Lots of states and localities that are struggling to pay for public services won’t collect any revenue from this year’s many holiday-related sales of digital goods and services — movies, books, games, software, and so on. Although every state with a sales tax levies it on these products when they’re sold in physical form in stores, about half of them haven’t updated their laws to tax these same products when they’re downloaded over the Internet. There are several reasons why they should do so, as my new paper explains:
Why do those taxes matter? Well, keep in mind that the holiday packages you receive traveled to your door on roads built and maintained with state and local taxes. And if your daughter is able to read Harry Potter on her new Kindle, chances are that a public school teacher taught her how. So let’s not deprive state and local services like roads and schools the few added dollars per purchase that taxing digital downloads would give them.