Digital goods taxes, like the ones considered by Rhode Island, would tax “specified digital products,” which includes “digital audio-visual works,” “digital audio works,” and “digital books.”
Digital goods provide a unique opportunity for states to encourage the growth of businesses and state green programs.
Most states that considered such tax revenues realized the potential harm and avoided such taxes. Vermont and Indiana recently rejected such bills. California and New York likewise changed their positions and now reject the taxation of digital goods. North Dakota recently enacted legislation that would affirmatively exempt any item transferred electronically in order to lure digital businesses to the state. And Iowa offers tax incentives to encourage e-commerce businesses to its state.
This tax will also burden the environment by causing consumers to slow their growing shift from physical goods to digital alternatives. A digital download is the greenest way to buy music, movies, books, and software. Downloading requires no driving to the store, no delivery vans, and no plastics or packaging. In 2007 alone, more than 200 million pounds of natural resources were saved by US consumers buying music digitally instead of driving to the store for a CD.
Digital download is the Green way to get our music, movies, and books. States should not be heaping new taxes on something they want to encourage.
In addition, independent music artists are increasingly bypassing traditional music distribution methods and are instead using Internet websites to sell their own creative works. A tax on digital downloads turns artists into tax collectors and impairs their ability to survive in today’s tough economy.
Finally, these taxes are nothing more than an increase of taxes on the state’s own citizens since they are the ones who ultimately are paying these taxes.
Congress is already considering the Digital Goods and Services Tax Fairness Act (S 971 and HR 1860) to stop states from taxing digital goods at higher rates than their tangible counterparts, and to standardize rules for sourcing the sales.
NetChoice Letter to Rhode Island Legislators in Opposition of Digital Goods Taxation
NetChoice Opposes Oklahoma Digital Products Tax
NetChoice Opposes Digital Goods Tax in Vermont
The Smallest State Makes a Smart Move
On Tax Day, a Taxing Year (Already) on Internet Commerce
Yes, North Carolina — Let’s Be Fair About Digital Downloads
North Carolina Targets Digital Goods
September 23, 2011 at 9:36 am
[...] just one week after we placed digital goods taxes on the iAWFUL list and 8 weeks after I wrote a blog thanking the RI Legislators for not imposing taxes on digital [...]