The tax man wants a piece of your tunes. Facing a sadly common budget shortfall, New York is now the latest state to consider a tax on digital downloads.
Gov. David Paterson is proposing dozens of new fees and taxes, according to yesterday's New York Daily News, including an "iPod tax" that would apply to Apple's
The potential tax isn't just bad news for Apple. Amazon.com
An "iPod tax" could also set back the legal downloading movement. Digital purchases and streaming music-subscription services like Napster and RealNetworks'
The only potential winner here may be Netflix
New York is not the first state to propose a digital delivery tax. However, at a time when nascent digital-delivery industries are just starting to catch on, making online offerings slightly more expensive won't broaden their popularity. If anything, it may turn people toward black-hat alternatives, or force companies to resort to ad-supported free models that skirt the state tax rolls altogether.
The future is coming. Unfortunately for downloaders, it seems the tax man's already gotten there.
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Longtime Fool contributor Rick Munarriz lives in the somewhat tax-friendly state of Florida. He does not own shares in any of the companies mentioned here. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool's disclosure policy is thinking of The Beatles, for some reason.