North Carolina considering digital download tax

by Alexander Sliwinski on Jan 28th 2009 12:55PM

North Carolina legislators are looking to modernize the state's tax code by including digital download charges. News-14 reports the new tariff could generate $12 million over the next year, a paltry figure compared to the state's currently expected revenue shortfall of $2 billion.

The new tax would affect digital purchases of music, movies, software and games. Rep. Paul Luebke (D) explains that it only makes sense that customers should pay state tax on digital items, because it's just like any other store. That may be, but is the way out of a bad economic situation to tax the consumer more?

[Via GamePolitics]

Source

Tags: culture, north-carolina, politics, tax

Reader Comments (55)

I think we should make a deal with the government: they get to tax digital downloads if they get rid of income tax.

Besides, they can't be making much on income tax anyway. I mean, who has a job anymore?

That was pretty much true before this happened. Around a quarter of the budget comes from income taxes (individual and corporate). Half comes from payroll taxes (which is why I laugh at anyone talking about lowering income taxes since most of us don't even pay them) and the rest come from excise taxes.

We can eliminate all but the excise taxes and be able to fund the US government at the exact same level as it was before Bush took office. Imagine that, 1999 level Government AND you'll never have a penny taken out of your check. Of course, that leaves our lovable Congress with no way to make new "stimulus" packages because, by doing that, we'd rapidly solve the problem.

The 99-00 budget surplus could have fixed a lot bridges and levees.

LaughingTarget, I agree.

Governments obviously can't run on air, so we need taxes, but we could also stand to lighten up the taxes a lot in this country and still have a fully functioning government.

Not to sound like a complete idiot, but what is the difference between income taxes and payroll taxes?

If I understand it correctly, income tax is tax paid for making money, and payroll tax is tax paid for paying people money, or simply having employees. It's kind of interesting isn't it? The government taxes money paid to someone, then taxes them for making the money that was already taxed for being paid.

Umm... payroll taxes are money that your employers takes out before you even get a chance at the money. In other words, they're withholding your tax money early. It's still basically income tax, and based on how much you've already paid in, you either have to pay MORE, or get a refund. At the end of the day, it's still income tax.

I pay 12% tax on everything on PSN, its not the end of the world, if I went to the brick and morter stores I would pay that too.

Damn, where do you live that 12% sales tax is acceptable?

Sounds like the same plan NY is trying to provide as well. With one approval I fear the remainder of the country will follow.

Haha music industry can't catch a break...

Prediction if this passes: More Arrgghhh less chaching...

Next on Channel 6 news:

North Carolina sees record piracy increase, digital media profits plummet

Depends on how obnoxiously the tax is implemented. A low percentage, even a percentage on parity with the sales tax, shouldn't cause much rabble. Obviously if they start discriminating against digital sales by going much higher, then there will be problems

Wait a minute, I know I paid sales tax on my MS points, iTunes and PSN always charged me tax.
What the fuck are these people talking about?

PSN charges tax??? or do you mean on PSN cards??

I added funds to the wallet then checked, sure enough there was sales tax.
I just logged on PSN to double check my purchase history. All of them had tax.

I get charged tax on both Xbox Live and PSN. Just quickly checking, "Linger in the Shadows" was $3.22 after tax and a recent $12.50 addition to my MS points was $13.53. I dont know if this is an NY state thing or just general.

Where do you guys live, Im in TN, and I dont get taxed on XBL(12/22/2008). I think I do on PSN tho, I'm not 100% on that tho.

It's probably because XBL and PSN isn't registered in your home states. If not, they can't remit sales tax to these states. Such purchase is considered out-of-state purchase. And technically, you are supposed to declare these out-of-state purchase on your annual income tax return and remit the unpaid or accrued sales tax to Uncle Sam directly.

Of course these unpaid tax isn't unique to digital distribution. Anyone who has shopped on Newegg knows what I'm talking about. But if you bought something on Macys.com chances are you will have to pay sales tax because Macy's is registered in all 50 states, okay at least in 40.

It's not so much a problem of digital distribution tax but a problem of untaxed out-of-state purchases.

Oh, I live in NY too.

Is that going to include stuff on the xbl marketplace?

FYI all downloads are digital by their very nature. DD is usually used to refer to digital distribution. Please don't ever say/write digital download EVER AGAIN. Thanks!

Grrrrrrrrrrrrrr! You showed them tiger!

I think state governments don't want to shrink themselves. They'd probably avoid raising taxes if they got a little smaller and cut down on expenses.

But we all know they won't do that. They're set on keeping their 2007-2008 budgets. Instead of adjusting to this horrible recession.

Damn governments want http://www.youtube.com/watch?v=o4Rcx64I2dE

Well, shit! There goes my plans for moving to North Cakalaki. What's next? A ban on hardcore pornography, Mountain Dew and Pringles potato chips?

Ny is getting a fat tax lol. They're taxing sodas and stuff lol

Time for ole Cliffy B to knock on some doors.

Time to hoard MS points!

Oh wait, I don't live in NC.

I think we all knew this was coming. States and the IRS are going to want taxes on all items bought over the internet before the year is out (I'm making my prediction now). No sales tax on things I buy at Amazon and Newegg was sweet while it lasted....

*sigh*

"No sales tax on things I buy at Amazon and Newegg was sweet while it lasted...."

That's because these company are NOT registered in your home state, hence can't remit sales tax to that state. It has nothing to do with Digital Distribution or not.

Right..that is the law now. I'm saying they'll most likely change it so that you owe state and/or local taxes on purchases made over the internet, whether or not the company you are making a transaction with has a physical location in your state.

In other words, they want to extend the sales tax (meant to tax people for doing business in their city/state) to include digital property. In the case of this story, it's just one state that wants to do it right now, but soon it will probably be most states. I don't think it is particularly right at this point...considering that some EULA's are basically only allowing you a limited rental of a game/movie/song, and paying full sales tax on something intangible that I won't even get to own anyway....ehh...

I'm just saying that we had all better get used to it.

Yeah, I hate being in TN, we have warehouses for EVERYTHING, no more taxless online purchases like when I was in FL.

BananaBoat,

I live in NY, I get taxed on XBL, PSN and iTunes, because MS, SONY and Apple are all registered in NY so they have to collect sales tax.
I don't pay sales tax on Newegg because they are not registered in NY.

WHAT?! Why do I have to suffer for living in NC? It's bad enough in this state as it is with money.

If they do this, the piracy will triple. Best believe that buddy.

yea......cause we all will find Bootleg copies of XBLA and PSN games.......

PSN: Aggie_Ceo, I believe he's talking about music and to a certain extent movie downloads. I know that I probably will stop purchasing my music and just listen to Last.FM (yeah, I do live in NC and I think this is pretty crappy, but what can you do eh?).

Except it's not like any other store in any way possible. There's no shipping and handling of goods, no physical storage, and no extra real estate fees that you'd pay for with a traditional store. Don't tax my internet use more than it already is. That's why I don't use live.

booooooooo

way to support the huge game developers who put NC on the software map Mr Legislator.

I'm sure they will appreciate the drop in sales.

On one hand its "Meh, whatever. As long as its no higher than a state sales tax already." Yet the other side is asking "Is taxing digital distribution like this really going to help that much in the grand scheme of things? If not, no need to raise such a tax during these times."

GAT DAMMIT!!!!!!!!!!!

hell we are SUPPOSE to pay taxes on stuff we buy online as well......but that isnt FORCED and pretty much relies on us being honest......

cant say that I blame them tho.......now if only they use that money to Force Time Warner to UPGRADE their speeds......

NC has almost 9% unemployment, and a 30 cent per gallon state gas tax. Adding more taxes won't help anyone in hard times.

Besides, how will this even work right? What if I bought a MS point card in a store, and having paid sales tax already, have to pay it again on EACH item I get with the points.

Given the number of developers that are located in NC, I bet this will go over like a fart in a windstorm.

I'm for it. I do think digital purchases should be taxed.

Brick and mortar stores are now competing with online as a distributor. Online is pretty much always cheaper, so more and more goods are purchased online. Unfortunatly, that means less and less go to brick and mortar stores, so those stores have to cut back on labor and jobs to cope. Fewer jobs is a bad thing overall for the economy.

Taxes would level the playing field and would help. We all can see digital downloads as the future, but keep in mind how many jobs rely on physical media sales. How many people used to work at music stores before those died off from iTunes and Napster? Movies are going the same way. Game stores could be next.

New Jersey has had tax on downloads for a couple years now.

Get over it.

Frak NC. I'd consider moving across the nearest border if I had a zip code there, if this passes. Or change my billing address to some old address of mine.

Another Democrat proposing yet another tax increase.

I'll try not to act so shocked.

I lived in NC for eight years, and they've been trying new angles on this kind of crap for a long time. They started with an honor-system internet purchase tax, where you had to estimate how many dollars' worth of internet purchases you had made during the preceding year. Then they moved to a flat income-based tax on the internet, on the theory that there was some mythical average of internet purchases across all citizens. People have ignored it out of principle, I think.

So this ain't nothing new.

Give me a freaking break. You are taxing something that isn't even tangible?! Bad enough that gifts, winnings, and tips are taxed... Before it's over, we will have an air tax, sight tax, feel tax, fart tax, and boner tax.

"Hey Bob! Check out the naughty bits on that one!" "DAMN IT JOE! There goes my lunch money. You're such an asshole." "I love you too, Bob."

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North Carolina considering digital download tax

Reader Comments (55)

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