Doyle wants to tax downloads in WI

According to the Milwaukee Journal-Sentinal, Gov. Doyle wants to put a 5% tax on downloaded material like music, books, and art.

A little-noticed provision of the Democratic governor's proposed state budget would extend the sales tax to those Internet transactions...

It's a matter of equity, said state Revenue Secretary Mike Morgan, defending Doyle's goal of having consumers voluntarily pay the sales tax on "intangible" items they buy and download from the Internet. Buyers would have to pay the 5% sales tax if they purchased those items at any Wisconsin store.

The oddest part about this is that the whole system would be voluntary. The article said that there would be no way to enforce this, it would be entirely on the honor system. Considering that I (and many other people) don't pay for downloads now, this is probably a poor way to spur Internet-based commerce in WI.

Wisconsin taxpayers are supposed to estimate what sales tax they owe on Internet and mail-order purchases, and voluntarily pay it when they file their income taxes. Compliance is "very low," Morgan conceded.

The songs on i-Tunes are already a little overpriced at $.99, I'm not going to pay the extra cash or take the extra effort to pay an additional tax.

This move makes it appear as though Doyle is against e-commerce and is attempting to tax the citizens of his state when no similar plans exist anywhere else in the country, except in South Dakota.

Wisconsin taxpayers are supposed to estimate what sales tax they owe on Internet and mail-order purchases, and voluntarily pay it when they file their income taxes. Compliance is "very low," Morgan conceded.

So what's the point? The state's budget is $53 billion and the this tax is only estimated to bring in $1.9 million. It waould make essentially no impact on the state budget, but give Republicans fuel to criticize Doyle for hurting business in WI. A bad idea financially and politically.

Also, just in terms of what's being taxed, state Revenue Secretary Mike Morgan's defense is: "Buyers would have to pay the 5% sales tax if they purchased those items at any Wisconsin store" No quite true though. If I'm buying songs from a store, I'm buying a plastic cd that holds them. If I buy a book, I'm getting a book, etc. There are material goods being taxed in these cases, wheras the internet tax applies to "intangibles". This may be something that eventually needs to be taken into account as more goods are bought on the internet, but it would have to be accompanied by some sort of enforcement mechanism, such as the tax being included in the price of the item.

I found it interesting that the J/S interviewed students in the Capitol doing the hunger strike for lower tuition about the tax. They were probably there anyway and wanted a student opinion, but it's cool that the strike got mentioned (it was actually the whole last paragraph of the article).

original article on arstechnica.com