Connecticut Considers Digital Download Tax 244
SonicSpike writes in with a story about the latest state contemplating raising revenues by taxing the net. "Downloading music, movies, e-books and Apps could soon cost Connecticut residents more as lawmakers consider a tax on digital downloads. The bill, proposed by the General Assembly's Finance, Review and Bonding Committee, would have consumers pay the 6.35% sales tax on any electronic transfer. Supporters say the bill would level the playing field for brick-and-mortar retailers in the state who are already required to charge Connecticut sales tax to consumers who purchase these products in their stores. About 25 states around the country have already begun taxing digital downloads."
So what? (Score:2)
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Re:So what? (Score:5, Funny)
So only stupid people pay real money for "ephemeral" products?
I don't know about that, but for sure only ephemeral people pay for stupid products.
Three things... (Score:5, Interesting)
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It's been on slashdot before, probably for other states, can't really remember. Frankly, as a European (Sweden to be exact), I'm still surprised you don't have taxes on internet purchases. Any online US retailer exporting to EU does have to add VAT to those transactions (which are then sent off the to EU state).
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The reason being that when the tax office actually crunched the numbers, they found that collecting such a tax would cost more than it brought in.
Looking at the global situation, I guess it was a rare flash of honesty, most government departments generally leap at the chance to increase their budgets and hire more staff.
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Well, in Australia, they only have taxes on internet purchases greater than $1000.
Just to clarify, goods and services tax (GST) is only collected at the border on shipments in excess of $1000 coming from overseas. GST is payable on purchases made within Australia, Internet or not, and the selling business is required to account for, remit the tax and absorb the cost of tracking it. I do not doubt the cost of the tax office collecting the numerous small amounts would swamp the revenue, but that did not stop them collecting the old piecemeal sales taxes on values over $400 (but it was
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but Conneticut already taxes this... (Score:3)
http://blog.ctnews.com/takeonlife/2011/01/22/forget-nickels-the-%E2%80%98use-tax%E2%80%99-could-generate-millions/ [ctnews.com]
Some exemptions are mentioned in that blog, but it misses the "single purchase under $25 is exempt" written on the form itself.
I ALWAYS pay my use tax when it is due (which is rarely due to exeptions, but I have paid it twice) and this sounds like double taxation to me, unless they also change their laws on the books.
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I ALWAYS pay my use tax when it is due (which is rarely due to exeptions, but I have paid it twice) and this sounds like double taxation to me, unless they also change their laws on the books.
It isn't. You don't have to pay use tax on items for which you've already paid sales tax. If you pay out of state sales tax on something, you only have to pay use tax if the rate you paid is less than your own state's sales tax and you only have to pay tax on the difference. The tax described here is paid to your OWN state as a sales tax, so use tax wouldn't apply.
I am not surpised (Score:4)
if they thought they could tax the air we breath they'd do it....
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Comment removed (Score:5, Interesting)
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Do you think prices would decrease if corporate taxes were abolished? No. Corporations would just pocket the money and invest it in more bonuses.
Meanwhile, income taxes would increase to make up for the reduced tax income.
Also, people pass on their taxes to their customers and employers too. So why not have identical taxes for corporations and individuals? Why not tax people on profit instead of income? Why should a person that spends all of his income on basic needs like food and shelter pay taxes, while a
Re:I am not surpised (Score:4, Insightful)
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That works when you aren't in a monopoly or cartel-controlled market, which all of ours are now.
Re:I am not surpised (Score:5, Insightful)
That works when you aren't in a monopoly or cartel-controlled market, which all of ours are now.
Thanks to the polices of the State that encourage this behavior.
Re:I am not surpised (Score:4, Insightful)
And this theory has shown itself to work in the digital marketplace? Products are 50% cheaper when downloaded compared to the retail version right?
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Theories are well and good, but they have to be supported by observations to be useful. What does empirical data say?
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"How did he die?"
"He suffocated."
"How could that happen?"
"He tried to save taxes."
How (Score:4, Insightful)
How do they actually make these online taxes work? force every single online payment gateway to tax every transaction from your state and send you the money?
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I don't think that has anything to do with this story. The article says nothing about taxing at the ISP level. It's a legitimate concern, but not what we're talking about here. Cut with the FUD.
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So unless you're going to commit tax fraud, Turbotax is all they'd need to comply. This is already in place, and working fine, in Washington state.
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It is not hard to grasp, it is hard to accomplish. All brick and mortar stores that pay sales take to a given state reside in that state.
Imagine if the sales tax instead of being on a location basis changed to a personal basis. So if a Connecticut citizen took a holiday to Italy and bought a $10 sandwich then 60 cents had to be taxed and sent Back to Connecticut. How would you go about accomplishing this?
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If a person isn't forming a contract for digital goods with a company recognized as being inside of Connecticut; no tax. If a person forms such a contact with a business that is recognized as being in Connecticut; Tax on
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I don't think the idea to to tax online Connecticut businesses but to tax Connecticut citizens online. This bill and all like it are for taxing citizens on all online purchases.
And online businesses do not really have a location, Google or amazon have to have their servers somewhere but the location is immaterial.
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That is not true at all. Every corporation has to incorporate in a specific state, and hence in bound by laws of that state.
Can I pay (Score:3, Funny)
in Bitcoin and Quatloos
"Levelling the playing field" (Score:4, Insightful)
"We steal from these guys over here. So we should steal from you, too."
Naturally the brick-and-mortar stores are going to favor fairness in the application of the tax laws. But why do we never see them saying, "You don't tax all these business, so stop taxing us?" Or, "Taxing these businesses is going to double your tax base, so how about cutting the tax rate in half?"
No, instead, the government wants more money and more control over a greater number of people and businesses. So they sell it to local businesses as "levelling the playing field" and these businesses eat it right up and support the ever-increasing growth of government.
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They are necessary.
They are?! I guess I must've missed the part where the states that don't charge sales tax have completely imploded and have been annexed by their neighboring states?
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"Necessary"? I guess New Hampshire never got that memo, because we have no sales (nor income) tax. Many times they've tried to pass one; each time it's failed. Often these politicians don't get re-elected, either.
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Often these politicians don't get re-elected, either.
Although sometimes they get elected US senator. With any luck, we'll pass an amendment to the state constitution to make those taxes even more unlikely.
Our state politicians are like car salesmen (yes, a car analogy!). "Well, by enacting a small sales tax, we won't have to raise property taxes nearly as much." In the end, we pay more anyway. All a granite stater has to do is look at our southern neighbor.
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Fortunately they can sometimes do less damage as a U.S. Senator. Two recent examples: I'd rather see former A.G. Kelly Ayotte as a Senator---one voice in 100--rather than leading the prosecution of innumerable victimless crimes. (Although I was part of that "Not Ayotte" campaign: Best of all would be for her to disappear into obscurity.) Similar with former
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No they aren't.
If you want to have a government, you have to fund it somehow, but there's no rule that says you have to fund it with a byzantine system of vague, complexly interacting, administratively burdensome taxes. Tax preparation and related services occupy something like 1% of the economy. Which, subtracting out government spending, is an even more significant bite of the real available resources.
Every time you complexify the tax code, you add more more work that needs to be done by someone, furthe
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If you take something from someone without their permission, it's theft. This is a rather simple concept. Calling yourself "the State" doesn't change the simple meanings of simple words.
I do vote. I do a lot more [jeremyjolson.com] than just vote, too. I have moved---to New Hampshire [freestateproject.org], not Somalia---because of my philosophical beliefs. Last week I was even part of a group [eprci.com] that defeated $24M worth of new theft that our public school district was proposing.
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If you take something from someone without their permission, it's theft. This is a rather simple concept. Calling yourself "the State" doesn't change the simple meanings of simple words.
I do vote. I do a lot more than just vote, too. I have moved---to New Hampshire, not Somalia---because of my philosophical beliefs
How did you move there? Hiking through the woods? Cause surely you wouldn't use the roads financed through taxes, because that would be theft from those sharing your philosophical belief.
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Although the roads are financed using taxes, presumably if there hadn't been taxes or other forms of government interference, there would have been private roads which are better than the ones we have now.
By your reasoning, if the government collected a $100 tax from everyone and used it to pay everyone a $95 check, anyone who opposes taxes would be obliged to throw the check in the garbage on the grounds that it was paid for by taxes.
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And if we had large-scale private roads, they would be built much better than they are now. As it is, there's a perverse incentive to actually build roads with substandard materials: Constant construction and road work means "more jobs." For a private business, more work is always a bad thing: It means more expense, and less profits. But for the government, it's a good thing: It makes politicians' careers, creates job security for State workers, and to many people, it justifies the very existence of the Sta
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If you take something from someone without their permission, it's theft.
They have given implicit permission. You are arguing against democracy, not taxes. You argue that everyone has 100% veto power over all laws "I didn't explicitly agree to that, so it doesn't apply to me", and that's anti democracy, where the "greater good" is given the power to tell the others what to do, two foxes and a hen voting on dinner, and all that.
Texas does this (Score:4, Informative)
Apple aleady does this in the App Store when I purchase in Texas. If I purchase an app in another state, Apple still charges me for Texas sales tax. I guess it is a shipment to my home, not to my device.
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Yes, tax law has always specified that taxes are paid in the locale that the goods are delivered to.
I used to work for a company that would ship things nation-wide. We were located in Texas, incorporated in New Jersey, the manufacturer was in Arkansas, shipped to New Mexico and billed to Arizona. New Mexico's state tax laws (the shipping address) were the ones we followed.
Empty Rhetoric (Score:5, Insightful)
"Supporters say the bill would level the playing field for brick-and-mortar retailers in the state who are already required to charge Connecticut sales tax to consumers who purchase these products in their stores."
An argument could easily be made that the playing field is already level. The advantage of ordering online is one of cost, with typically lower prices and less of a drain on local infrastructure (it costs the state / local government more to provide fire / police protection / emergency medical services / roads / etc. to a few dozen brick-and-mortar stores than to a single warehouse), and possibly hard to get items (ones which cannot be carried locally, for lack of space in a store; commercial space being at a premium). The advantage to brick-and-mortar stores is time, with the more popular items you are typically looking for already in stock, hence the price premium ("I need this item today").
As such, the advantages on both sides balance each other out fairly well.
This tax, of course, is then a simple cash grab. Going off a stereotype of legislatures, we will assume that the state coffers are beginning to, if not already are, empty. As such, someone took a look at things that are considered popular enough to tax (demand is unlikely to change, so it's *free* money they can skim off the top, without impacting the industry; this is also an economics-FAIL, but the people in charge love to hear things that confirm their bias), and barfed up a semi-palatable reason for this new tax.
Re:Empty Rhetoric (Score:5, Interesting)
Why shouldn't online purchases be taxable? Slashdotters always complain when people demand different laws for things "on the internet". Why is this an exception?
We need to fund the government somehow. Having a mile-wide loophole for purchases made on the information super-highway is archaic and counterproductive. I'd prefer no sales tax at all, since it's a regressive tax, but if we're going to have one, it should be applied everywhere.
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This is already a solved problem. The tax is based on the location of the buyer. For all practical purposes the billing address they have on file (if they have a validated credit card) is good enough, though with location aware devices you can always go for more precision.
Re:Empty Rhetoric (Score:4, Insightful)
Now what happens when other states implement the same thing? Is every vendor expected to have a sales tax permit for every state in the country that collects sales tax? There are quite a few states that have different tax rates depending on where you live (or rather based on where the vendor is located). So, once you alter the methodology from vendor location to consumer location the whole concept breaks down pretty quickly.
But, what really bothers me is that the state of CT ALREADY has a system in place to collect sales tax for citizens of CT. The CT sales and use tax includes a use section, which means that if you buy something and the cost did not include CT sales tax then you are responsible for paying the use tax (which is identical to the sales tax percentage) when you file your state tax return. Wouldn't it be easier to enforce this than to try to go after venders located in states that CT could have ZERO jurisdiction over?
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Taxes, in an ideal world, are levied in response to a need for services.
Examples:
Most property taxes go to fund local schools, police, fire, and local public services. While your consumption may not be proportional to the value of your real estate, it becomes a relatively fair basis for taxation.
Motor fuel taxes fund road projects. That one is fairly proportional, since heavier vehicles cause more wear and tear on roads, and generally get worse mileage.
Sales taxes - which are local - pay for local infrastru
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Most property taxes go to fund local schools, police, fire, and local public services...
This is a common mis-conception
Actually, it's not a misconception - it's fact. Nearly all of your local tax dollars stay in your locality. Most of them pay for a portion of public schools.
If you're arguing with my usage of the term "fair" as a basis for taxation, that may be a bit more understandable. Those who have owned land for a very long time, and have had that land appreciate may have larger than typical tax bills on an illiquid asset. For the most part, though, you chose to purchase real estate fully aware of the proportional ta
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Why shouldn't online purchases be taxable?
Why does everything need to be taxed? Don't we have enough forms of taxation already? Would you ever be satisfied so long as there was still a glimmer of capitalism left untaxed? In New Hampshire, we pay mostly via our property taxes. We don't have or need a state sales or income tax. Taxing us two or three different ways doesn't magically create money that couldn't have been collected the first way. All it does is create more bureaucracy, thus necessitating more taxation to fund the bureaucracy.
Onlin
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We need to fund the government somehow.
Yeah, but how much government do we really need?
So much government that it's costs cripple people & business while killing our competitiveness in a world economy? Enough government to track everyone & everything?
If all we paid for with our taxes was "civilization", we could do away with the Federal income tax and cut most state taxes to nearly zero.
I think we're well past the point of "paying for civilization", and we are and have been, especially in the last several decades, paying for our own ensl
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Go polish your gun, Tea Bagger.
Gee, thanks for your concern for the condition of my small arms, but I assure you they are secure, well supplied, well taken care of, and most have a low-maintenance matte finish or coating for low reflection and harsh environments!
It's good to see a counter-example to the typical knee-jerk stereotyping and ad hominem attacks from Progressives and others on the Left. Your tolerant and inclusive attitude and empathic dialog is to be commended, sir!
Strat
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What does your penis size have to do with this, Tea Bagger?
Ask your mom when she calls you up from the basement for dinner.
Strat
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Maybe because the law says mail order purchases to out of state companies are tax exempt? iTunes is owned by Apple who are based out of California.
How about instead of finding new things to tax, the government spend more responsibly? Every week I have to do more with less. Why does this all powerful entity funded by ME not have to follow the same rules?
I seriously doubt the fire/police/road departments will be disbanded because of a lack of funds.
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"I seriously doubt the fire/police/road departments will be disbanded because of a lack of funds."
Precisely my point. These are all local services, taking care of the local community. If a warehouse in NY is being burgled, will the NJ police show up? No. My counterparts have sold people on the great lie that taxes are necessary to fund services, services that benefit those being taxed.
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I'd prefer no sales tax at all, since it's a regressive tax, but if we're going to have one, it should be applied everywhere.
If not no tax then lots of tax? That's some strange logic. Maybe you also think that uniform taxation means a lower and fairer rate, but it doesn't work that way. My state raised sales tax by 25% ("because of inflation" "because other states are doing it" "for the children") and ended up with a budget surplus to blow on vanity projects and contractor handouts, while reducing services and raising fees.
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They are taxable, in fact they are already taxed, all this does is put the burden on the business to collect the tax. This means that the business has to keep track of sales taxes for every area that has them, even those areas where they have no presence. Since tax codes change along various lines (including within the same zip code) it becomes a non-trivial problem.
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We recently got a tax on downloads in my country. Well, we already had a tax on local products, but now foreign companies are supposed to add VAT to downloads according to the usual rates in the country. One problem is that this can't be enforced, and the government admits as much. Only big companies who want to play nice even care. I suspect they still pocket the extra money.
Apple add 25% to apps, music and books, but they really only pay 6% in Luxembourg and keep the rest. Amazon I'm not sure about; they
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Why? Because this is about digital downloads, not physical items that happened to be purchased online. The so-called goods really are different. They aren't material. They don't suffer from the scarcity of the physical. The state is conveniently making the same mistake the MAFIAA deliberately commits.
It does shine more light on the MAFIAA's quandary. This tax bolsters their arguments in favor of treating these products just like physical goods, so they should support it. But, they shouldn't support
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And other Slashdotters always complain that we need to fund the government somehow. Having nonsensical laws for commerce and taxation is archaic and counter-productive. I'd prefer no sales tax at all, since it's a regressive tax, but we're going to have one, it should be charged only within the state that passed it.
Do you see what I did there?
Here is a better idea (Score:2)
Drop the sales tax entirely and raise income taxes. Problem solved
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I vastly prefer sales tax. Although in this case it really ought to be a flat tax
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As for the regressive nature of the tax; you do know we can buy things out of state? If the tax is so bad for any of the goods I want then I can just go order goods from someone with no sales tax. I've already saved my entire Amazon Prime membership fee in taxes
Alright, and now looking at my taxes and doing what you said.....They're exactly the same
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You know you're still required to pay taxes on those things you order from out of state.
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Item(s) Subtotal: $4.93
Shipping & Handling: $0.00
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Total Before Tax: $4.93
Sales Tax: $0.00
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I'm only being taxed on purchases that come from Washington based sellers
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Right, but you're still legally required to pay it, it just isn't assessed at the time of sale. It's called a use tax and you're supposed to report it on your tax return.
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Yeah as far as Use Tax is concerned; we ain't ever heard of no Internets up here in Seattle
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Flat taxes are an excellent idea, but only if implemented on gross receipts and not on a "net" or "adjusted" income. If every entity in the US paid 5% on their gross income, we could probably run the country. Poor people would get off with a nominal tax bill (a hike from the current negative rate they "pay"). People with several shell corporations to hide assets and limit liability would pay double, triple, or more. Supply chains with short distribution would pay the least tax (think local farmers, who wo
An even better idea - gross receipts tax (Score:3)
Net income is easy to fudge and modify. Gross receipts is whatever you receive. Without deductions, it becomes a "flat fee" for any transaction, paid by the recipient.
Double Taxation (Score:3, Interesting)
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All three are separate contracts, and so taxed separately
Sales tax... (Score:5, Insightful)
I realize the world doesn't work like this. But in my opinion if they're going to tax the purchase it should then fall under all the rules of buying from a Brick and Mortar store too, such as the First-sale doctrine. After all, if I buy a book from a brick and mortar I'm legally allowed to sell that book to someone else. On the other hand, when I download from iTunes I have no way to sell that item, because I didn't purchase it, I "licensed" it. Which the businesses love to remind us. If I'm then being taxed as if I'd purchased it, then the states should require the companies by law to treat it like any physical purchase and allow me to transfer the ownership of it.
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Except that you can't apply a state tax to an out of state entity. Hey, the money's gotta come from somewhere, and the only thing they can get to is the end user.
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If you come to Washington and tell your checker, at whichever store you choose, that you are from out of state and so are to be charged no sales tax; you still have to pay the tax
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If I sell you something (I am located in Virginia) via mail - the state of Washington cannot compel me to pay any taxes, either on my work or on your behalf. If I came to your state, I would no longer be out-of-state.
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Except in a few situations [wa.gov]
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While it's true that out-of-state entities have no obligation to collect sales tax on behalf of a government if they don't have a physical presence in that state, the tax is still due. It's called a use tax, and it's the obligation of the consumer to report and pay it. Almost all states that have a sales tax also have a use tax, they're just extremely
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I would love to pay taxes on digital media if it meant I actually owned it. I have an xbmc htpc, and there is not a single legal avenue for getting movies onto it.
Just this weekend I did another periodical scouring of the internet for sane media outlets, and left more frustrated than you could imagine. Both Amazon Instant Video and Google Play will only "rent" the movies, which require streaming them through their locked down (and buggy) web players. The iTunes Store gives the illusion of purchase because t
Brick and Mortart selling digital goods? (Score:2)
Where are these stores that sell digital goods? Do you hook up a usb drive to a station, pay and download? How does this work with iTunes cards? You pay tax to buy one and then pay tax again? Double dipping aren't we?
Okay (Score:2)
The real problem (Score:4)
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In CT, we have the highest state tax on gasoline and among the highest in tax per capita. We probably have the most underfunded state pension fund in the country.
You can't be doing worse than your neighbors to the east...
Just get rid of sales tax (Score:2)
Aside from the obvious benefit of eliminating this issue of taxing interstate (and internet) commerce and non-physical things, there are some subtle advantages. For example: part of the reason that certain services (telecommunications) are able to get away with tacking on un-advertised fees is because Americans are accustomed to paying more than the price tag
Interstate commerce domain of the federal govt (Score:2)
How is this even constitutional? Unless the vendor has a state presence, this is a matter of interstate commerce, which is the sole domain of the Federal government. Why the fuck does government have to tax every fucking thing that exists? We really need to clean house at all levels of govenment because spending is out of control, and the we're demanded to pay in taxes is absurd.
D'loads help -save- the Planet (to some degree) (Score:3)
Rather than TAXING the good guys (who preclude the need for trips to a Bricks & Morter shop), governments should -really- be REWARDING their carbon-saving efforts... at least where the products are shipped electronically, as downloads are.
Triple Bottom Line accounting is LONG overdue, and it's crazy to support Bricks & Morter business that are -less- efficient in terms of their -customers'- carbon footprint, ie, when shopping for & buying products.
On the other hand, I'd be -happy- to endorse such a tax, but ONLY after we're all driving 100% Electric Vehicles (EVs), which so significantly reduce our carbon footprints, that shopping trips would be easier on the environment.
Tax breathing and be done with it (Score:2)
Until of course it dawns on you that poor people breathe and use the internet too. Then it's a war crime.
Re:Nahh (Score:5, Insightful)
Couldn't you just use an access point across the street ( and likely in another state) and bypass the whole problem?
Re:Nahh (Score:4, Interesting)
Re:Nahh (Score:5, Insightful)
That would never work. After all, people never regularly cross the border into Pennsylvania or Delaware to buy fireworks or fill their trunk with tax-free cigarettes. Nope, never happens.
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Sure. If you can manage to lie about your billing address to the site you are downloading from. I'm not sure, but that could be illegal.
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Paypal? That would prevent the seller from knowing where you are located, would it not?
Re:Nahh (Score:5, Informative)
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Come now, even Google isn't completely evil.
Re:Nahh (Score:4, Insightful)
Re:Nahh (Score:4, Insightful)
A better way to "level the playing field" would be to eliminate the sales tax for the brick and mortar stores. That would also increase the chances of those living in border states coming to the brick and mortar stores to avoid the taxes in their states.
But no, they won't even consider that because it just may lower their revenue in the short term and we all know no politician thinks beyond the next election.
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In a shocker, Malloy doesn't support this tax. So it needs a 2/3 vote to pass now.
http://www.wfsb.com/story/17176089/hearing-held-on-proposed-digital-download-tax [wfsb.com]