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Democrats Your Rights Online

Wisconsin Governor Proposing Tax On Downloads 840

Christopher Reimer writes "Ars Technica is reporting that the Wisconsin's governor is proposing a tax for downloads. From the article: 'Wisconsin's Democratic governor thinks it's not fair that tangible items get taxed while downloads, like music, ebooks, software, etc., go completely untaxed. So, he proposes to rectify the situation by having Wisconsin's 5% state sales tax apply to Internet downloads.'"
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Wisconsin Governor Proposing Tax On Downloads

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  • IANAL, but..... (Score:5, Informative)

    by thewldisntenuff ( 778302 ) on Thursday March 10, 2005 @02:03PM (#11901278) Homepage
    IANAL, but I thought this might violate the Internet Tax Freedom Act of 1998 (which was renewed in 2003)......

    However, this comes straight from the federal law -

    SEC. 1101. MORATORIUM.

    (b) Preservation of State and Local Taxing Authority.-- Except as provided in this section, nothing in this title shall be construed to modify, impair, or supersede, or authorize the modification, impairment, or superseding of, any State or local law pertaining to taxation that is otherwise permissible by or under the Constitution of the United States or other Federal law and in effect on the date of enactment of this Act.

    The funny thing is, the whole law is VOLUNTARY! Although I don't think it'll matter if they really want to get the money....If it comes to pass, they'll probably make a provision to make it mandatory

    -thewldisntenuff
  • -1, Flamebait (Score:5, Informative)

    by SpiffyMarc ( 590301 ) on Thursday March 10, 2005 @02:03PM (#11901280)
    Article summary is wrong and intended to cause a flamewar.
  • by MLopat ( 848735 ) on Thursday March 10, 2005 @02:04PM (#11901302) Homepage
    Aside from the fact that any tangible item purchased on the internet is subject to sales tax of some sort, this new proposed law doesn't make alot of sense.

    From the article: "That's right: it's voluntary. In a country that can trace its origins in part to a dispute about taxes, does this man really think that people are going to voluntarily pay a tax? And what makes it even funnier is that he thinks people in Wisconsin are going to voluntarily pay."

    This new tax on downloaded items would be completely voluntary. How many slashdotters are going to lineup to pay more taxes for items that they already receive for free. Next!
  • Like VAT? (Score:2, Informative)

    by ettlz ( 639203 ) on Thursday March 10, 2005 @02:09PM (#11901422) Journal

    In the UK, we pay VAT on downloaded "goods" (I'm to taxpert, but I guess they'd be classed as taxable luxury services or something --- at least, Woolworths are running an offer where they pay the VAT on downloads). The tax is paid by the retailer and normally passed on to the consumer.

    According to TFA, this is a tax on purchases, not downloads. So if it's free, keep on clicking.

  • by Anonymous Coward on Thursday March 10, 2005 @02:09PM (#11901424)
    As long as Slashdot has a 'Democrats topic,' I hope that it has a topic for the GOP

    It does. [slashdot.org]

  • by Transcendent ( 204992 ) on Thursday March 10, 2005 @02:09PM (#11901434)
    This would only apply to things you pay for...

    It won't include free websites, e-mail, free software downloads, etc... just the software you download and pay for.

    Plus, this will only affect you if you live in Wisconsin, since states cannot tax interstate commerce.
  • by taniwha ( 70410 ) on Thursday March 10, 2005 @02:10PM (#11901443) Homepage Journal
    umm - the answer of course is "yes", everything should be taxed equally ... and if you're math is up to scratch you too can figure out why 8% (or what ever the tax is) of 0 is not really an issue
  • Re:Originating state (Score:5, Informative)

    by jkabbe ( 631234 ) on Thursday March 10, 2005 @02:11PM (#11901463)
    Many states have what they call a "use" tax. In other words if you bring something into the state (and "use" it?) that was not purchased in the state you have to pay tax on the purchase price. This allows them to circumvent the Commerce Clause and effectively charge a sales tax on out-of-state purchases.
  • Re:Does this mean (Score:4, Informative)

    by Minna Kirai ( 624281 ) on Thursday March 10, 2005 @02:13PM (#11901502)
    Users will have to pay tax each time they visit a webpage on a subscription based website?

    No, of course not. Calling it a tax on "downloading" is really inaccurate- it's a tax on "paying for downloads". Possibly, it could apply to a subscription website (maybe even preimum Slashdot), but if so, the tax would only be applied as you make the payment, not when you download each page.

    Suppose that Utah has a tax on ski resorts. They'd charge 5% at the time you buy the tickets- it would be stupid to suppose a tax collector would be stationed at the ski lift, collecting $0.50 each time a person rides up the mountain.

    Its generally much more efficient and less obtrusive to collect taxes at the same time another payment is being made. Otherwise, the government must hire a whole new collection-person, devastating the new income stream.
  • by AKAImBatman ( 238306 ) * <akaimbatman@gmaYEATSil.com minus poet> on Thursday March 10, 2005 @02:16PM (#11901565) Homepage Journal
    We know we're one of the most taxed populations in the union.

    Actually, Dane County is one of the most taxed. The rest of the state isn't too bad.

    We know our state government is corrupt and unethical.

    Eh? Tommy Thompson did a damn good job of keeping things in order. The problem is that there has been no true sucessor step up, so the proceding governors have kept blundering along.

    (see: http://en.wikipedia.org/wiki/Jim_Doyle [wikipedia.org])

    In a state that is almost entirely M$ dominated

    You wish. It's a state that's IBM dominated. Most of the big companies still run the old mainframes and will happily pay for and install whatever nonsense IBM throws their way. CICS Java bridge, Websphere, WSAD, etc? Install it all! We need it!

    Not much creative thinking when it comes to computers. At least in Dane county, anyway. *sigh*

    it shouldn't be surprising the population is ignorant about the nature of the Internet.

    Nonsense. The rest of the state is quite well aware of the Internet. Dane county, OTOH, tends to have its head up its collective rear. Unfortunately, that's what happens when you have a very liberal University in the middle of an otherwise conservative state. The two kind of mix into this weird "we'll meet you halfway" type of arrangement.

    Don't get me wrong. Wisconsin is my home state and I love it. But Dane county has serious issues.
  • by prdallan ( 847818 ) on Thursday March 10, 2005 @02:23PM (#11901651)
    Just confirming, from the article linked inside the ./ linked article:

    Gov. Jim Doyle wants you to pay Wisconsin's 5% sales tax whenever you pay to download a song, book, movie or piece of art
    Link: http://www.jsonline.com/news/state/mar05/307622.as p [jsonline.com]
  • by Zuke8675309 ( 470025 ) <[moc.liamg] [ta] [rekcuz.yt]> on Thursday March 10, 2005 @02:25PM (#11901694)
    I say, if this is what the people of Wisconsin want, then they should be allowed to have it! God bless them for finding yet another source of revenue they can piddle away until they need another fix. Maybe they want to build an "art park" In Milwaukee to compete with Chicago in the category of ostentatious waste.


    I know this isn't a left-right thing, but I don't understand why a Democrat would bolster this idea, since I feel it is a tenet of the left to play hands-off with the net. At least, I consider myself pretty far-left and I certainly think this is a foolhardy idea given the current disparities in tax policy. I tend to think this guy must be in the pocket of some special interests, or he himself stands to benefit in some way.


    I live in Wisconsin. The reason Gov. Doyle is proposing this (and a slew of other new taxes) is because he doesn't want to cut any spending to balance the state budget. His current budget proposal for the next two years (Wisconsin does two year budgets) projects a 1.8 billion dollar deficit. Compounding problems for him is that Wisconsin is already a tax hell and there is strong public support for a property tax freeze, thus he's looking for alternate ways he can raise taxes.
  • Re:Great! (Score:2, Informative)

    by Thud457 ( 234763 ) on Thursday March 10, 2005 @02:27PM (#11901722) Homepage Journal
    Usually, if the business has a store in that state, they're supposed to collect sales tax for the state.
  • by shotfeel ( 235240 ) on Thursday March 10, 2005 @02:28PM (#11901732)
    Yes, considering the proposal is for 5% of the purchase price. If the purchase price is $0, the tax is zero.

    The article (not the Ars Technica writup) specifically states its for purchased downloads. For example, I recently purchased some software online that gave me a choice of either having a CD shipped to me (in which case the cost of shipping was added) or downloading the software for instant gratification. The proposed law would mean that if I chose the download method I would be subject to the same sales tax I would have paid had I chosen to have the CD shipped to me.

    There is no proposal to tax all downloads.
  • by LordEd ( 840443 ) on Thursday March 10, 2005 @02:29PM (#11901746)
    Read the article that the article is based on. The first thing it says is:
    Gov. Jim Doyle wants you to pay Wisconsin's 5% sales tax whenever you
    pay to download a song, book, movie or piece of art.
    Its a sales tax, meaning that some form of sale had to have occurred.
  • by vrimj ( 750402 ) on Thursday March 10, 2005 @02:29PM (#11901749)
    There is another sort of sale which is also generally exempt. Catalog sales are unusally untaxable unless the vendor has a physical branch in the state. Why should internet downloads be treated diffently.
    Of couse one can argue that they are actually being treated the same, many states also expect their citizens to volunatrly report and pay sales tax on catalog items as well. It doesn't work so well since there is really no way to enforce the tax.
    That is really my problem with all such proposals. On one hand I think an internet tax could be somewhat good for the community, there is no better way to get govement support then to give them a piece of the action. I supect DCMA and the like would have come out diffently if the govemental pocketbook had been weighted the same way the public interst was.
    On the other hand passing an unenforcable law is simply foolish. Every law that can be ignored with impunity throws all others in to suspicion. One also wonders how we could possibly need a law to govern something that cannot even be tracked.
    Prehaps insted of downloaded sales they should simply consider a small tax on datastreams in general. It would at least be trackable, and might result in WI encouraging file swapping to get those taxes up (kidding!)
  • Re:Great! (Score:5, Informative)

    by LoadStar ( 532607 ) on Thursday March 10, 2005 @02:30PM (#11901760)
    Wouldn't that fall into federal law? Most internet purchases (especially in Wisconsin) are from over state lines. Unless they started enforcing their state sales tax nationally--which is regularly collected from the seller, not the buyer--then they would be out of their jurisdiction. They would only be able to collect from sellers within the state, so then the internet vendor would just have to establish their business out of state.

    You're thinking of the sales tax that retailers collect from you and then file with the state. That's not this.

    This is the sales tax that Wisconsin collects as a part of the state income tax. There's a line on the Wisconsin income tax that asks the filer to enter the amount of sales tax due on items purchased from out of state but used within the state, items you didn't pay tax on at the time of sale. For example, internet and mail order purchases.

    Of course, the thing is - this line is an "on your honor" line, really. The state doesn't really check to see if the amount - if any - that you pay on this line is actually the amount you owe. As a result, I think I heard only a little over 20,000 people actually enter anything onto this line.

    There's been noise that they may start using this line as a trigger for audits, but to my knowlege, at this point, it's just noise.

  • by OhPlz ( 168413 ) on Thursday March 10, 2005 @02:31PM (#11901766)
    "This year's $170 million package includes proposals to levy sales taxes on software that is purchased on the Internet instead of bought on a computer disk"

    http://www.boston.com/news/local/massachusetts/a rt icles/2005/03/02/romney_rethinking_new_powers_for_ tax_aide?pg=2

  • Re:-1, Flamebait (Score:4, Informative)

    by shotfeel ( 235240 ) on Thursday March 10, 2005 @02:35PM (#11901821)
    No, the critical part is that its a tax on purchased downloads.

    And IIRC from reading the article earlier, its not voluntary. It relies on the honor system. There's a big difference there.
  • by TheFlyingGoat ( 161967 ) on Thursday March 10, 2005 @02:38PM (#11901868) Homepage Journal
    You're correct, but you're also unfamiliar with the situation in Wisconsin that is leading to this tax proposal. The governor is claiming to have a balanced budget without raising any taxes. He's also vetoing Republican legislation for a property tax freeze.

    At the same time, he's proposing this new tax and increasing spending. It's technically not raising taxes since it's a brand new tax, but logically it's the same thing.

    What this really comes down to is a wasteful government throwing money at different programs, increasing taxes for some of the highest taxed citizens in the country, and claiming that to do otherwise will be "hurting our kids education".
  • by Nos. ( 179609 ) <andrew@th[ ]rrs.ca ['eke' in gap]> on Thursday March 10, 2005 @02:40PM (#11901904) Homepage

    I'm not familiar with Wisconsin tax law, but I would assume that these taxes should apply anyways, assuming that you are buying from a business with a physcial location in that state. At least that's how I believe it works here in Canada and provincial taxes.

    I don't think downloads should be any different than any other product or service simply because its off the internet. If I buy a service contract, I have to pay tax on that, and its as intangible as a downloaded mp3 or ebook. However, if the company does not have a physical location in my province, I don't have to pay provincial tax, only federal tax. I live in Saskatchewan and frequently by hardware from a Canadian distributor in BC. I have to pay GST (federal) but not PST (provincial) on the hardware and the same on any labour I pay (I usually have them build the computer for me for $25 if I'm ordering a full system).

    However, I can see this being very difficult to enforce. You can't base the choice on the originating IP, those can easily be proxied from another state. Since we're talking about non-physical goods, there's no shipping address, and even if there was, what says you aren't shipping it to a friend in another state. The only thing I could think of would be if you could validate the "home" address of the credit card and base it on that address, but there are ways around that as well.

  • by b-baggins ( 610215 ) on Thursday March 10, 2005 @02:48PM (#11902007) Journal
    every Republican in office is for "Don't Tax, But Spend Just As Much As If We Were".

    Your information is out of date. The 2005 budget proposed by Bush freezes all federal spending and eliminates or consolidates many departments. Haven't you been hearing the howls about how it will starve children and leave the elderly dying on the streets?

  • by dillon_rinker ( 17944 ) on Thursday March 10, 2005 @02:58PM (#11902162) Homepage
    Lately, just about every Republican in office is for "Don't Tax, But Spend Just As Much As If We Were".
    Of course. You understand the reasoning behind this, don't you?

    As a Republican, you should go kick your party in the goods for being so completely irresponsible
    Ah. I guess you don't.

    Hopefully people can discuss this without getting their panties in a bunch
    I don't think you're going to get what you hoped for after I finish...

    Ask yourself ONE question: Which presidential party slashed welfare? Ok, TWO questions: Which presidential party ran up such a high debt that entitlements HAD to be cut?

    Do you see the strategy yet? Just in case not, I'll spell it out. The Republicans, under Ronald Reagan (who popularized the phrase "welfare queen") ran up a HUGE debt. The Democrats, under Bill Clinton, HAD to cut something. Welfare, a popular Republican target, and a popular Democratic program, got cut.

    Now the Republicans, under George Bush, continue to run up a huge debt while popularizing the notion that Social Security is dying. The Republicans have NEVER been supporters of social securty.

    Guess what will happen next? If your panties aren't in a bunch yet, then you're not paying attention.

    Let me sum up: The Republicans are EVIL. They run up a HUGE debt so that something has to be cut from the budget. The Democrats are STUPID. They cut their own social programs.

    THAT, I believe, is the unspoken plan of the Republicans. If you ignore their words and observe their actions, it's the only thing that makes sense.

  • by lysium ( 644252 ) on Thursday March 10, 2005 @03:08PM (#11902304)
    The 2005 budget proposed by Bush freezes all federal spending and eliminates or consolidates many departments.

    You are conveniently omitting the costs of the Greater Middle East Initiatives (i.e. wars), as is the budget proposed by Bush. Federal spending is not frozen; "defense" spending is skyrocketing.

  • by Mancat ( 831487 ) on Thursday March 10, 2005 @03:46PM (#11902815) Homepage
    However, the joke just isn't true. [snopes.com]
  • It's a pitty (Score:3, Informative)

    by hawk ( 1151 ) <hawk@eyry.org> on Thursday March 10, 2005 @05:44PM (#11904261) Journal
    that we don't have a system in which Congress, rather than the president, authorizes spending . . .

    oh, wait . . .

    well, Damn that Clinton and his Contract With America, anyway . . .

    hawk

    for those outside the US: the Republican Reagan had a Democratic Congress (except for a couple of years in the Senate), while the Democrat Clinton had a Republican Congress (except for his first two years which led to it).

    Our budget balanced not because of one party or the other, but because, after the Republican landslide, Clinton switched from calling the plan to balance the budget quickly irresponsible to a plan which it did a year faster. And after the one-upmanship between the two parties knocked another year or so off, falling interest rates knocked yet another year off.

    But *shh*. Don't bother these guys (on either side) with the facts. All of the prudent cuts came from their own party, as did the idea of fiscal responsibility, while all the bad cuts and debts came from the other one . . .
  • by brouski ( 827510 ) on Thursday March 10, 2005 @06:28PM (#11904723)
    The Snopes article doesn't say it's not true, just that it can't be proven.
  • by drsquare ( 530038 ) on Friday March 11, 2005 @06:20AM (#11908478)
    Actually there have been democracies for thousands of years, but don't let that stop you from thinking that the world started two-hundred years ago.

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