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NYC Prposes the Dreaded Digital Tax

In these trying economic times, businesses and government entities alike are pinching every penny while seeking as many revenue growing opportunities as possible.  In an effort to get a handle on his states economy, Governor David Paterson of New York has proposed a new budget that would include taxes on several different types of downloaded media, including music, movies and games.

While the popular street name for the move is the "iPod tax", the official name is the "Close Digital Property Taxation Loophole". The initiative plans to "Imposes state and local sales tax on purchases of prewritten software, digital audio, audio-visual and text files, digital photographs, games, and other electronically delivered entertainment services." This tax would likely affect the sales of downloadable content for video games, meaning New York residents may have to throw down some extra cash when getting the latest Rock Band tracks.

Other new taxes for the Empire State would affect movie tickets, taxi rides, soda, beer, wine, cigars and massages. It also extends sales taxes to cable and satellite TV services and removes the tax exemption for clothes costing less than $110. So, if you have virtually any vice known to man short of illegal narcotics, New York is looking to rain on your parade.

Taxes aside, Paterson and his $121 billion proposed budget are also looking to cut school aid by over 3%, fire over 500 state workers, shut down seven state agencies, and $3.5 billion in health care costs.

While these taxes won't affect anyone outside of New York, the proposed tax on downloadable content could set a dangerous precedent, allowing for other states to implement similar taxes. However, New York City mayor Michael Bloomberg is not a fan of the budget, claiming it could cost the city nearly $1 billion dollars total. Furthermore, many state conservatives believe that the new taxes would drive many New Yorkers to shop in New Jersey, where things like gas, spirits and soda have much lower taxes.

While many don't support new taxes, ever, it is important to keep the economy in mind. "This is where we are," Paterson told reporters. "Maybe we should have thought about this when we were depending on what we thought was inexhaustive collections of taxes from Wall Street -- and now those taxes have fallen off a cliff."