Interested in the subject, and still sorely missing the old Watch This Post function.

While I am not a big fan of paying more for anything, Taxing digital purchases diffinatly makes sense.

Whenever I bought anything online  for the past 3 years there used to be no tax on it, and now they are starting to tax internet transactions which I think is bullocks.  The shipping cost to me was like the tax in which I was okay with because the mail man needs money too; but it is absurd for the government to try and get taxes on everything.

I really would like to see Brad's feelings on this.  It won't change my mind, but I'd be interested.

The main hypocritical reason it won't change my mind as I'd get taxed on it.

Heh, I'd try to find away around it. Have a bank account in WY and pay through a proxy?

WA state residents already pay taxes on Steam since Valve is located there.

The sales tax is a point of sale tax.  You are not buying something in your home state, it's dishonesty to tax them.  The sales tax from the retailers point of origin on the other hand is an entirely logical addition to the price.  That's not happening because they're terrified of taxing locally.  When your tax base can theoretically do business from space, you have to treat them fair or they'll use that near limitless mobility and leave your ass holding the bag.

They want to save the traditional retail chains because half of them aren't going to be around ten years from now, but they don't want to tell the public that in return for them, a billion dollar a year industry moved to state x and said fuck you in return.

To avoid the idiotic argument, no, I don't think retail is disappearing, I think half the chains are disappearing.  As in too many stores and not enough shoppers to fill them outside of black friday.

In canada, especially in Quebec we are taxed when we sneeze so we are use to it. Welcome to the club.

If you make more then 50K a year you pay the the crown 52% in imcometaxes. The you have the federal taxes and then you pay the provincial taxes on anything you buy.

So when I buy a game say 40$ you have to add 14% in taxes. It's like that for everything here. Online purchases as well.

I used to live in Ottawa, so I can definitely relate   That being said, Canada has many, many perks as well.  I may not want your taxes but my medical bills wouldn't be too desirable to you either!  That's another subject entirely, though, I just wanted to give a shout-out to a Quebecois

the health care is not free. you are paying for someone else to use it while you are healthy and if you go through life without using it you would be waisting your money

This is true. However it is not run by one company or body like socialized health care.  Also, if our markest were more free then  the compition between the companies would also help with any sort of cost etc.  Moreover, the main problem with insurance companies is that pact that they are pubicly owned with stocks etc. and according to law the only concer to them is to turn a profit for their investors, thus pushing people who really need the help out beforethey really get it. A truely preivate insurance system without public ownership would be prefered. 

Another thing that the healthcare in America has done has forced us to be more preventive in our personal health concerns so that we do not need to spend the money that we have earned.  This creates a system where we can end up healthier in the longrun because of money which is what it all runs down to.

First of all, there has to be some sense of objectivity when discussing this. It goes without saying that the consumers who gain an unfair advantage by using these services would like them to be kept that way (at least that would be the initial response from most).

Since this community is based around software and games, I will keep to those and stay away from digital music downloads.

I sincerely enjoy the term "international protectionism". Normally the infant industry argument is applied on a nation- or region-level. However, for two main reasons taxing digital goods will be difficult: firstly, as noted above, an uneven legislated taxation will simply "push around" the affected companies, and the different legislators will end up competing with each other. While this may not necessarily be a bad thing, it does mean that the development of an international tax level will be significantly slowed unless action is taken on an international level. And secondly, taxing digital goods is hard because it doesn't pass customs (you can't easily measure it) and the VAT is usually charged based on the location of the buyer, not the seller. The international protectionism is enforced on an international level, and anyone who wishes to change that without the consent of everyone else in the world, will in fact end up losing in the long run (at least theoretically) as companies adapt to the local taxation higher than their near and far neighbours.

Producers are taking this into their own hand, and going over the head of the retailers. Impulse and EA are perfect examples of this. They sell through normal stores, but also present the digital goods on their own. Where the producer does not make a digital version available, subretailers take the matter into their own hand and sell cdkeys on the internet(s). Thus, whether or not producers choose to sell digital versions, they are available on the market. Taxing digital goods will hit every producer. The question here is who of the suppliers it will affect, because that is where the unfair advantage lies. Right now, the taxation system favors digital goods. Anyone who supplies digital goods will therefore be hit (this is obvious) while physical retailers will only be hit indirectly as turnover for producers decrease (physical retailers would still benefit overall due to rules of substitution - at least, that is the logical conclusion). Of course they are not always separate, for example GAME (game.co.uk + local versions) supply both digital and physical sales, but it would still apply to internal divisions).

Does the infant industry argument apply to digital goods? This is the fundamental question that has to be answered. If the argument applies, the taxation should not be placed. If it doesn't apply, then the taxation should be placed (although it may not be beneficial to individual regions). My conclusion is that the argument no longer applies. This is based on three pieces of vital information.

1) New titles are consistently sold digitally, it is no longer a fringe supplier industry. As noted above, almost every game can now be bought digitally.

2) The digital supplier industry is seeing consistant and large increase in sales and customers, both in relative and absolute terms. We all remember Steams announcement that they had reached 15 million users. If my memory does not fail me, frogboy commented on these forums that we (the forum users) seriously underestimated their sales through impulse.

3) Digital goods are now being sold by traditional online stores who used to deal primarily with taking orders through their sites and then sending the physical package by snail mail. Amazon is a prime example of that.

These 3 things put togheter means that the movement towards serving digital goods is happening where it hasn't happened already. Frankly, the infant industry argument cannot possibly apply any longer, when major suppliers such as EA and Amazon are seriously involved, and suppliers who specialize in digital goods have been proven profitable. Furthermore, the market is growing, and while taxation will certainly hamper the growth, it is a fair assumption that it will continue to grow or at least certainly not shrink.

Edit: It should be noted that taxation has already started happening on digital goods. North Carolina is by no definition "first".

VAT is bad.  Hidden tax systems are what let congress spend money like crazy.  When you can't see how much the thieves are stealing from you to build roads through their undeveloped real estate, it doesn't bother you as much.  That will lead to even more complacency than we have now.  It also hoses certain types of industry in a cataclysmic way.  When you're selling items with huge work related costs and minimal resource related costs, you're fucked.