Proposed New York State Budget Would Tax DLC

If you live in the state of New York, you could find yourself paying sales tax on downloadable content (DLC) for video games, beginning in 2009.

That’s because, much like the private sector, state and local governments have been hit hard by the current recession. In New York, Gov. David Paterson (D) has responded by proposing a budget that calls for layoffs, service cutbacks and new taxes, including one that will likely add to the cost of your DLC on Xbox 360, PS3, Wii or PC.

The New York Daily News has coverage of Paterson’s budget plan:

Gov. Paterson’s proposed $121 billion budget hits New Yorkers in their iPods – and nickels-and-dimes them in lots of other places, too.

Trying to close a $15.4 billion budget gap, Paterson called for 88 new fees and a host of other taxes, including an "iPod tax" that taxes the sale of downloaded music and other "digitally delivered entertainment services."

Indeed, a review of the budget document reveals the details of Paterson’s plan to tax all forms of digitally-delivered content:

Close Digital Property Taxation Loophole. Imposes state and local sales tax on purchases of prewritten software, digital audio, audio-visual and text files, digital photographs, games, and other electronically delivered entertainment services to achieve tax parity. For example, with the passage of this bill, a book, song, album, or movie would be subject to sales tax no matter if it was bought at a brick and mortar store or downloaded online.

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  1. Bigman-K says:

    It’s shit like this that would make me vote Libertarian from now on even if i disagree with alot of their fiscal/economic beliefs. I don’t have a problem with taxes as they’re obviously needed but cutting social services as well as raising taxes at the same time is rediculous. Also sin taxes piss me the hell off.

     "No law means no law" – Supreme Court Justice Hugo Black on the First Amendment

  2. deadlance says:

    Perhaps I’m burning some unbuilt bridges here, perhaps I’m starting a new movement…

    This whole taxing digital crap is too much. We already pay to many taxes for too much crap. We have a HUGE budget problem here in the USA…. and now we’re coining more money and going in MORE debt just to try and get ourselves out of debt… it’s bull.

    If we REALLY want to fix the budget problem, I have a few solutions to propose. I don’t care if you like them, they are just opinions, but I think they’d work pretty well.

    Idea 1 – I’m not sure what politicians actually make, but I know its a lot more than they should. Why do we pay our politicians so much money for them to decide what we can do with OUR money. How about this – Politicians – ie: Senators, House of Representatives – in order to /force/ them to better represent the people they are supposed to be representing… should only make per year the average income for their state. That average should take into account everyone from the age of 16 to the age of social security (not whether they can draw from it or not, but the actual age where everyone gets to start drawing from it) including those people unemployed for ANY REASON. If you are 16, you should probably have a job. If you arent old enough to draw social security, you should probably have a job. Therefore, you would count against or for the system. This would force politicians into helping out the state / country. Polician wants more pay? Help lower unemployment rate. Want more pay? lower the age of social security so that all of us still paying into it, might reach that age someday and get to utilize that money. Perhaps whatever politicians worked for the state that Bill Gates lives in… well, thats where we do the croping. top 2% of the states highest earning individuals and bottom 2% of the states lowest earning indiviuals just dont count. That helps keep it a little more even.

    Idea 2 – Screw people in prison. They are in prison as a punishment, not for free food and education. I read that it costs about 3.5 million dollars a year to keep a medium security inmate in jail, per year. That’s a lot of tax dollars IMO. How about we put inmates in a 10 foot by 10 foot room, slide them in a bowl of water and a bowl of rice two times a day, and let them serve out their punishment ACTUALLY being punished. They shouldnt get free time in the yard to play basketball. They shouldnt eat better than I do, or get to watch TV, or have visits from friends or family. They should sit and think about what they did, why they did it, or die. They had their choice, they did the crime anyway. We’re too humanitarian, not saying its always bad, but in this case it is. A vast majority of times when someone goes to jail and does their time and goes free, they do some if not the same crime yet again.

    Stop trying to tax the average hard working american citizen, and think about other ways to lower our budget debt, and do what politicians SHOULD DO, DO WHAT YOU TOOK OFFICE TO DO!! HELP US, NOT F$CK US OVER!


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  3. Verbinator says:

    Sew the Wind, Reap the Whirlwind.

    With a few exceptions, the voices heard on this forum are almost exclusively the folks who voted for (or would have voted for) the President Elect and by way of election day coat tailing effect, have even further filled state and local governments with even more tax-loving Democrats. If you live in a "Blue State" you can probably expect to see more of the same from the people YOU elected to office.


  4. zel says:

    Video games already get taxed at the store when you buy it in a box, depending where you live, but here in FL they do it already. When you buy a music CD at a store you get taxed too. The idea of this tax is to close the discrepancy in purchasing where if you buy in a store you get taxed and if you buy online you don’t get taxed. Online purchases being tax-free is really a loop-hole we exploit so you know sooner or later the gov’t will close that loop hole once they start to loose too much in tax dollars.

    As for the extra taxes on everything else like the crazy 13% tax on soda or was it 17%?   now that is completely ridiculous.


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  5. zel says:

    Because its an entertainment tax, not a ownership tax 😛   man you gotta hate how they skirt around it!


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  6. catboy_j says:

    This Is Wrong, parts of where I live in NY are already paying 8% sales tax or more on offline items. In addition there’s all these random taxes, bottle taxes. Some politician wanted to put a tax on ALL recyclable goods. Jeesus christ is already costs me an additional dollar to buy a can of pop just because the recycling guys don’t pick up on this street.

    If this were a videogame tax outright I’m pretty sure a lot of people would suddenly be against this. OR a Music Tax. But since they know they can’t get away doing that, maybe if the government was a little better with money we wouldn’t have to go through this.

    I also really don’t see how the British’s Insane taxs correspond to New York as part of the American revolution was a little bit about taxes right?

  7. Praetorian says:

    I’m from Missouri originally and it’s not too bad of a place to live as long as you don’t live in St. Louis, the crime rate there is through the roof. Oh, and don’t get sucked into the Branson/Springfield area — they brainwash people into evangelical ceremonies that turn you into a cult member.

    That said, the Kansas City area isn’t too bad, well, it wasn’t too bad when I left, but that was three years ago and I hear all the places I used to hang out are closing up these days.

    OH! The most important part, you can still SMOKE INSIDE BARS in most regions of the state. They couldn’t pass it statewide so they are slowly trying to pass it locally per city.

    Hope people will pull their heads out of their rears soon and realize that for every ridiculus law they pass we lose the freedoms we fought for in 1776.


    "I’ve been told I’m the resident skeptic, but I wouldn’t believe that."

  8. Keith K says:

    I kind of assumed that the cards were treated as gift cards. I’ve never bought one though, so Im not sure. If I ever some PSN cards in Canada, I’ll give it a try.

    My suggestion is that points cards be avoided. Everyone who purchases content from their console should do so by prepaid credit card. That way charges can be reversed if you get dicked.

  9. MrKlorox says:

    Purchasing in-store definately has tax included (unless it is mislabeled as a giftcard). And so does purchasing online.

  10. MrKlorox says:

    This is so wrong! We already pay tax on most DLC when we purchase Nintendo/Microsoft points for exchange.

  11. Doomsong says:


    Here in IN we pay taxes on MS points at Walmart but not at Gamestop… So I think in some places it just has to do with store policy.

    "Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety" – Benjamin Franklin

  12. Buckeye531 says:

    I don’t know how they would make this work. Don’t we pay sales tax when we buy Wii point cards or Microsoft point cards?

  13. King of Fiji says:

    This is why the planet will be overpopulated in a couple of years.

    Because people who deserve to die won’t be able to because the government is butting in too much.

    Also people who die due to drinking too much soda DESERVE to die of drinking too much soda.  Its called survival of the fittest.

  14. CyberSkull says:

    According to all the copyright bills, I don’t own the items I download, so why should I have to pay taxes on something I don’t own?

  15. illspirit says:

    And how, pray tell, do they intend to enforce this? Audit people’s computers, consoles, and iPods for new data? Or will they rely on people to voluntarily fill out forms and mail payments to their city or the State? Good luck with that..

    Or do they expect online retailers to levy the tax and send it off to NY? If that is the case, I would do one or a combination of two things as a merchant: A- Stop selling to anyone in NY, possibly even blocking all IP addresses from the State, and/or B- should anyone in NY manage to buy anything, no tax is charged, and if NY sends agents across State lines in an attempt to collect the tax, I’m calling the AG’s office to have Virginia State Police sent around to arrest them.

  16. BrandonL337 says:

    wow i just realized my sig is so completly appropriate for this comment

    There have always been motherf*ckers, there will always be motherf*ckers, but what we can’t do is let them control our motherf*cking lives. -John Oliver, December 1st, 2008

  17. BrandonL337 says:

    Mother FUCKER!

    There have always been motherf*ckers, there will always be motherf*ckers, but what we can’t do is let them control our motherf*cking lives. -John Oliver, December 1st, 2008

  18. E. Zachary Knight says:

    That sucks that they are double taxing your PSN purchases. That is something that really should stop. PSN cards should be treated like giftcards. You don’t pay taxes on a $20 giftcard to Walmart, but the giftcard does count towards paying sales tax on your purchases with it. That is something you really need to take to your state representitives and get changed. Either that or take it to the game store you are buying the cards from.

    As for the Wii and 360, they can only reasonably tax the purchase of points. There is no way to actually tax the purchase of DLC with those points.

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  19. sheppy says:

    As much as I want to bash this, it actually makes sense to me.  Of course I live in Illinois where anything from WOW subscriptions to PSN transactions already get taxed.  But my main issue is how, then, will they standardize this?  As an example, I already had an issue with a PSN card I bought just to see how flawless the experience is to use them (a friend was curious and I was going to buy Wipeout HD anyway).  I got taxed at the store despite being a gift card like transaction, then I got taxed online.  So I paid a 15.5% sales tax just because I got the card in the store.

    While I trust my PSN account with credit info, what about when we buy the cards for the other two systems?  How do the further transactions get taxed?  Does New York suddenly get a Microsoft Space Buck boost to their budget?  I mean how do you monetize a system that is set up directly to confuse how much money your’re spending in their system?

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  20. zel says:

    I’ve heard Texas is pretty nice too, I’m in FL so this doesn’t affect me but i’m in Naples, which is a rich person’s playground and a simple 1300 sqft house on a small lot ran about 350k two years ago, thankfully its back down to 140-170k but even that is too much for a place that small so i still kinda wanna get outta here. Maybe it’ll keep dropping though and become reasonable some day :/


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  21. GrimCW says:

    oh they cut down on the spending, they canned some thousands of governement employees (mostly the secretarys of the secretarys).

    they just haven’t bothered to cut back on their high class costumes, solid wood furniture, big houses, "buisness trips", and big fancy car rides of yet.

    god forbid the politicians themselves take a hit to the wallet. they are the ones who need a bleeding pay cut, not the average joe. instead the politicians get a raise and AJ gets the unemployment line (which is broken atm, i’ve had to CALL to get my claims released for the past 5 weeks because some inept idiot can’t make an automated system to release payments on its own. And the people on the phone don’t know why it isn’t releasing properly either… so thats no help.)

    grrr i hate being unemployed, but the only work available is temporary or seasonal :/ i half fear the need to sell off my sealed Startrek model kits :/ and i wanted to build’em… (not a fan of the show so much, but i love the ships and building those old kits)

    as it is you can bet unemployment to spike more after christmas when the christmas help is canned from their jobs.

  22. GrimCW says:

    lol yar i heard about that one too a few days ago.

    its bullox and not right.

    the state is currently in a high level of unemployment and its rising steadily as time goes on, and now their ADDING more taxes? this is not a smart time to be adding more bills to peoples bills. I mean, they even extended unemployment benefits already due to this.

    and now we’re gonna add more taxes on top of peoples heads who can’t even balance their bills the economy’s so screwed up?

    my GF and i are looking towards Missouri ourselves to get outta here as her aunts been sayin some nice things about it :p.

  23. ShadowDragon28 says:

    I really hate stories like these. The local governments spend more than the budget allows, they end with a huge defecit, and their solution to the problem? Maybe cut down on the spending? No. Hike up fees and make up new ones to make citizens foot the bill.

  24. ZippyDSMlee says:

    There is a reason one should not tax online sales, the cost of shipping plus the sale can make local shops look better, the whole point of online shopping is better deals.

    For DLC there is no shipping cost, you need a system able to send money to the state the person buys stuff from and frankly the buyer dose not need to see or be aware of the tax, have the DLC provider pay for it in a seamless manner.

    We need a new federal law on alcohol shipments tho, have the provider pay for fed and state tax have a file with a signature forum on hand to make delivery easier(currently adult signature only), have that form protect the seller and shipper from liblity issues,  local alcohol  laws will cover just about anything, make the process simple and better.
    Pirates,Shearers,Lenders and downloaders are not a market that can be taped by the mainstream.
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  25. zel says:

    ya i already read about this on yahoo news, they included taxes on soft drinks with less than like, 70% real fruit juice, to try and fight obesity. because, and I quote "People don’t really realize the amount of calories they’re ingesting through liquids," … "They say, ‘Oh, it’s just a drink.’"

    man, this explain why i see so many new yorkers over here in FL now 😛  driving like they’re still in new york O.o


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  26. GrimCW says:

    i could’ve sworn when he took the seat he SWORE he was gonna do everything he could to put money IN to peoples pockets and not take it OUT of our pockets.

    figures he lied, he is a politician after all. IIRC he swore up and down that he was gonna avoid raising taxes. we’re already taxed up to our waists for crying out loud in NY state, and people are LEAVING because of it.

    hell, i’m getting ready to bail myself, this is getting rediculous and just plain stupid.

  27. zel says:

    Ya i agree, i’m not generally for price hikes, but the truth is we’ve pretty much been avoiding taxes online for years now. Hell I buy my computer parts online strictly because newegg is out of state for me and as such you don’t have to pay tax on it. I knew sooner or later local gov’t was going to start taxing it. The problem of course is how are they gonna track it 😛

    lets say i’m an online vendor here in florida and someone from new york makes a purchase, how will new york know?  as a vendor in FL i’m not required to notify NY of your purchase, and its not like the state of NY has access to your bank account (or do they?). NY doesn’t have jurisdiction over me as a FL vendor to force me to release that info, do they?  well, i’m sure the bigger companies like MS, nintendo, and sony will comply, apple too, but other places really don’t have an obligation to i don’t think.

    As the internet get more and more ubiquitous though, i’m sure sooner or later all states will enforce each other and get that extra tax money 😛


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  28. jamesweis says:

    Well…I could go for a little bit of shoe throwing…

    Maybe if they want to encourage healthy eating habits, they should make them more affordable and actually "encourage" them as opposed to "discouraging" unhealthy habits by taxing the hell out of them.  Seriously, watch what happens if the government were to offer a tax credit for not smoking.

  29. King of Fiji says:

    Either they tax all of it or none of it at all or tax a bit of it and prepare to get shoes thrown at them.


  30. finaleve says:

    Yeah I saw a segment on the news on that (NJ guy here).

    In all honestly, I drink Soda strictly.  Ever since playing D&D with friends many years ago, I kept a habbit of drinking.  I’m capable of staying focused (unless I’m tired from lack of sleep), and can work normally just like any person.  I’m 6’3" (roughly) and weight less than 190 lbs.
    Its not that I can’t drink any other drink out there.  I can drink juice and other flavored drinks, but I can’t seem to drink water without complaining.  Soda is also cheap (1.06 for a 2 liter bottle of soda here, granted its not name brand).

    Soda is unhealthy for the most part, but to tax it for obesity is kinda odd.  Candy and other various foods that are actually fattening should be considered taxed before soda is.

  31. Doomsong says:

    Aye matey…. Hoist the Jolly Roger!!!

    "Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety" – Benjamin Franklin

  32. King of Fiji says:

    In all seriousness Mr Cranky Canadian its not that I mind the tax itself.  Its the amount of taxes we are getting for many things at one time.

    Also I’m sorry but you can tax downloadable content.  (I don’t download much so huray for that)  You can increase my tuition by alot.  But when you tax my god given right to drink soda by using the BS rationalization of calling it an obesity tax without taxing all other sugary subtances which amounts to hypocracy then I’m sorry government has gone too far.

    Now if you’ll excuse me I left a 12 pack of Pepsi One in my trunk.


  33. DorkmasterFlek says:

    I was about to say the same thing, although I’d prefer they eliminate it here than add it there.  😛  We get taxed when we buy MS points on XBL and Wii Points as well.  I’m not sure how the PSN works since it uses actual dollar amounts, but I’d imagine you get taxed when you add money to your "wallet".

  34. ZippyDSMlee says:

    Meh tax PC,parts and the net 15% and touch not free distribution of media.
    Pirates,Shearers,Lenders and downloaders are not a market that can be taped by the mainstream.
    I is fuzzy brained mew =^^=

  35. E. Zachary Knight says:

    No, they would only tax real money purchases. SO with the Wii and 360 you would be taxed on the points you buy in order to download the item. They won’t add a MS Points sales tax of 5 points on the hundred when you download a game. But they will charge you a 5% sales tax when you buy the points.

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  36. insanejedi says:

    No, this is more like exchanging for foreign currency since buying microsoft points is like buying european Euros. Thankfully there isin’t a premium for buying those points (or is there? conspirisy!!!!) but it works in the same way. My issue is that, if i already bought the microsoft points, why am I being taxed agian for the downloads? Then agian, if I buy Euro’s I get taxed on that, and also get taxed on whatever thing I buy with the euro, so It makes sense to some extent. I hope though they try their best to make even numbers on the download price though, like I don’t want it to be 813.444444444 MS points for Bionic Commando since that screws everything up.

  37. Keith K says:

    No. Money added to your wallet is the exact amount you add. You are taxed per purchase. Tax is taken away from funds in your wallet in addition to the cost of your purchase.

  38. GrimCW says:

    if by "here" you mean NY state.

    actually we aren’t taxed on it by law.

    Newegg for example tried to tax NY residants for awhile but retracted the idea later on because they lost buisness doing it.

    NY law doesn’t not require the taxed sales of online merchandise, physical or digital (of yet) unless the store is within the state.

    so the PS3, M$ points, and Wii points thing are under a voluntary basis, now if their actually using that money to pay off taxes to the state is another question to be asked.

  39. Outrun1986 says:

    Its already taxed here, we get taxed when we buy stuff from the PSN store, and when we buy Wii points.  Thankfully I am too old to buy into the new "digital products" craze especially when they are DRM laden so the instances when I buy DLC are very, very few and far between.

  40. Father Time says:

    Well it was inevitable really. Let’s hope it’s not too much.


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  41. Glasofruix says:

    Here in Europe, we pay VAT on everything… But we have worse, in France they pay a 500% tax (yes, a 5 with TWO zeros) on blank DVDs.

  42. Wolfemann says:

    We’ve already got this where I’m from – in WI, every year we have to pay sales tax on anything we’ve bought over the ‘net that hasn’t already been taxed.  Most people ignore it – it’s a tax on honesty, really, because they’ve got few ways to know if you’re telling the truth of now.

    I, as an employee of the state, pay every year… more accurately than many of my co-workers, sadly.

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  43. Geoff says:

    It was only a matter of time, really.  Did anyone honestly think the government wasn’t going to try and find a way to squeeze more money out of us once DLC became popular?

    Though I don’t necessarily like it since I live in NY and don’t want to pay more money (who does, really?) I can understand the need for it.  A lot of states especially NY are hurting economically and need to find new sources of revenue.


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  44. Neeneko says:

    While I am generally no in favor of having to pay more money for something, in concept this doesn’t sound like a bad idea.  Sales tax needs some kind of update for the on-line market.

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