Consumers at risk because of fragmented digital taxes
Whether watching the latest Oscar-nominee from the palm of your hand or feeding your Angry Birds addiction during the morning commute (for those non-drivers out there!), digital applications, also known as digital goods, have become an integral part of daily life and entertainment. Besides movies, games, and music, digital goods have expanded into nearly every market to enhance one’s quality of life – from receiving community safety updates, newspaper subscriptions, and even filing taxes.
Furthermore, access to applications and broadband services transcends the material to promote social equality and progression. At the Minority Media and Telecommunication Council’s 2012 Broadband and Social Justice Summit, Louisiana State Senator Sharon Weston asserted how digital goods and other broadband services empower marginalized groups with the educational tools to better their lives. Moreover, digital goods are the new normal for convenience and necessity in American society. However, the tax structure does not reflect the technological and consumer reality of this market.
Depending on state residence and digital good product purchase, some consumers could pay duplicative taxes on their digital goods. There are political efforts in both local and Federal legislatures that are addressing this issue. While many states do not tax digital goods, other states such as Maryland and Florida are moving forward with designing proposals to tax digital goods. Before these states act, a federal framework is imperative to protect consumers from multiple states taxing the same transactions. With federal guidelines questions over taxation can be clarified to ensure fairness for every American consumer of digital goods. We hope Congress passes the Digital Goods and Services Fairness Act of 2011 (S. 971 / H.R. 1860), which would establish just such a framework in order to protect consumers in every state.