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Download Taxes As a Weapon Against File-Sharing 451

An anonymous reader writes "An examination of a new "digital downloads" taxation law in Washington State suggests that files downloaded via file sharing programs may be covered by the law — meaning that you may be expected to pay taxes based on 'the value of the digital product ... determined by the retail selling price of a similar digital product.' Thus, if you were to download music or movies and not pay the taxes, would you be liable for tax evasion charges? How much do you want to bet the RIAA will push exactly that claim?"
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Download Taxes As a Weapon Against File-Sharing

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  • by Anonymous Coward on Wednesday June 03, 2009 @05:12PM (#28201369)

    So, if I were to download an operating system, like Linux, or an IDE, like Eclipse, would I be liable for taxes on the price of similar offerings from Microsoft?

  • by guspasho ( 941623 ) on Wednesday June 03, 2009 @05:13PM (#28201383)

    So if I were to download Ubuntu, would I have to pay taxes based on Windows Vista or Windows 7? Ultimate? Professional? Home starter?

  • "file sharing" (Score:4, Interesting)

    by drDugan ( 219551 ) on Wednesday June 03, 2009 @05:18PM (#28201457) Homepage

    How do they plan to handle legitimate file sharing, e.g. content released without a fee or supported by voluntary sponsorship?

    Do they plan to tax that too?

    If they plan to handle it differently, how will they assess the legal status of the bits being shared?
    If they plan to handle it the same, that seems grossly unfair to the artists and independent producers.

  • by paeanblack ( 191171 ) on Wednesday June 03, 2009 @05:19PM (#28201477)

    If I won a $10,000 iTunes gift card, I'd have to pay taxes on that. (Assuming deductions/exemptions were unavailable/already used)
    If somebody gave me $10,000 as a gift, I'd have to pay taxes on that. (Assuming deductions/exemptions were unavailable/already used)
    If somebody "gives" me $10,000 in music via bittorrent, why on earth should that be tax-exempt?

    In almost every state, items purchased out-of-state must be declared and a "use tax" is due when imported. There is a reasonable exemption limit so you don't have to declare that bag of Cheetos you bought driving home from trip, but if you purchase a car in New Hampshire to avoid Massachusetts sales tax, you still owe money to Massachusetts, and they will collect it.

    Just because you downloaded it doesn't mean you shouldn't pay gift/sale taxes. Taxes are part of life. Deal.

  • by Tiro ( 19535 ) on Wednesday June 03, 2009 @05:21PM (#28201511) Journal
    Interesting. How much should FreeBSD or Darwin OS cost? Similar to Linux, to Mac OS X or to Windows? What about XCode tools, a 1GB+ dvd image? Pretty much impossible to implement this without pissing everyone off.
  • by spun ( 1352 ) <loverevolutionary@@@yahoo...com> on Wednesday June 03, 2009 @05:27PM (#28201601) Journal

    Crap. I have free software worth tens of thousands of dollars on my computer at home. I shudder to think how much we have here at work. I'm thinking Microsoft might want in on this action, to put a tax smackdown on Open Source.

  • Re:Sounds good... (Score:5, Interesting)

    by Goldberg's Pants ( 139800 ) on Wednesday June 03, 2009 @05:28PM (#28201631) Journal

    Conceptual issues are irrelevant. The RIAA has big, high paid lawyers who will bend you over a barrel and rape your virgin ass all while telling the judge how you downloaded a song and are now guilty of tax evasion.

    If they got Capone on tax evasion, they can sure as hell get you!

  • by wol ( 10606 ) on Wednesday June 03, 2009 @05:28PM (#28201635)

    Assuming I download a copy of Gimp (gpl and free software), does that mean that I now need to pay a tax equal to what I would have to pay if I bought a copy of Photoshop?

  • by vlm ( 69642 ) on Wednesday June 03, 2009 @05:35PM (#28201753)

    Charities and other non-profit organizations are tax free in the US.

    So downloading Debian would be tax free, but downloading Ubuntu (which BTW is Swahili for "couldn't install Debian") from Canonical Ltd. would be taxable?

  • by MoFoQ ( 584566 ) on Wednesday June 03, 2009 @05:38PM (#28201823)

    Under the "strict" reading, can't this also be applied to various open source projects?
    For instance, GIMP [gimp.org] is a powerful image manipulation program, that to some rivals Adobe's Photoshop and Corel's Paint Shop.
    And if this asinine law were to be strictly applied to this program, it could be disastrous. Especially considering the $500 or so price tag of Photoshop (Paint Shop can be as little as 20 bucks to 50 bucks depending on various rebates).

    What about Debian? Wasn't there an article just recently on Slashdot that calculated the cost it took to develop Debian 5?

    Or Ubuntu?
    Or Chrome/Firefox/Opera?

    And don't forget independent or forward-thinking musicians and artists (including writers) who publish their digital works online for free.
    How will they be affected? Will this law become another tool for big corporations and entities to abuse to kill off the independent artists?

    Some things to think about, especially since they do say that the devil is in the details.

  • by nxtw ( 866177 ) on Wednesday June 03, 2009 @05:41PM (#28201885)

    If you buy used CDs for $1 each, do you pay taxes on the $1 price or on the original retail value?
    If you record FM radio on a cassette player, do you pay taxes based on how much the songs would have cost to buy on a casette tape?
    If you record a song from Internet radio on your computer, do you pay tax based on the cost for the radio service to license that song and transmit it to you?
    If you download the 30 second sample of a 3 minute song, do you pay tax on 1/6th of the purchase price?

  • Re:Sounds good... (Score:3, Interesting)

    by hackstraw ( 262471 ) on Wednesday June 03, 2009 @06:16PM (#28202477)

    Sounds like this would be great for the end user. All live recordings would be reduced to free because here is the current value: http://www.archive.org/details/etree [archive.org] . Most all software would be free because of http://www.gnu.org/ [gnu.org] and http://kernel.org/ [kernel.org] , and http://sf.net/ [sf.net] .

    Basically, everything will asymptote to $0.00, and any percentage of that is also $0.00. I doubt the lawmakers thought of it that way, now did they?

  • Re:Sounds good... (Score:5, Interesting)

    by Maxo-Texas ( 864189 ) on Wednesday June 03, 2009 @06:17PM (#28202499)

    I think they would need to prove that
    a) I didn't rip it from my CD (and then the CD was lost/broke/destroyed so I no longer own it).
    b) I didn't record it off of the radio.
    c) I didn't record it off of my cable music channels.
    d) I didn't record it off of an internet radio station.
    e) I wasn't given the song by someone else who owned it legally and gave me their only copy.

    Still- it's a novel concept and it motivates the government to do RIAA's enforcement for them. Once again externalizing corporate costs.
    Given the hell that is coming in the economy, I wonder if it will be worth it.

    e) Provides the most interesting possibilities for creating extremely long chains of custody between various people who each legally owned the song and gave it to each other. For example, you could give your only copy of a song (not retaining anything) and take another song from a library. You can do this now legally. We check out DVD's for tv series and movies and CD's for songs from our library. You listen to it for a while and then return it.

    ---

    Something that people always trip up on (in TV shows and in real life) is that lying or conspiring is often a separate crime. So they fail to get you on the original charge but can show that you lied or conspired to break the law and so you are tagged for that. Basically, so much is illegal now that if the government really wants to put you in prison it probably can.

  • This is surprising (Score:3, Interesting)

    by fermion ( 181285 ) on Wednesday June 03, 2009 @06:20PM (#28202547) Homepage Journal
    Traditionally retailers have gotten in trouble for doing anything based on the retail sales price. First, there can only be a suggested retail price, to prevent price fixing, Second, retailers have paid settlements due to the fact that the 'retail price' or 'comparison price' was an arbitrary number used solely to make it appear that the consumer was getting a discount. One retailer went out business based the fact that it could not longer claim to offer discount mechandise, the priced it sold for was basically the same as everyone else, and other have to put disclaimers such as 'no sales may have been made at the state retail price.'

    Some might say this not retailers setting a base price, but the government, so it is ok. I think, though, this is still in effect price fixing, a it sets, at least within a state, a fixed priced for a given product. Though this may not result in a fixed price, which only lead to increase inflation as retailers are forced to overcompensate when price adjustments are allowed, it is certainly still an unwarranted obstruction of the free market.

    If this is allowed, what is next? Minimum taxes on each transaction at the grocery store. If I want too offer buy two, get on free, do I have to pay taxes as if I bought three items? Do I have to pay tax on the total before the coupon?

    I am absolutely in favor of taxes, after all the roads need to be fixed, the soldiers need a fair chance of getting a new leg when the original gets blown off, children need to be educated, but the tax must be based on real product or services. This will be the beginning of a serious problem. Just imagine getting advice for you computer from a professional. No charge, buddy, but the retail value fo my time is $200, so I have to charge you fifteen bucks in tax.

  • WERE (Score:3, Interesting)

    by RudeIota ( 1131331 ) on Wednesday June 03, 2009 @06:23PM (#28202581) Homepage

    So if I was to upload pirated movies

    *bludgeons you repeatedly* WERE, WERE. This is not Kentucky!

    "was" and "were" as used here are both correct -- which shows the AC's ignorance.

    The only nit pick you can make is that the subjunctive mood of "was" in this case (probably) isn't as correct as "were" in this sentence. If given the choice, "were" is a better fit because the sentence implies something that (probably) isn't something the GP was going to do, but if the GP were really considering claming pirated movies, then "was" would actually be the most appropriate word choice.

    The best choice is merely subjective. By the way, I used to live in KY... I'm sorry the educational system failed you so miserably. :-)

  • by PPH ( 736903 ) on Wednesday June 03, 2009 @06:58PM (#28203099)
    Start a Church: Our Lady of the Eternal File Share.
  • Re:Sounds good... (Score:4, Interesting)

    by dimeglio ( 456244 ) on Wednesday June 03, 2009 @07:47PM (#28203751)

    Put a classified add in the papers: "found MP3 songs on hard disk, looking for rightful owner to return it to. If unclaimed in 30 days it is presumed that I can keep them. Please contact ....." That should demonstrate due diligence from your part and keep you away from those RIAA lawyers.

    RIAA: Hon. judge, the accused has downloaded 30 songs illegally. Here is the evidence.
    Accused: I did no such thing, however, when I discovered them I wanted to returned them to their rightful owners, hence this classified ad in the NY Times.
    Judge: bailif please bring this here.
    Accused: It has been 30 days last month and no one has yet claimed them.
    Judge: Thank-you accused for doing the right thing, Case dismissed!

    Food for thought...

  • Re:Sounds good... (Score:2, Interesting)

    by symbolset ( 646467 ) on Wednesday June 03, 2009 @11:22PM (#28205377) Journal

    There's a graph here somewhere. It's probably a complex 5D curve.

    What is the value of Beowulf? As a part of English literature it's a priceless treasure. As a movie plot it seems to be worth a good bit [imdb.com]. As a secret? About the $0 [gutenberg.org] you refer to.

    Art is supposed to become culture. That's its job. Laws like this one prevent prevent our culture [gutenberg.org] from being useful to all of us when stuff like this happens [wdwmagic.com].

  • Re:Sounds good... (Score:4, Interesting)

    by rtb61 ( 674572 ) on Thursday June 04, 2009 @01:17AM (#28205945) Homepage

    Taxing an activity implies that you retain possession of the proceeds of that activity. So download a track, they report it and require that you erase it, you no longer have it and are thus you no longer pay tax on it. Sales tax is based upon the sale of an item, not it's perceived value or the method by which you obtained it. Take for example a wedding video. What would be the defined value of the recording to the families involved, thousands of dollars, so what sales tax should people pay who receive a copy of that video? So what tax should the bride and groom collect from people who receive a copy?

    Bear in mind that the RIAA et al wanted hardware that would break all recordings that contained copyrighted content, so wedding videos that were recorded while copyrights content was playing in the background where to be unplayable until every person who viewed the video paid a copyright licence fee to view that video into perpetuity and, of course now the required sales tax, so christenings, birthdays, anniversaries all are technically required to pay tens of thousands of dollars in copyright fees and now sales tax.

    The buyer never directly pays sales tax, the seller is required by law to add the value of sales tax to the sale price of the product, collect that sales tax and pay it too the government, so it is the seller who is charged with tax evasion, because regardless of the sales price of the product and percentage of that total price paid by the buyer must be paid by the seller to pay the legislated value of sales.

    Hmm, so the RIAAs buddies are subject to legal penalties for failing to collect and pay the required sales on all content viewed by civil, not criminal law infringing means, hmm, sounds like a good way to get the government more money and to eliminate the pigopolists, so win win. Of course throwing all those people in jail for not paying tax on their various highly valued family videos might be a bit extreme ;).

  • Re:Sounds good... (Score:4, Interesting)

    by mcvos ( 645701 ) on Thursday June 04, 2009 @05:30AM (#28206993)

    Netherland: 19% sales tax on luxuries, 6% on bare necessities. Income tax 30-50% (but with a lot of deductibles).

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