California Democrats look to tax iTunes downloads

“Apple’s iTunes has been nothing short of revolutionary. For just 99 cents, you can download almost any song onto your computer or iPod. For a few more dollars, you can rent a movie or buy an episode of your favorite TV show,” Brian Joseph reports for The Orange County Register.

“The service has become so ubiquitous that last month iTunes was named the nation’s second largest music retailer, behind only Wal-Mart,” Joseph reports. “It is a money machine – and our Legislature appears to have noticed.”

“You see, music and movies purchased on iTunes differs from those purchased in stores in one very significant way: it’s not taxed. California law explicitly restricts sales tax to ‘tangible’ goods – i.e. products that can be ‘seen, weighed, measured, felt or touched,'” Joseph reports. “A digital file, obviously, isn’t any of those things.”

“But the state faces an $8 billion deficit. The Legislature needs money. So it’s looking to iTunes,” Joseph reports.

“Last month, Assemblyman Charles Calderon, D-Whittier, introduced Assembly Bill 1956, which would apply sales taxes to media downloads. That would take a 99 cent song and bump it to $1.07 or more,” Joseph reports.

“New taxes require a 2/3rd vote of the Legislature, meaning some anti-tax Republicans would have to sign onto the proposal, but Calderon got creative,” Joseph reports. “Instead of proposing a new tax, AB 1956 simply requires the Board of Equalization to amend the definition of ‘tangible personal property’ to include ‘digital property.’ That needs only a majority vote, meaning no Republicans necessary.”

Joseph reports, “Voila! A new tax – without a 2/3rds vote.”

Full article here.

Did Apple create California’s budget crisis or did California’s legislature spend way, way, way more than it took in for years? Perhaps before taxing California’s consumers and taking a bite out of one of the premier California-based employers, the legislature should first look to reign in their massive, wasteful spending habits? You know, get your business in order first before you look to disrupt the well-performing businesses of others. Just a logical thought. We now return you to reality and the illogical thought patterns of California legislators.

Apple ought to noisily explore Arizona real estate opportunities. That would put an end to this sort of stupidity immediately.

[Thanks to MacDailyNews Reader “Bill M.” for the heads up.]

142 Comments

  1. Hey MDN, you watch your comments. Somebody has to pay for Mayor Newsom’s immigration policies and he is too cool to pay himself.

    Just my $0.02

    P.S. 118 MB patch to Office 2008 just arrived.

  2. How about you stop supporting drug using fatherless baby making machines. That’s at least a start.. then look at your salaries. Only after you look to yourself can you start taxing me EVEN MORE..

  3. My iTunes Store purchases (downloads) have always been taxed here in Washington, DC. I thought that was the case everywhere that Apple has a physical presence — they must abide by the local sales tax rate. Unlike, say Amazon, which does not have a physical presence here, and nothing is taxed when purchased from them. Californians have been getting off easy if they’ve had this arrangements for so long on so-called “intangible” goods!

  4. Oh, but we can’t CUT anything in California……..we just need MORE money. That will fix everything. Fix the educational system, it will fix health care, hell, it even fixes erectile dysfunction.

    With Gas prices here in California well over $3.50 a gallon, there is NO WAY I’d support raising ANY taxes at all.

  5. The key here is exactlly how the law would be written. If some one in CA bought software from a company in Texas and had to pay Texas sales tax, would they have to pay CA sales tax too??

    That is one of the problems now with internet sales. Its a matter of who gets the money. Every state wants your money, and they do not care if they deserve it or now.

    Greedy govt. 🙁

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