Not only were the Beatles great musicians, Rhode Islanders are probably thinking the band was prophetic.
After all, "The Taxman" lyrics are a long list of taxable items that used to seem outrageous. But as states cope with dwindling treasuries, we're seeing levies added to a lot of things we never expected to be taxed.
That's the case in Rhode Island, where residents might soon face a 7 percent tax when they buy online content.
That's right, downloading a personal copy of the Beatles tax anthem from iTunes could soon cost a Rhode Island music lover 9 more cents.
In addition to songs, the proposal would tax video downloads, ring tones and digitally delivered software.
The digital tax is part of a larger effort by Rhode Island lawmakers to raise sales tax revenue. The legislature also wants to add the state's 7 percent levy to over-the-counter drugs, insurance proceeds and sightseeing tours.
The budget is expected to go before the Ocean State House later this week. If the sales tax provisions go into effect on Oct. 1 as proposed, the additional collections would raise an estimated $17 million.
Lots of download taxes: And while the digital download proposal is new to Rhode Island, it's not new elsewhere. Almost two dozen states already tax various digitally acquired material.
The latest count includes Alabama, Arizona, Colorado, Connecticut, Hawaii, Indiana, Kentucky, Louisiana, Maine, Mississippi, Nebraska, New Jersey, New Mexico, North Carolina, South Dakota, Tennessee, Texas, Utah, Washington, Wisconsin, Wyoming, as well as the District of Columbia.
The Streamlined Sales Tax Governing Board also tracks state "taxability matricies," which detail the jurisdictions' taxes, including in many cases digital goods and services.
Feds want to stop it: Some members of Congress, however, want to take away this state revenue stream.
U.S. Senators Ron Wyden (D-Ore.) and John Thune (R-S.D.) have introduced The Digital Goods and Services Tax Fairness Act of 2011. It would prohibit state and local governments from taxing products where taxes do not apply to similar tangible items. For example, a tax could not be applied on an electronic newspaper subscription if it is not also levied on the paper newspaper.
The Senators say their bill would provide clarity and uniformity in the taxation of digital goods.
"Digital goods and services are a fast-growing and increasingly important part of our economy," said Thune. "Unfortunately, the rules regarding how these goods and services can be taxed are ill-defined, creating the potential for multiple taxes by different jurisdictions on a single purchase by a consumer."
"This bill gives the new and innovative digital economy the breathing room it needs to grow this exciting new market and create the good paying jobs that will result," said Wyden.
But until Congress stops them, look for states to continue to try to collect from the ever expanding digital marketplace.
Related posts:
- Illegal downloaders, beware the tax man
- California, Texas: A tale of two online sales tax approaches
- Sales tax collection on online purchases: legislation to ease it, lawsuit to stop it
- E-books could be a boon for states
- 'Can you hear me now?' Your cell phone's state
and local taxes are huge! - IRS launches smartphone app
- Taxes? There are apps for that
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