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 bill also includes budget cuts as well as a variety of tax increases to patch Wisconsin's $600m shortfall under its current budget set to expire June 30.
But the bill is getting a lot of media play for its digital tax provisions, fingered as (the arguably misleading moniker of) an "iPod tax." The name obviously downplays the true reach of the tax, which levies a 4 per cent charge on "digitally delivered entertainment services" including music, movies, e-books, greeting cards, ringtones, and many other downloadable items. It's expected to generate $11m for the state over two years.
We don't think we're being pedantic over the overly-specific term "iPod tax" judging by the shock and horror from New York state pundits recently learning their digital download tax will also cover internet pornography. We pointed this out back in December, but clearly its taken a while for the revelation to spread (although I think there's a cream for that).
The New York state Division of Budget confirmed to the Associated Press that the tax would apply to grumble flicks downloaded online or purchased on pay-per-view television. Of course, there isn't nearly so many folks willing to publicly despair a surcharge on When Harry Wet Sally as everyone's favorite digital music player – but it appears the anti-pornography crowd is calling the tax a [*ahem*] slippery slope.
"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."
[Lord knows horny teenagers always check their local tax codes before surfing internet pornography. Also, apparently New York's taxes on alcohol, tobacco, and gambling make them all A-OK for kids].
The tax only applies to pornographers in New York state, however, and out-of-state skin hustlers won't have to collect from New Yorkers.
Nevertheless, the age of a tax-free internet in America appears to drawing to a close. And state governments rooting for change under the couch cushions will only help quicken the pace. ®