Proposed New York 'iPod Tax' - Could include Videogame DLC

[Deejay]

Proposed New York 'iPod Tax' Could Include Videogame DLC
New taxing on "digitally delivered entertainment services" to help close NY budget gap.

Are you a fan of downloadable games and digitally distributed add-ons to your retail products? Is one of your primary reasons for enjoying them the cheap price? Sorry to say it, but if you live in New York state, that cost could be climbing in 2009.

GamePolitics has done the legwork in digging through a proposed 2009 budget plan for New York covered in this article by the New York Daily News. Specifically, the proposal by governor David Paterson seeks to fix a $15.4 billion budget gap through over 80 new fees and taxes, including what's being called the "iPod tax." As the title suggest, this budget would add taxes to music downloads, but it would also tax "digitally delivered entertainment services," a term vague enough to likely include downloadable games and downloadable content.

GamePolitics pulls a quote straight from Paterson's budget document:

"Imposes state and local sales tax on purchases of prewritten software, digital audio, audio-visual and text files, digital photographs, games, and other electronically delivered entertainment services to achieve tax parity. For example, with the passage of this bill, a book, song, album, or movie would be subject to sales tax no matter if it was bought at a brick and mortar store or downloaded online."

Paterson's budget is currently only in a proposal state and is not completely passed yet. That said, if it does pass, we have to wonder exactly how videogame DLC will be taxed and for how much. Since a lot of DLC is negligible microtransactions already, it will be interesting to see how exactly the taxes for these purchases add up.

Thoughts? Opinions?

It's only a matter of time before the federal government hops onto this plan. I could imagine their mouths salivating when they see the amount of digitally distributed games, expansions, point cards, etc etc that are bought on a daily basis. I personally think it's kind of gay to levy taxes intangible data, but that's just my take.

Edit: Fixed link. Also added link to the Daily News Article

[Correction]

this would murder the netflix instant download pass, if you had to pay a tax every time you streamed a movie it'd stop being worth it versus simply ripping the discs you get in the mail.

[Maxxthepenguin]

It's just sales tax, done online. I don't think there's any problem with it.

[MrW]

Taxing intangible goods lol. They must be running out of things to tax. They can't think of anything better to tax more? Say ciggarettes, guns or alcohol? Although I can understand why they would.

[Deejay]

It's just sales tax, done online. I don't think there's any problem with it.

But with the government imposing a tax on downloadable data, wouldn't it require that all DLC be passed and rated by the ESRB before release? I'm pretty sure that all or most DLC don't follow the same regulations as in store releases. However, I could be completely wrong on this, so feel free to correct me.

[archibaldcrane]

this would murder the netflix instant download pass, if you had to pay a tax every time you streamed a movie it'd stop being worth it versus simply ripping the discs you get in the mail.

It's just applying state and local sales taxes to downloadables. Since you don't pay per download with netflix, it would have no effect at all.

I don't really see a problem with taxing this type of stuff, there's like 29 states with budget deficits right now.

[Wintermute]

Wonder what the NY govt. is gonna do will all those MS points from Live!

[Maxxthepenguin]

But with the government imposing a tax on downloadable data, wouldn't it require that all DLC be passed and rated by the ESRB before release? I'm pretty sure that all or most DLC don't follow the same regulations as in store releases. I could be completely wrong on this, so feel free to correct me.

ESRB has nothing to do with the government, it's a the video game industry regulating the video game industry. It has gotten government support, but that doesn't mean the government controls it. But in any case, DLC doesn't usually get checked out by the ESRB afaik.


I'm actually pretty sure Ohio does this already. I think I've gotten taxed on digital downloads before.

[Quixon]

I wonder is this would include things like Downloads for Nintendo Virtual Console.

You technically aren't directly paying for the games on there, you're using Points. Could they consider the VC Points as being a form of entertainment, and just tax you on those instead?

[archibaldcrane]

Possibly, or Nintendo has foresight and a sweet loophole that you might see a ton of in the future.

[Qalbert]

yeah but the people who buy point cards would then end up being taxed twice which is pretty unfair

[Norellicus]

It's just applying state and local sales taxes to downloadables. Since you don't pay per download with netflix, it would have no effect at all.

I don't really see a problem with taxing this type of stuff, there's like 29 states with budget deficits right now.

So since the states can't manage their money they get to tax goods that have no impact on your status as a citizen?

Taxes on gasoline and vehicle ownership go to transportation costs, which enables maintenance and developments of roads so you can drive around...taxes on retail keep the internals of the local economy going, which enables the business(es) that you use to continue running...income taxes cover your personal welfare, through unemployment and other such programs...so what exactly is the justification of forcing me to pay out to the local authority to download 20mb from the intertubes? What impact does that 20mb have to the local region that makes a tax necessary, and where exactly do I see that money coming back to me? You already pay taxes/fees on your ISP, so it's not for usage of the data infrastructure.

[MisterBob]

Nah, they'll tax the point purchases.

[archibaldcrane]

So since the states can't manage their money they get to tax goods that have no impact on your status as a citizen?

blah blah blah

Your downloading of games or music from the intertubes circumvents having to support local brick-and-mortar businesses in the community that you would have to pay local and state taxes to. They're just preventing the circumvention.

[Norellicus]

Fair enough, I didn't consider the by-proxy effect on lack of business to the B&M.

[Qalbert]

Yeah because indie developers certainly don't have to pay more to physically print and distribute their content.

[TheShadyMan]

When you buy Microsoft points from a retail store, you pay tax on them don't you? If so, it would make sense to tax them if you buy them online direct to your account.

[Charismatic]

Glad I don't pay for anything anyway

[Correction]

Your downloading of games or music from the intertubes circumvents having to support local brick-and-mortar businesses in the community that you would have to pay local and state taxes to. They're just preventing the circumvention.

So state taxes are a protectionist anti-consumer tariff now? Awesome! Let's help out that poor, suffering GameStop.

[Qalbert]

taxing the points themselves is fine, but to tax the virtual items creates double taxing among other issues