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Mississippi Bill Would Tax Software Sales 293

Posted by kdawson
from the join-the-crowd dept.
Byzantine writes "The Mississippi Legislature has passed MS House Bill 1461 which would amend the state's tax laws specifically to charge sales tax on 'electrically transferred digital products,' including products bought via mail-order. The bill is currently on the governor's desk awaiting signature." Softpedia claims that 20 states have enacted download taxes of one sort or another — most of them for iTunes music — and that New York is considering taxing downloads of all kinds.
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Mississippi Bill Would Tax Software Sales

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  • Re:Inevitable.... (Score:3, Interesting)

    by Chabo (880571) on Tuesday March 10, 2009 @07:03PM (#27142499) Homepage Journal

    No one taxes to just tax.

    Obviously you don't live in California.

  • by rtrifts (61627) on Tuesday March 10, 2009 @07:04PM (#27142507) Homepage

    I live in Canada. Here, all of these products are taxed like any other good or service - and there is no mail order freebie to distory the level playing field of the retail economy by not having to pay them via mial order. Up here? It's not new. It's not shocking. Believe it or not, the sun still comes up every morning - the world turns. Then it gets dark and we go to sleep. Every day. Life goes on.

    Thing is, the federal debt in the USA has been spiralling so fast since 2000 that all of these "reports" and pointing to same as the portents of the Four Horsemen are going to go the way of the dodo in a dozen years or so - or less.

    You simply will not have a *choice* but to increase taxes in the USA to at least Canadian and possibly Western European levels if you don't deal with it soon enough. (My bet - you won't deal with it soon enough. Americans are nutty when it comes to taxes.) You'll put it off and put it off and then put it off somemore until there is no wiggle room left at all. And then you will point fingers at your politicians - instead of you the voters - which is *precisely* where the blame will lie.

    That's the price you will ultimately have to pay for spending money for decades that you simply do not have. That prediction is not a *maybe*. It is a *certainty*. The cheque is coming to your table. Deal with it (and kindly quit your whining about it too, please. It's not a big deal.)

  • by Chabo (880571) on Tuesday March 10, 2009 @07:08PM (#27142551) Homepage Journal

    I have a feeling this will be implemented like sales tax for purchasing items online: you buy an item from Newegg, and they have to charge you sales tax if you live in a state where they have a physical presence (CA, NJ, TN), even if your order is shipped from elsewhere.

  • http://window.state.tx.us/taxinfo/use/ [state.tx.us]

    Many state do require you to report items purchased in another state, based on how long ago you bought it.
    You might want to find out about that tax fraud you've been committing.

  • Re:Inevitable.... (Score:5, Interesting)

    by Chabo (880571) on Tuesday March 10, 2009 @07:22PM (#27142711) Homepage Journal

    I recently came to California from New Hampshire, which introduced a property tax several years ago. I wasn't around for Prop. 13, but after doing a bit of reading, I'm glad it passed. If someone owns land, and has little income, why should they be punished for that?

    I know a man who works as a teacher in New Hampshire who owns over 100 acres of land. The land's been in his family for at least two generations. The property tax was passed, and he nearly went bankrupt paying the taxes on the land because the land value assessments were artificially inflated by the housing market bubble.

    I don't like heavy taxation in any form, but property taxes are disproportionately unfair to anyone who owns land and doesn't have a high income.

  • by AuMatar (183847) on Tuesday March 10, 2009 @07:24PM (#27142743)

    Its called a "use tax". For example CA charges one on anything bought on OR (where there is no sales tax). Buy a car there and you'll quickly find yourself being taxed by CA (although admittedly only big things like cars get tracked down. Everything else is done on the honor system, with remarkably few people filling out anything but a 0 on that line.

  • Re:Inevitable.... (Score:3, Interesting)

    by CrimsonAvenger (580665) on Tuesday March 10, 2009 @07:25PM (#27142753)

    No one taxes to just tax. It's hard enough to tell people you need to tax for the things they want!

    I wish I lived in your world. Here in the Real World (tm), governments tax anything they can get away with taxing.

    After all, if you have revenue, you'll find a way to spend it....

  • by Chabo (880571) on Tuesday March 10, 2009 @07:25PM (#27142759) Homepage Journal

    Read my post again: I listed those three states for Newegg because of sales tax. Newegg has locations CA, NJ, and TN, so if they ship an order anywhere in CA, NJ, or TN, they have to charge sales tax. If Newegg ships a package to any of the other 47 states, they don't charge sales tax.

    As far as I can tell, if Mississippi passes a Software Sales Tax, then the only retailers that have to comply are retailers in Mississippi to Mississippi residents.

  • Re:Inevitable.... (Score:3, Interesting)

    by Chabo (880571) on Tuesday March 10, 2009 @07:46PM (#27142979) Homepage Journal

    I'm fairly young, but I thought that the state-wide property tax was only enacted after the Claremont Decision. This seems to be confirmed by the fourth all-caps paragraph of this story:

    http://www.nhpr.org/node/4290 [nhpr.org]

    Is this incorrect? I thought that the NH tax system before the Claremont Decision involved only direct taxation at the town level.

  • Re:thus ensuring (Score:5, Interesting)

    by yog (19073) * on Tuesday March 10, 2009 @07:48PM (#27143001) Homepage Journal

    Mississippi stays at the bottom of the heap

    Don't worry, they'll be joined shortly by many other states hungry for revenue. The problem with this bill (well, one of many problems, actually) is that it will damage the nascent e-book and e-music industry just as they're struggling to get established, even as paper and CD publishers flounder. Also, it will largely tax the teens and 20-30-somethings who actually purchase these kinds of products. A rather regressive tax.

    It should be easy enough to get around this law. If you read the bill, it spells out the precise types of electronic "products" that are taxable. So the vendors can simply convert these products to non-ebooks and non-music and non-videos, and provide a little converter that allows the buyer to change them back into ebooks and music and videos at his/her discretion. We don't sell music, we sell blobs of binary data. If you find a way to transform it miraculously into your favorite music, more power to you!

  • Re:thus ensuring (Score:3, Interesting)

    by penix1 (722987) on Tuesday March 10, 2009 @07:59PM (#27143133) Homepage

    An even better idea would be a refusal to sell to residents of those states. The moment the billing / destination address is identified as a taxing state, refuse the sale based on the tax legislation. If it's online, link to it specifically. Nothing like political pressure to make a politician squirm. Once those states stop having sales from Internet based sources, they'll change their tune.

  • Re:Logical Move (Score:3, Interesting)

    by jabithew (1340853) on Tuesday March 10, 2009 @08:46PM (#27143693)

    Please show me where taxes on the citizens hurt the economy.

    This is the second time I've posted this link [wikipedia.org] today.

  • Re:Inevitable.... (Score:3, Interesting)

    by Chabo (880571) on Tuesday March 10, 2009 @08:59PM (#27143849) Homepage Journal

    Actually, one of the biggest reasons I don't like New Hampshire's property tax is that for the last few years, the assessors were inflating the assessed value. Thing is, the more they say your house/land is worth, the more you're taxed. It was in their best interest to say that your house was worth a fortune! My dad had to appeal on our house to get another assessor to come and give a more reasonable figure.

  • by kseise (1012927) on Tuesday March 10, 2009 @10:14PM (#27144637)
    There are not software sales. As we have all learned, software is licensed. No sale, not tax. You want to tax it? Make it a sale, and let me do with it as I please.
  • Re:Inevitable.... (Score:4, Interesting)

    by Temkin (112574) on Tuesday March 10, 2009 @11:08PM (#27145103)

    Sorry, I know this is off topic but I can't let it pass without comment.

    So you REALLY think that it was Prop 13 that sank California?

    Well.... The thing about prop 13... It set up a conflict of interest between the cities and counties and their populace. After prop 13, the cities and counties were opposed to new housing development. Housing demands services that is not covered by the revenue generated. As time goes by, the cities and counties develop complex ways of hiding this problem by implementing all manner of permit fees and revenue enhancements. For example in 2000, in one small east SF Bay area city, in order to build a house, it cost in excess of $70,000 for the required building permits. That means that every single house that has a valid occupancy permit, no matter what condition, has a built in base price of $70,000.

    Artificial scarceness drives up prices. When a house changes hands, it can be reassessed under prop 13. So churn is good for cities.

    Finally... The banks get to collect 5 - 6 - 7% interest on all this property tax avoidance chicanery. Lather rinse repeat for 30+ years...

    We're reading about the results in the paper every day. The house of cards finally folded. Now some of the gross abuses of the state expense structure are coming into view. My favorite... The police and correctional officers union. You do your 20 years, and get to retire with full benefits. So you can retire at roughly 40 years old, and have full pay and benefits for life while you go double dip as a security consultant, etc... Same deal with the firefighter unions.

    The problem is... It's easy enough to say "yea, that's wrong. They shouldn't sign those contracts." or "they should repeal prop 13", but they're entrenched. If you benefit from them, you support them. My parents love prop 13. And why shouldn't they? They're paying property taxes last reassessed in 1978. Their son bought a cardboard box of a house, payed 11% income tax, 5% of his income in property tax, 9.25% sales tax, 1% vehicle property tax, and countless fees... and double that again in inflated prices so others could do the same... and got fed up sold his house and transferred his job out of state. They still don't understand why.

  • Re:Inevitable.... (Score:1, Interesting)

    by Anonymous Coward on Wednesday March 11, 2009 @08:30AM (#27148669)

    Reallocating property from one person to another based on "productive use of capital" for the benefit of society over the rights of the individual is always going to be a negative incentive to productivity.

    The classic socialist rebuttal would be that you don't reallocate the property to another PERSON, you reallocate it to the state, which then shares it with everyone based on who can make the best use of it.

    Nice in theory... fails in practice. Heads of state tend to engage in cronyism and pet projects simply because it is human nature to do so.

    Insofar as property taxes being inevitable for public services... why not a service tax? I'd like the fire department to stop my apartment from burning down even though I don't own it.

  • Re:thus ensuring (Score:3, Interesting)

    by Attila Dimedici (1036002) on Wednesday March 11, 2009 @09:19AM (#27149137)
    It just means that all of these businesses will move to a state that does not have such a law. If you do not have a physical presence in a particular state, said state cannot require you to collect sales tax (read this bill, it also recognizes this limit). The problem with this tax is that it encourages businesses to locate in another state. It will not generate as much revenue as the legislators anticipate, unless they spend a significant amount of money on enforcement. Even then I suspect that the result will just be lots of people being penalized for not declaring this on their own, not actual compliance.

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