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Tuesday, July 27, 2010

Past time for California to address digital consumption

Recently, Amazon announced that in the past three months, it sold 143 Kindle (digital) books for every 100 hardcover books that it sold (7/19/10 press release). Amazon says it also has over 640,000 books available for the Kindle with 80% priced at $9.99 or less. Also, sales for January through June 2010 are three times higher than for the same period last year.

For Californians buying digital books, the deal is even better because California doesn't apply its sales tax on digital goods even though they are personal consumption and the equivalent of buying a tangible book. California is way behind the times on this. What is the point of having a sales tax on consumption if you are going to exclude a modern, growing form of consumption - digital goods. Several states have modernized their sales tax - why not California?

Some say doing so will harm the sale of digital goods, but that is bogus. Note that the Kindle books are less expensive than the tangible. Also, when Apple increased the price of some iTunes downloads from 99 cents to $1.29 - they still sell them!

I've been writing about this for years (as have others). The longer the California legislators wait, the harder it will be to sell this one. AND, it is important that when they broaden the tax base to include digital PERSONAL consumption (not business consumption), they should lower the rate!

What do you think?

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