Why the "iTunes Tax" is Bad for you Pocketbook, the Environment and Independent Musicians

New York Governor David Paterson's proposed state budget "hits New Yorkers in their iPods - and nickels-and-dimes them in lots of other places, too" says the New York Daily News.

Trying to close a $15.4 billion budget gap, Paterson called for 88 new fees and a host of other taxes, including an "iPod tax" that taxes the sale of downloaded music and other "digitally delivered entertainment services."

While we sympathize with the tough road ahead that the governor faces in trying to balance a budget in the teeth of a generation's worst recession, there are so many things wrong with the download tax.

First, as Mike Masnick points out, there is no functional reason for this...

...other than the fact that the state desperately needs money, and so it's trying to add taxes to just about anything it can find. Of course, back in the old days, the point of a sales tax like that was to contribute to gov't-funded infrastructure (roads and such) that allowed folks to go and buy something. There's no such rationale for taxing internet downloads. It's a blatant money grab and Paterson seems to have no problem admitting that.

Internet issue advocacy group NetChoice weighs in on how, in an era where tax policy should be encouraging energy efficiency and carbon impact, this tax does the opposite:

...why in the world would NY impose a new tax on something we all want to encourage right now? Digital downloads of music, movies, and books have no carbon footprint and use none of the oil consumed with a round-trip to the store. Moreover, there’s no plastic and paper packaging to create and crate off to a landfill. We've blogged on the environmental benefits of downloading here.

NetChoice also raises an issue that most other coverage has ignored to date: Namely, "the budget proposes expanding and asserting the concept of "nexus" to cover out-of-state sellers that use an online network of affiliates."

This will:

"also extend the long hand of government to the long tail of online commerce. Who'll be hurt? Small, independent artists that have websites to sell their own creative works. If a NY-based author or musician adds a link to her webpage saying ‘buy my book/music now on Amazon.com’, she’d be creating a new tax collection burden for Amazon--on everything Amazon sells to anyone in NY State. Amazon’s not going to sit still for that, and they might just stop their affiliate program for NY-based suppliers, authors, and musicians. "

So, let's say that your emerging band isn't AC/DC and you can't get an exclusive deal with Wal-Mart to sell your music. You go directly to your fans on the Web and hope that they choose to pay for your music instead of pirating it. This tax would both create an additional cost that will never get into the hands of the struggling artist, and it might minimize the breadth of online channels that NY artists have to sell their work on the Internet.

Comments

[Lisa Marie]

Digital downloads of music, movies, and books have no carbon footprint and use none of the oil consumed with a round-trip to the store. Moreover, there’s no plastic and paper packaging to create and crate off to a landfill. We've blogged on the environmental benefits of downloading here.