“That $1.29 iTunes song or $9.99 e-book may be more expensive than you think,” Melanie Hicken reports for CNN. “If you live in one of the nearly 25 states that charge sales tax on digital goods or services you likely pay more for everything from downloaded music, e-books and ringtones to streaming TV shows and video.”
“And a growing number of states are finding ways to tax our digital diversions,” Hicken reports. “While some states rely on existing sales tax laws, more than a dozen have enacted sales tax laws specifically targeting digital goods. What exactly is taxed varies widely by state.”
Here’s what some residents currently pay:
• iTunes: Downloaded music is one of the most commonly taxed digital goods. For example, a $12.99 album downloaded from iTunes carries a state sales tax of 52 cents in Wyoming, 78 cents in Vermont and 91 cents in Mississippi.
• E-books: States that tax iTunes also tax downloaded e-books. Take New Jersey, which levies a 70-cent tax on a $9.99 purchase, or Utah which imposes a tax of 47 cents.
• Mobile phone apps: Apps are a unique case. Some states that don’t tax “digital goods” still tax apps, the same way they tax software downloaded to a computer. For example in New York, a $2.99 Angry Birds download from the iTunes store will carry a 12-cent tax. But if a New Yorker downloads music or a movie from iTunes they won’t get taxed because the state doesn’t tax digital goods.”
Hicken reports, “Critics argue that digital goods shouldn’t be taxed the same way as physical goods since users are often paying only for a license, not tangible physical property. ‘You can gift your records in your will,’ said Katie McAuliffe, executive director for digital liberty at Americans for Tax Reform. ‘You can’t do that with your iTunes library.'”
More info, and a link to a map with links to the 50 state tax websites, in the full article here.