Taxing our tunes

One of the constants in life has struck again. No, not death -- the other one. No, not IU losing at football -- the other, other one. You know: Taxes!\nLast week, a study by CNETNews.com revealed that 15 states (and Washington, D.C.) have laws requiring sales tax on downloads from online music stores, such as Apple's iTunes. \nAnd, lucky us, Indiana's among them.\nAccording to a bulletin on sales tax published in May 2002, Indiana considers music downloads to be a form of software -- specifically, pre-written or "canned" programs -- and has stated: "Pre-written programs, not specifically designed for one purchaser, developed by the seller for sale or lease on the general market in the form of tangible personal property and sold or leased in the form of tangible personal property are subject to tax ... Pre-written or canned computer programs are taxable because the intellectual property contained in the canned program is no different than the intellectual property in a videotape or a textbook."\nThis news took awhile to reach the editorial board, seeing as we're currently driving herd across the Argentinian pampas -- but our response was swift and decisive: We're against paying taxes on downloads.\nThere is, of course, the economics 101 argument -- the fact that taxes generally divert funds from efficient use in the market (where resources are allocated according to the rational decision-making of many buyers and sellers) to less-efficient use by a hierarchical state bureaucracy (where they are allocated according to some guy who probably thinks Nickleback "kicks ass"). But the problems for music downloads go even further.\nWhile the International Federation of the Phonographic \nIndustry reports that digital music sales tripled in 2005 to $1.1 billion -- thus, making it a tempting target for tax-hungry state entities -- the industry is still only just becoming successful. Legal music downloads remain dwarfed by the number of pirated downloads, which continues to grow despite the major labels' tendency to sling lawsuits like Mardi Gras beads. And album sales for the major labels dropped 7.2 percent in 2005 -- with the success of digital music being a bright spot in an otherwise bleak year. All this makes one wonder, then, if the state of Indiana might think the best time to tax agriculture is during a drought.\nHowever, there's also the burden on the consumer. We are already taxed when we buy our computers, when we buy our mp3 players and (every month) when we pay for our broadband Internet access. Do we seriously need another tax on top of all this? Especially when the state's claim to a share of this transaction -- that occurs entirely via privately owned cable lines and electricity -- seems so spurious?\nMaybe we'd be happier if we felt the tax revenues would actually go to programs that benefit us. But then, again, the state keeps slashing the education budget.