LLR Pages

Tuesday, March 18, 2008

Hungry Taxifornia's New Download Tax

An $8 billion shortfall which is affecting the State of California is leading state legislators to come up with a proposal to tax downloads of music from online stores like Amazon and iTunes.

Here's an interesting excerpt from the Oakland County Register piece that says it all:

New taxes require a 2/3rd vote of the Legislature, meaning some anti-tax Republicans would have to sign onto the proposal, but Calderon got creative.

Instead of proposing a new tax, AB 1956 simply requires the Board of Equalization to amend the definition of 'tangible personal property' to include 'digital property.' That needs only a majority vote, meaning no Republicans necessary.

Voila! A new tax – without a 2/3rds vote.

'This is crazy stuff,' said Michelle Steel, Orange County's representative on the Board of Equalization, who has been the lead opponent of the 'iTax' since before it was even in bill form.

'It's totally illegal,' she said.

To be fair, California isn't the first state to propose the tax. Far from it. A 2006 report by CNET found that 15 states and the District of Columbia tax media downloads. A November survey by the Washington state Department of Revenue found 21 states tax cell phone downloads.

'It's not new,' said Calderon, who readily admits he's trying to cut out Republicans. Calderon said their opposition to new taxes shouldn't get in the way of a legitimate policy debate.

'Our economy's changed,' he said, 'shouldn't our laws?'