'iTunes weTax,' says New York State
By Angela Gunn | Published December 19, 2008, 5:24 PM
Seeking the means to shrink a nasty budget deficit, legislators in Albany have floated the idea of slapping a 4% tax on entertainment services delivered via the net, including streaming movies, e-books, and music downloads.
The move, though perhaps among the least disruptive of the suggested changes to the state's $121 billion budget, could prove painful for legitimate services and provide additional motivation for those who lean toward getting their music and movies off the file-sharing services.
New York certainly wouldn't be the first to try to close what the budget calls the Digital Property Taxation Loophole. Tennessee has a similar law going into effect in January; Nebraska's version kicked in in October. (New York's actually held the line on not taxing downloads, as Apple discovered when they inquired in 2007 [PDF available here].) The question is of course how or even if such a tax -- which the budget-makers estimate could mean $15-20 million for state coffers -- could be collected.
The key concept is "nexus" -- the policy that a state can only collect tax from a business with a presence within its physical borders. Nexus is the rule of the land since 1992; though there's pressure afoot in Congress to change that, as long as a presence is required, there's no mandatory tax collection possible.
(We pause here for iTunes, eMusic, and such to figure out not only where their staff lives, but in which cloud or server farm they've parked their files.)
Times being what they are, pressure from the states to come up with a tax-assessment strategy is apt to increase. A CNET report last summer indicated that a number of states have agreed to adhere to the digital-download taxation standards of the Streamlined Sales Tax Project, which could facilitate collection by making it easier for digital-entertainment firms to figure out state requirements.
So why the uproar over New York? So far, Gov. David Paterson's budget is dismaying plenty of people -- slashing health care and education, closing a prison, and promoting new taxes on everything from soda to haircuts to seed-dealer licenses to movie tickets. (Paterson, has, however, announced that he has "ruled out taxes for the wealthy," claiming that the rich people might move away.) No one sane would claim that an "iTunes tax" is the worst thing on the menu, but as a term of synecdoche for a miserable nickel-and-diming situation, it's about pitch-perfect.
So what's new, this IS the Vampire State after all.
Score: 0
|I have never been unhappy about moving OUT of NY state. They look for reasons to tax people, guess the Boston tea part was for naught.
Score: 0
|Where y'at, Gregmlr?
Score: 0
|I've had a 6% sales tax slapped on my iTunes purchases since its inception!
Score: 0
|At least the music industry is no longer pursuing people who share music. This makes it even more tempting.
NYS is already the land of taxes! Now tax on music downloads? Oh and we now are going to get an 18% tax on Pepsi/coke. Our blind gov thinks we're all too fat and we must therefore pay for it!!
Score: 0
|He's blind! How does he know if you are fat?
Apple and it's I-Tunes store are located in Sunnvale Kalifornia. FREE music to download at www.archive.org is on servers in the old US Army Presidio building up the road in San Francisco. How is he gonna tax free music from this artists' supported website?
Score: 0
|Yes but apple has brick and mortar stores in New York. Compare it to Barnes and Noble: They have to pay sales tax on their online store in every state they have a brick and mortar presence even if it is a different department. I am not saying it is right but that is the direction things are headed. States have long looked at online sales and drooled at the prospect of a sales tax and easy revenue.But, like most things the government does, it will kill all online sales to a large extent. Just my humble opinion.
have a nice day:)
Score: 0
|That still leaves that free music archive up the road. Nobody is making any $$$ from those downloads; so there is nothing to tax. I suppose the socialist regeime in NY will try to block access to that website just like their comrades in the communist police states already do. Then Patterson will have to learn the hard way about IP proxy software that reroutes your traffic through a third country...
Score: 0
|This will prompt more people to download illegally, great move.
Score: 0
|This really is NY's 3rd attempt at getting at taxes from e-retailers. The 1st was a direct tax on whatever an e-retailer sold in the state even if the e-retailer didn't have any presence in the state. That was shot down in the courts.
The 2nd and ongoing is to indirectly tax what are called associates businesses to a bigger e-retailer that are in the state.
This is another attempt (being carefully watched by other states) to get some sort of tax on e-retailers even though the tax, as it has evolved requires a physical presence in the state for the state to tax it.
At the end of the day, what this is eventually going to lead to is each state taxing items bought or rented online. I would suspect that this would have a chilling effect on sales.
Businesses that have a “brick and mortar" presence in a state are all ready paying a sales tax on items sold.
In the case of ITunes, since Apple owns it and has stores in the state then they will probably lose. The others I am not so sure but it will eventually go that way.
Score: 0
|NY isn't the first, and they won't be the last!
This is not some new groundbreaking news. Its just the most recent event in a long history of attempts and implementations.
Score: 0
|You're right. You can go all the way back to the start of Amazon in the 90's and see states trying to tax but the courts, so far, have been clear that the company must have a brick and mortar presence in the state. Now this can be just a headquaters or a warehouse but that B&M clause has been the key, New York is trying to be creative in an attempt at an end run around the courts. If they succeed then that will start all the states doing the same.
Right now, if you purchase online, you only pay tax if there is a B&M presence in your state.
Have a nice day:)
Score: 0
|That would explain the first sentence of the writer's third paragraph:
>>New York certainly wouldn't be the first to try to close what the budget calls the Digital Property Taxation Loophole.
Such a clever writer. I'm glad she mentioned it ;-) .
Score: 0
|Funny how his logic against taxing the rich doesn't seem to hold for taxing the non-rich. Make it easier to get taxes, and more money will come in. Also, less people will nee dot collect it. Ah, but I'm just a dummy that has no real political experience.. I wonder how much smarter this guy is?
Seriously, lets stop the stupid taxation during recession, its just gonna drive the nail in harder.
Score: 0
|As opposed to not taxing during a war. oh, wait, two wars. That went well too! doubled our deficit, didn't it? yeah.
Score: 0
|Actually Bush's tax cuts brought more money into the government because of all the jobs it created.
Score: 0
|Another 16 year old historian.
Gore was responsible for casting the vote defeating the Republican lead balanced budget amendment on the express stated basis that the amendment did NOT make exception for deficit spending during time of war.
You wanted it, you got it.
Now shut up.
Score: 0
|Don't confuse him by pointing out the obvious - just as Jack Kennedy had done by lowering the maximum tax rates in 1962.
"Across-the-board tax rate reductions introduced by President John F. Kennedy reduced the top rate from 91 percent to 70 percent. These lower rates, along with substantially lower taxes on savings and investment, are associated with the longest economic expansion in American history."
http://www.heritage.org/research/taxes/BG1086.cfm
The idea that encouraging investment by those who pay the VAST majority of taxes rather then simply sheltering them in tax defered or exempt vehicles - or moving them offshore - is simply too complicated for those who live solely in the land of cutesy labels and slogans.
The wealthiest 1 percent of the population earn 19 percent of the income but pay 37 percent of the income tax. The top 10 percent pay 68 percent of the tab. Meanwhile, the bottom 50 percent—those below the median income level—now earn 13 percent of the income but pay just 3 percent of the taxes.
http://www.taxfoundation.org/news/show/250.html
http://www.american.com/...o-really-pays-the-taxes
So, if you cut tax rates, of course it cuts taxes to those who ACTUALLY PAY the most! But isn't it cute to say that favors the rich!? Because the poor don't pay nearly as much! DUH!
But you know, facts, as opposed to sloganeering, are not used much by the liberals who attempt to convince by emotion and symbolism at the expense of logic and reality.
Score: 0
|Wrong answer! If a reader checks out your Heritage link, they will find two things: first, the article in question was written about eight years ago and has been surpassed by a longer expansion. Second, the Heritage Foundation is a conservative think tank. Nice try at slanting the facts. Bill Clinton actually had the longest economic expansion in history. For reference, see a NON-biased site: http://www.nber.org/cycles/cyclesmain.html
and http://www.nber.org/cycles/november2001/
In regards to your supporting the rich, have you read the articles about YOUR tax dollars going to fly around corporate executives: http://news.yahoo.com/s/...meltdown_corporate_jets
Further, what about YOUR tax dollars going to pay for executive bonuses? These are the morons that got us into this mess in the first place! http://news.yahoo.com/s/...5Sgx896dOc6LMFiTQ.yBhIF
Thank God the Cowboy will be out of the White House SOON! What can you expect from a guy that only graduated business school with a "C" average. All he did was give our money to big business, his rich friends, harm the environment, animals and our reputation throughout the world. Deregulation and "too big to fail" obviously don't work; greed takes over and we find ourselves in this mess!
And while we're at it, why don't you actually try being civil to people? Try a positive comment for folks instead of always cutting people down.
Score: 0
|You mean the Balanced Budget Amendment that passed congress in 1998? Oy, do your homework before spewing that insane bush crap.
Score: 0
|Hahaha!
The balanced budget amendment was passed by Congress and then vetoed by Clinton.
The attempt to override the veto was defeated 64-35 in the Senate, as it failed to achieve a 2/3 majority.
Bush was nowhere to be found - aside from proposing a state income tax for Texas as governor!
And who supported Bush? Certainly not me!
Homework? It seems you have quite a bit to do!
Score: 0
|The same facts are available on the IRS site!
And who controlled taxes under Clinton? Or for that matter, who controls taxes under ANY administration? CONGRESS! Are we going too fast?
My supporting the rich? LOL!
I simply stated, CORRECTLY, that as they pay the vast majority of taxes, that when there is a tax cut, those who pay the vast majority will also receive the greatest amount back.
Is this so confusing to you?
This fact has nothing to do with partisanship. Just MATH. Something you obviously are obviously not well versed.
Oh, and as you continue to display your ignorance, it was ironic that Bush had a higher grade average than did Kerry - your erudite candidate. Oh...sort of puts things into perspective doesn't it.
But keep trying to tie Bush to me, as I have opposed him since before he was President, as he is anything BUT a fiscal conservative.
Oh, and he harmed animals...You mean, like the spotted owl? As its populations were diminished in the OLD GROWTH forests!
But come to find out, they don't live in the OLD GROWTH forests! Instead they thrived in the boundary land where there was an abundance of scrub and understory vegetation that actually harbored the food sources they actually lived on! Oh! Ooops!
Oh, and the fact that Clinton signed the law with Greenspan's endorsement allowing investment banks to deal in derivatives and credit swap certificates that you are so want to blame on Bush?
Ooops.
And deregulation? LOL! Show me where Bush deregulated ANYTHING substantial! In fact, with SOX, HIPAA, and others he added over 7000 pages of regulation!
So, keep making up more emotional garbage. And while Bush may have been a social conservative - eg, a right wing liberal supporting their own brand of right wing religious social engineering, Bush was by NO MEANS a fiscal nor a small government conservative!
And I love how you complain about the expansion of the Federal government, when the ONLY gripe the Democrats had has has been that the radical expansion of unfunded mandates for such things as the Prescription medicare bill, and the expansion og the Education Department has not been enough! LOL!
So, get a clue, and frame your arguments correctly. I have not, nor do I support Bush!
And as far a being positive, I am positive you have not only mis-stated my position, but you have displayed your ignore-ance of facts as well.
Oh, and if you do a few more serches, lots of interesting stuff is available:
"The Tax Foundation (http://www.taxfoundation.org/) has made the claim that the tax cuts signed by U.S. Presidents Ronald Reagan and George W. Bush, contrary to popular belief, actually made the U.S. tax code more progressive, not less. They state that in 1980, before Reagan's tax cuts, the richest 1% paid 19.05% of all federal income taxes, and by 1988, after Reagan's tax cuts, their share had increased to 27.58%. Likewise, in 2001, before Bush's tax cuts, the richest 1% paid 33.89% of all federal income taxes, and by 2006, after Bush's tax cuts, their share had increased to 39.89%.[18] However, someone earning a higher income, but paying a lower tax rate still might pay more in taxes than they did before the tax code was changed."
Score: 0
|I voted for Kodos, not Kang.
Score: 0
|Of course, the other answer would be to end those two stupid wars. But that is to logical. Stock up on shoes and invest in shoe companies:)
Have a nice Day:)
Score: 0
|That sound you hear is zridling hitting the floor after the right hook while he was scratching himself.
Have a nice day:)
Score: 0
|Foxfyre: A little off topic aren't we? why don't you boys give each other your IM and carry on ELSEWHERE. Thank you.
Score: 0
|I am so glad I don't live in New York. Highest taxes and nothing to show for it.
Score: 0
|Just cause I couldn't resist adding the flip side...
I am so glad I don't I don't use iTunes, unfortunately I have to deal with the rest of the crap.
I don't live the NYC insanity, just have to pay for it (read taxes).
And yeah, you're right, high taxes & little to show for it, but there are a few (very few) upsides to it, but this isn't a place to go into it. Though I believe majority of our taxes go into that black hole called NYC never to be seen again (upstate consistantly gets shafted).
I vote for secession and a 51st state North New York!
Score: 0
|I know of 10 people (including me) that moved from NYC/NJ west and never looked back. sya, wouldn't want to beeya!
Score: 0
|It (the tax burden) could be worse (literally!)! You could live in New Jersey!
Score: 0
|I just hope not to California and the land of fruits and nuts!
That's like jumping from the pan into the fire!
;-))
Score: 0
|I anticipate this as one of the coming elements of "change" regarding a growing trend in desiring to tax all things sourced via online means, be they streamed or hard goods.
Score: 0
|You want the benefits of living in a functioning society, but you don't want to pay for them. Gee, and you wonder why I see you as being so retarded.
The USA is one of the least taxed Western nations, and it shows in how much its infrastructure (70% of your roads and bridges are deemed unsafe.) and services have deteriorated. This is why libertopiaism will never work in the real world. You poor deluded ba*tard.
Score: 0
|"70% of our roads and bridges are deemed unsafe?" says who? where you pulling that number from? cause i drive those roads for hours every day and it's definitely not the roads i'm scared of.. it's other drivers.
Score: 0
|Just have fun pushing his limited buttons.
He thinks the Republicans, and especially BUSH, are libertarian!!! - as OBVIOUSLY he hasn't a clue as to what the POV entails.
And he is simply oblivious of our social and economic history since the 30's.
But he's fun to mess with in a perverse way, as his reations are SO idiotic and SO predictable.
Score: 0
|Ok...I know that I am going to regret this but I have to ask, what is a libertopiaism? And don't tell me that it is a cross between a liberal and a libertarian. It has been scientifically proven that they can't inter-breed.
Have a nice day :)
Score: 0
|Here's a thought...lower your B&O taxes so all of those West Coast outfits move to NY. At the same time institute a flat tax so your revenue department can be run by about twenty people with Pentium III's. Wonder how much THAT would bring in?
Score: 0
|Why would we move to a bankrupt state?
Score: 0
|hey tax away and see how fast many legit services disappear.
Score: 0
|I always get a big laugh whenever Americans say something stupid like that.
Score: 0
|You have to understand our stupid socialist friend here..
After all, without taking from someone else, how is he going to get what he wants?
You see, his illogic is that what is his is his, And what's yours is his as well.
You see, he's special...he's entitled.
Life is easy for a socialist. If you don't have what you want, you can just blame it on the other guy who isn't giving it to you fast enough!
Score: 0
|And NY is about to annoint a new senator with zero experience just because her daddy was a famous prseident almost 50 years ago. Caroline Kennedy-Schlossberg hasn't voted in half of the elections in the past 20 years according to public records. She's interested in public education; but doesn't wanna run for the school board and deal with it directly.
"My name is Kennedy. We were born rich and always treated special like a royal family. So gimme a US government post on a golden platter just like a queen's birthday present..."
Score: 0
|