Are you paying the iTunes tax? Growing number of U.S. states find ways to tax digital goods and services

“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.

21 Comments

    1. Let me tell you how it will be,
      There’s one for you, nineteen for me,
      ‘Cause I’m the Taxman,
      Yeah, I’m the Taxman.
      Should five per cent appear too small,
      Be thankful I don’t take it all.
      ‘Cause I’m the Taxman,
      Yeah, I’m the Taxman.

      (If you drive a car ), I’ll tax the street,
      (If you try to sit ), I’ll tax your seat,
      (If you get too cold ), I’ll tax the heat,
      (If you take a walk ), I’ll tax your feet.
      Taxman.

      ‘Cause I’m the Taxman,
      Yeah, I’m the Taxman.
      Don’t ask me what I want it for
      (Haha! Mister Wilson!)
      If you don’t want to pay some more
      (Haha! Mister Heath!),
      ‘Cause I’m the Taxman,
      Yeah, I’m the Taxman.

      Now my advice for those who die, (Taxman!)
      Declare the pennies on your eyes, (Taxman!)
      ‘Cause I’m the Taxman,
      Yeah, I’m the Taxman.
      And you’re working for no-one but me,
      (Taxman).

  1. The Tax Poem, origin Unknown.

    Tax his land, tax his wage,
    Tax his bed in which he lays.
    Tax his tractor, tax his mule,
    Teach him taxes is the rule.

    Tax his cow, tax his goat,
    Tax his pants, tax his coat.
    Tax his ties, tax his shirts,
    Tax his work, tax his dirt.

    Tax his chew, tax his smoke,
    Teach him taxes are no joke.
    Tax his car, tax his grass,
    Tax the roads he must pass.

    Tax his food, tax his drink,
    Tax him if he tries to think.
    Tax his sodas, tax his beers,
    If he cries, tax his tears.

    Tax his bills, tax his gas,
    Tax his notes, tax his cash.
    Tax him good and let him know
    That after taxes, he has no dough.

    If he hollers, tax him more,
    Tax him until he’s good and sore.
    Tax his coffin, tax his grave,
    Tax the sod in which he lays.

    Put these words upon his tomb,
    “Taxes drove me to my doom!”
    And when he’s gone, we won’t relax,
    We’ll still be after the inheritance tax.

  2. Makes me glad I live in sales tax free Oregon. Of course, I’m not as happy on April 15 when I have to pay my rather large state income tax. Maybe I’ll just do all my downloads on April 15 and feel sorry for the suckers in states with high sales taxes.

    1. I’d rather pay sales tax on what I spend, so if I don’t want to pay as much tax, I just don’t spend MY money. Income taxes are stupid. It allows the government to decide how much of the fruits of YOUR labor that you get to keep. This country was built on sales, use and excise taxes. We’ve only had a sales tax for 100 years.

        1. Roads are paid for with Excise Taxes; like those we pay on fuel, tires, and a myriad of other excise taxable items.

          The Federal Government has no business being in business. Hospitals operated just fine prior to Congress getting involved. It was the creation of the HMO and all the assorted laws that killed health care in this country. Like AMTRAK, the US Postal Service, Social Security, Medicare, etc., everything the government touches turns to shit.

  3. Not a big deal. Unlike many here I don’t mind paying taxes. The rates are pretty low and the benefits are quite high. In my area we have clean streets, police protection, public health, clean air and water, international airports, good hospitals, libraries,a great fire department, good schools, lots of open space and more, all of it supported by taxes. To me this is a great deal. I’m glad there is such a wonderful country that can be supported by such a low level of tax.

      1. That is what govt does best – destroy other governments, including itself. Those in favor of taxes are the one’s who support war and dont know it.

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