that they collect it for you.

Of course sometimes people forget to pay it.

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Um...?

$11 million collected in tax over 2 years is going to make what kind of dent in an (presumably) annual deficit of $600 million?? (This wasn't exactly clear if the deficit was accumulated or annual and I CBA to look up, it's Friday after all)

Or is it more a case of "...every little bit helps..." ?!

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Pirate

Just another incentive to get it "free"...

...and just when the pay-for-it music folks were starting to get some traction in people's hearts and minds, here comes the tax man to squelch a growing (and tax revenue generating) industry. Don't think it will stay just in NY and WI once the precedent is set...

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Tom
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@Dave

No, it's more like the Income Tax. They figure if they start it small and negligible, after it has been well established they can jack the hell out of it and it won't get repealed. They just seem to have forgotten that the increased cost of communicating with people on the internet when you already have internet service is about $0.00, and that nothing gets internet users more riled up than charging them taxes on something they've come to expect to be free of them.

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You're missing a big point...

Digital download tax could also mean that when you view a movie rental via 'video on demand' that your cable company has to charge you an additional tax. So your $4.99(USD) movie will cost an additional 4% for Wisconsin residents.

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let's call this what it is....

"stimulus bill that includes a measure for adding sales tax "

So let me get this right. You're stimulating the economy by TAKING money away from people who buy stuff?

"rooting for change under the couch cushions"

Which should read "rooting around in people's pockets"

"if you're taxing it – how can it be wrong"

Well, if that's the case, please stay away from my normal work income; i.e., don't tax it any more.

@Andy Bright - "carpal tunnel and blindness excepted"

Mate, you have two problems here. One is bad technique and the other is bad aim.

NY has conveniently bypassed the location connexus it their quest to gather taxes from out of state vendors. If, and when, this goes to the surpreme court...maybe a federal appeals court...IANAL...NY should lose based on the prior decisions by the Supremes regarding taxes on out of state businesses with no local presence.

The states, like all other taxing authorities, simply cannot get their hands on enough of our money fast enough to spend, spend, spend. they are willing to do almost anything to gather "fees", "licenses", and traffic tickets; all in the name of boosting their bottom line spending.

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@AC 11:37 & @OFI

begin comment_to_AC

"Everything is stored as 1's and 0's, you just need some software to take the 0's and 1's of a binary file, make it look like ASCII and then go back the other way."

That's been around since before there was pr0n. See:

http://www.opengroup.org/onlinepubs/009695399/utilities/uuencode.html

@OFI

I know. Kinda misses my point, though ;-)

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Luckily, I live in a state without a crisis

Or at least no major one. Some cutbacks and delayed spending, but there's no intent to touch the rainy day fund. Maybe something about our legislators being normal people for most of the biennium(the leg only meets for something like four or six months, excepting special sessions) means that we're unusually blessed with common sense.

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Ian
Unhappy

But won't someone...

think of the (probably almost impotent) New York Conservative Party leaders...

I think Michael Long might actually be more worried about how much more his left-handed browsing habit is going to cost him, and he won't get such a kick from his viewing if it doesn't seem as vile and degrading as it use to. Nothing like government legitimisation to take the zing out of your sexual depravity.

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Paris Hilton

Mike, what are you doing in your bedroom?

Nothing Mom, I'm just paying some State tax, unnnng, honest!

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