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North Carolina wants a piece of digital sales

Most consumers would agree that they are taxed enough. Those who happen to live in a state that has a state income tax are taxed even higher than some consumers in America are. One of the few respites from sales tax has long been online purchases through companies who don’t have a physical presence in the state the consumer lives in.

Massive online retailers like and Apple, owner of iTunes, have spent a considerable amount of time and money fighting attempts by various states to tax digital sales. New York State passed a law that forced Amazon to add sales tax to orders for consumers in the state. Amazon filed suit against the state on the grounds that it had no physical presence in New York State, a concept called "nexus" which previously had protected online firms against such taxation. However, Amazon ultimately lost the suit because New York State was able to prove that by soliciting affiliates in the state it was effectively doing business there.  In losing, a legal precedent was set which promised to potentially undo nexus protections for online retailers across the country.

Apple's iTunes store has also drawn the eyes of lawmakers in various states looking to add tax revenue to their state coffers, inspired by recent successes. New York State was again at the forefront of the case when it tried in December of 2008 to force Apple to collect sales tax on digital sales from iTunes.

Other states are looking at the success New York State has had with getting money from digital sales and want a piece of the action. A legislative commission in North Carolina is looking at methods that could be used to tax digital downloads from sources like Amazon and iTunes.

The committee is attempting to "modernize" the North Carolina tax code, which was written long before the advent of digital sales.

Rep. Paul Luebke describes, "We used to think of everything in terms of being tangible. Nobody thought of how you could possibly download anything."

At this point, taxing digital downloads is still nothing more than a proposal and is far from becoming law. However, changes proposed by the general assembly could affect how tax laws in North Carolina are written in the future.

Luebke continues, "So if you buy a book in a bookstore, you're going to have to pay sales tax on it," Luebke said. "If you're downloading a book from a book seller, you should have to pay sales tax on that as well."

According to research taxing digital sales of music, books, movies, and software could add about $12 million to state tax revenues over the next fiscal year. That is a temptation that the state isn’t likely to pass up, considering that North Carolina is faced with a $2 billion shortfall in its budget.

CEO of the North Carolina Technology Association Brooks Railford disagrees with the proposed digital sales tax. Mr. Railford states, "We would be concerned about any kind of new taxes in this economy. The consumer is already very highly taxed, the economy is stretched. All we're asking is that those considerations be taken carefully and that the industry be asked for their input as the legislation is finalized."

One of Railford's major concerns is the impact on sales of digital good to the companies who sell them. The lack of sales tax online is often one of the key reasons consumers buy online rather than in a retail store. Adding sales tax could have a major detrimental effect on online retailers.

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RE: Hey, North Carolina...
By crafty on 1/29/2009 4:02:40 PM , Rating: 2
Norway has a massive budget surplus, healthcare and housing for all of its people. Their government's problem right now is that they have too much money and they don't know what to do with it.

The northern European countries come out on top on most major indexes of livability and they are all socialist economies. I'm not saying that socialism is the way to go, but capitalism is probably the most overrated and destructive economic ideology in human history. That doesn't mean some achievements that came out of it weren't objectively good, though their cost was very high in lives and human misery.

Through deregulation and a dismantling of the New Deal, Republicans ca. 1980-present have been attempting to turn back the clock to America as it existed economically in the late 19th century. I am telling you now that people are not willing to live in those conditions again with homeless orphaned children wandering the streets of our cities and open sewage in the tenements. Go to the slums of some third world country and see how Americans used to live. Go to the factories in China and see how Americans used to work.

We are not going to turn back into slaves that live in slums. Sorry, but if rich people try to force that down our throats their heads are going to end up on pikes. All the so-called libertarians on this board, whose association with liberty ends with their endorsement of corporate power, should wake up and find their self-interest isn't in allowing the rich and the wealthy to control our destiny.

RE: Hey, North Carolina...
By supergarr on 2/2/2009 5:43:54 AM , Rating: 2
Norway... the bottom bracket of income taxes is at 28%. They have a wealth tax (a tax on all of your assets) as well as this income tax, which goes up percentage wise as you go up the brackets. There is also an addtional 7% in social security tax. The wealth tax is anywhere from 0 to 1% and their sales tax is a whopping 25% tacked on all goods and services including imports!

These reason they have a surplus, is because they rape the wallets of their people.

And china is communist, what do you expect.

“Then they pop up and say ‘Hello, surprise! Give us your money or we will shut you down!' Screw them. Seriously, screw them. You can quote me on that.” -- Newegg Chief Legal Officer Lee Cheng referencing patent trolls

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