Attention all you (legal) music downloaders out there: Very soon the songs you purchase from iTunes could help pave the roads you drive on, pay for an artistic fellowship or buy books for kids in the school around the corner. Because in a number of states, budget proposals are targeting digital downloads, looking to make them taxable items, and therefore subject to state sales tax.

In New Jersey, Governor Richard J. Codey has called for an amendment to the state's sales-tax laws that makes downloads — including songs, movies and books — taxable items and subject to the Garden State's 6 percent sales tax. So in the future, every 99-cent song purchase from iTunes could now cost you $1.05.

Codey hopes the move will "level the playing field" for record stores in New Jersey that have to charge a sales tax for each CD sold, as opposed to digital music stores, which do not.

At least 16 states currently apply sales tax to digital downloads: Alabama, Arizona, Colorado, Connecticut, Hawaii, Idaho, Indiana, Louisiana, Maine, New Mexico, North Dakota, South Dakota, Tennessee, Texas, Utah and Washington. According to New Jersey Treasury Department spokesperson Tom Vincz, as technology continues to outpace tax laws, more and more states will soon be added to that list.

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Posted by Lawren at June 24, 2005 07:31 AM

You Said

As far as I know all iTunes downloads in the U.S. are already charged sales tax based on the state of residence.

Says: M@ at June 24, 2005 08:31 AM

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I better load up then, since I've got one week left in NY where it's tax-free on iTunes!!! Guess that makes up for the 8.5% or whatever the hell it is out here ...

Says: Iceman at June 24, 2005 10:22 AM

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