Digital downloads have so far escaped the greedy gimme more myopic vision of our politicians. But no longer. Nine states in the US considered taxing digital downloads and five of those already passed them into law. Massachusetts, Wyoming, and Washington are amongst those who have already passed such laws.

Of course states are only allowed to tax businesses that have a physical presence within their borders, but the law could be changed soon. This is the reason that CDs are taxed heavinly but downloads from iTunes are not. Its not that the states like you to download from the internet, its just that the laws were written long before the proliferation of the net.

Changes in law are to be expected considering that over 30% of the music revenues in the United States are digital and this ratio is only growing. Retail e-commerce sales are now estimated to exceed $130 billion a year.

A good counter-argument on not levying taxes is that its probably the greenest way of purchasing music. It involves no packaging, transportation or production which would necessarily have a carbon footprint.

Cnet has an excellent report compiled on this subject.

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