Digital content makes a lot money—over US$130 billion in sales a year—but most of that actually isn't taxed. Yet! Realising they're leaving vast streams of green untapped, states are getting wise—nine this year have considered digital download taxes, and five of those passed them, for a total of 17 states that tax digital purchases. And don't worry, they're totally coming to a state near you, it's only a matter of time.
Massachusetts, Wyoming, and Washington are gearing up for their bills, just to name a few. It's actually kinda surprising it took this long for the taxes to start piling on. Most of the initial considerations about squashing a nascent market are nearly moot this point, in any case, with the digital market booming. I mean, when 30 percent of music revenues in the U.S. are digital, and the biggest music retailer in the world deals exclusively in digital content, you know the tax collector is going to be slinking close behind.
The one thing that might save us from being taxed is geography. States can only tax businesses that have a physical presence within their borders. Congress could change the law (and they probably will at some point), but in an election year, it's unlikely (one reason to be glad the circus is in town until November). It'll be interesting to see how this plays out—digital taxes seem like an inevitability, however. CNet points to NY as a bastion of tax-free sanity, but they're trying to squeeze Amazon right now, so it seems like a safe bet the money they could bring from taxing downloads will look pretty damn tangible. [Cnet]