iTunes Tax Coming for Californians?
by Tim Stevens, posted Apr 9th 2008 at 8:14PM
The blissfully tax-free nature online music shopping may be coming to an end. Buying virtual goods such as MP3s has been pretty much tax-free ever since the iTunes store launched in 2002, even though various money-hungry politicians around the country have been itching to levy Internet specific taxes for just as long. The latest is Democratic Assemblyman Charles Calderon from City of Industry, California, who wants to start applying a sales tax of 8.25 to 8.75 percent on digital downloads in an effort to remove the state's $8 billion budget deficit.
Calderon wants to update a 75-year-old law that indicates taxes must be applied to "tangible goods." Movies and music for download have so far been exempt from this tax, since users can't really touch or feel them. You can, however, see and hear them when played on a computer, which is good enough for Calderon. By also applying the tax to purchases of online pornography, Caleron believes he can increase state tax revenue by $500 million annually (still leaving $7.5 billion to go).
However, don't fret just yet, West Coast downloaders: Love 'em or leave 'em, the Republicans in California have your back. They are opposing this measure and are expected to block it from passing, meaning your $.99 downloads will stay just that -- at least for now.
From Mercury News
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