More states join iTunes tax debate

From CNET News.com: A growing number of states are considering taxing songs from iTunes to relieve their strained budgets, though at least one state may buck the trend in the hopes of appearing more tech-friendly.

A state legislator in North Dakota last week introduced a bill to explicitly exempt digital goods such as digital music or movies, digital books, or ringtones from the state's sales tax and use tax. A hearing on the bill is scheduled for next week.

At least 17 states currently collect taxes on digital goods, and a handful more may join them. A bill was introduced last week in the Mississippi state legislature to impose taxes on digital goods, and lawmakers in North Carolina are considering a digital goods tax as well. New York Gov. David Paterson has proposed the tax in his state, and legislators in states like California and Wisconsin may take up the issue again this year despite a lack of support for it in the past.

The extra revenues that could be gained from taxing digital downloads may be appealing to state lawmakers, but Stephen Kranz, an attorney at Sutherland law firm who represents members of the digital media industry, called digital download taxes "a short-sighted approach to digital tax policy."

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