How about paying tax on that 99-cent music download? The new pair of shoes you just ordered online? What about a tax on viewing online streaming videos? That’s right – the effort to tax binary code is underway.
For years, the internet has flourished as a free marketplace where the only extra cost a consumer pays for is shipping – unless you buy the product digitally. It’s opened expansive new markets, lowered product costs for consumers across the country, and given rise to tons of new online businesses.
Enter the money hunger politicians. Forty-six states overspent their way into budget crises, and to cover their tracks state legislators and governors are becoming increasingly desperate to steal more of your hard earned dollars. Now they want to tax your online purchases.
Americans for Tax Reform recently started a project called “Stop eTaxes.” The website (www.StopETaxes.com) tracks state and federal legislation and is working to mobilize grassroots opposition to these targeted tax hikes.
Kentucky, Wisconsin, and Mississippi have passed tax hikes on digital music, movies, books, and ringtones this year. Washington, Vermont, North Carolina, Minnesota, and Massachusetts are now looking at similar legislation – some of which goes so far as to tax “additional digital goods,” whatever that means.
More frightening, states like New York and California are seeking ways to tax everything you buy online – both digital and tangible goods. The so-called “Amazon Tax” provides that a business has a sufficient nexus in the state (which is necessary to collect the tax) by simply advertising through a third party in the state. This nexus can be anything from a newspaper to a state blogger putting up ads on their site.
Say you live in New York and want to buy some super sweet, rare pogs (or a ShamWow or whatever) from an online retailer in Florida. If that Florida company advertises at all in New York, not only do you pay tax, but the out-of-state company is tasked with trying to figure out which of the thousands of tax jurisdictions you live in and how much you have to pay.
If it sounds like a complicated scheme to raise taxes and circumvent the Interstate Commerce Clause of the U.S. Constitution – that’s because it is. But what else is the government for?