Maryland's Governor O'Malley is Right: Digital Downloads Don't Need a Special Tax Break


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Governor Martin O’Malley’s budget has been circulating for a few days, and it seems people are just now turning their attention to one of its smaller tax changes, that is, the Governor’s proposal to end the tax exemption for digital downloads of things like software, songs and magazines.

Maryland’s House Minority Leader had some predictably harsh words for O’Malley after learning of the proposal, but it’s hard to argue that the state should be taxing books and CD’s bought from Maryland retailers, while not taxing digital versions of the exact same products purchased over the Internet.  Viewed in that light, it’s more than a little confusing why the House Minority Leader apparently views this proposal as some kind of revenue grab.  If it’s reasonable for Maryland’s sales tax to apply to all the books, CD’s and other similar products purchased within the state’s borders, the governor’s proposal is also reasonable.  The fact is, this change would simply update the state’s sales tax code to take account of the changing ways in which Marylanders are doing their shopping.

Just as taxing services and online sales is the right response to a changing consumer marketplace, so is a tax on digital downloads.

Photo of of Governor Martin O'Malley via Chesapeake Bay Program Creative Commons Attribution License 2.0

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