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NTU Urges Congress to Pass Bill to Protect Consumers from Predatory Download Taxes

by Clark Packard / /

The Honorable Congressman Kevin McCarthy
Majority Leader, United States House of Representatives
2421 Rayburn House Office Building
Washington, DC 20515

The Honorable Congressman Steve Scalise
Majority Whip, United States House of Representatives
2338 Rayburn HOB
Washington, DC 20515

The Honorable Congressman Bob Goodlatte
Chairman, House Judiciary Committee
2309 Rayburn HOB
Washington, D.C. 20515

Dear Leader McCarthy, Whip Scalise, and Chairman Goodlatte,

On behalf of National Taxpayers Union (NTU), I write to urge your support in passing the Digital Goods and Services Tax Fairness Act, H.R. 1643, sponsored by Congressman Lamar Smith (R-TX). This strong, bipartisan bill would provide much-needed clarity and sensible limits for the taxation of digital goods.

The dizzying rise of music and video downloads, mobile device apps, streaming services, and other digital products has been viewed by some state and local tax officials as merely an opportunity to collect additional revenues. Given that consumers can now be charged taxes from several jurisdictions on the same purchase (e.g., from the state where the seller’s server is located, from the state where the customer’s phone bill is sent, from the location where the consumer downloads the item), Congress should establish boundaries for these practices. H.R. 1643 prudently prevents states from piling on repetitive download taxes, and requires an affirmative act by a state (as opposed to an administrative edict) in order to tax digital goods. Simply put, this legislation protects consumers from unreasonable and duplicative taxes on digital goods and services.

With ravenous spending appetites, state and local taxing jurisdictions will continue to add complicated layers of taxation onto the sale of digital goods and services. This will act as a roadblock to the growth of the 21st century digital economy. Thankfully, lawmakers can prohibit this growth-killing trend from continuing by passing H.R. 1643. It is both reasonable and feasible for Congress to do so in the remaining weeks of this session.  

Sincerely,

Clark Packard
Counsel and Government Affairs Manager