Seeking the means to shrink a nasty budget deficit, legislators in Albany have floated the idea of slapping a 4% tax on entertainment services delivered via the net, including streaming movies, e-books, and music downloads.
The move, though perhaps among the least disruptive of the suggested changes to the state's $121 billion budget, could prove painful for legitimate services and provide additional motivation for those who lean toward getting their music and movies off the file-sharing services.
New York certainly wouldn't be the first to try to close what the budget calls the Digital Property Taxation Loophole. Tennessee has a similar law going into effect in January; Nebraska's version kicked in in October. (New York's actually held the line on not taxing downloads, as Apple discovered when they inquired in 2007 [PDF available here].) The question is of course how or even if such a tax -- which the budget-makers estimate could mean $15-20 million for state coffers -- could be collected.
The key concept is "nexus" -- the policy that a state can only collect tax from a business with a presence within its physical borders. Nexus is the rule of the land since 1992; though there's pressure afoot in Congress to change that, as long as a presence is required, there's no mandatory tax collection possible.
(We pause here for iTunes, eMusic, and such to figure out not only where their staff lives, but in which cloud or server farm they've parked their files.)
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The move, though perhaps among the least disruptive of the suggested changes to the state's $121 billion budget, could prove painful for legitimate services and provide additional motivation for those who lean toward getting their music and movies off the file-sharing services.
New York certainly wouldn't be the first to try to close what the budget calls the Digital Property Taxation Loophole. Tennessee has a similar law going into effect in January; Nebraska's version kicked in in October. (New York's actually held the line on not taxing downloads, as Apple discovered when they inquired in 2007 [PDF available here].) The question is of course how or even if such a tax -- which the budget-makers estimate could mean $15-20 million for state coffers -- could be collected.
The key concept is "nexus" -- the policy that a state can only collect tax from a business with a presence within its physical borders. Nexus is the rule of the land since 1992; though there's pressure afoot in Congress to change that, as long as a presence is required, there's no mandatory tax collection possible.
(We pause here for iTunes, eMusic, and such to figure out not only where their staff lives, but in which cloud or server farm they've parked their files.)
Source
