Cheese Head Gamers Weep: Wisconsin Tax Adds 5% to Cost of DLC, Game Downloads

If you live in Wisconsin, that Xbox 360 DLC you’ve got your eye on is about to get 5% pricier. Ditto for that PC game you’re considering downloading from Steam.

The Spectator reports that Gov. Jim Doyle (D, left) has signed into law a measure that will impose a 5% sales tax on digital goods. In addition to game content, things such as music, movies, digital books and ringtones will be affected.

State Rep. Scott Suder, a Republican, was among those who opposed the new tax:

It’s basically taxing students to fill in the Doyle budget shortfall, and I think that’s unfair.

Wisconsin officials estimate that the levy will raise approximately $10.9 million between 2009 and 2011.


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  1. shady8x says:

    Well we all knew this was coming…

    I am not for taxes or anything but online shouldn’t be a magical tax free realm… especially when we borrow a trillion bucks from China every few months…

  2. Mort says:

    Ummm, if you lived in Wisconsin, you already had to pay taxes on stuff you buy online. That’s right, the little thing called “use tax”, Wisconsin already had it. You were supposed to be paying sales tax anyways!

    This just makes it so people actually pay it. I was upset until I realized this and then thought “Oh… well shit. Nevermind, I will pay this and we can just forget about all that stuff I never declared.”

  3. Lost Question says:

    "It’s basically taxing students to fill in the Doyle budget shortfall, and I think that’s unfair."

    anyone else got im going to harp on this tax and when (or if) im in power do nothing about getting rid of this tax

  4. Kris says:

    I’m also wondering if this would just tax the points you buy, or the actual content.  For something like Steam there’s no issue, but it’s clearly a problem when you get on LIVE.  If they’re not careful they’d be taxing people twice for the exact same money, which isn’t fair at all. 

    Apart from that, I don’t see any problem with taxing online purchases.  If things are going digital like everyone keeps saying (though I doubt this myself), it’s going to have to start at some point; better early on when this sort of thing is still new than to try to do it later when everyone’s used to not paying taxes on digital content.

  5. JC says:

    I actually thought most people would be wanting to bypass this by using other forms of method by allowing someone else to gift you the game and you pay them the same money, or shave off a bit of that 5% for a 1% tax and a tiny profit…

    I hope my state doesn’t try to enact something like this. I’m too used to paying for taxes and once a while I rather have something ship over instead of driving or walking. We consume and surprisingly not every shop is dead like in other places.

  6. NovaBlack says:

    hmm i would LOVE a 5% tax.

    in the UK i pay 17.5% on on DLC… including MMO subscription fees, steam purchases.. everything.

  7. HelpHelpImBeingRepressed says:

    "Wisconsin officials estimate that the levy will raise approximately $10.9 million between 2009 and 2011"

    I think they’re going to need to recalculate that.  Taxes != revenue, especially in a situation like this.  There are other points but I feel previous comments summarize them well.

  8. E. Zachary Knight says:

    No we were founded on the concept that we should not be taxed without having a say in the matter.

    The Boston Tea Party was a response to England taxing imports of tea and other goods without the colonies having a seat in parlament. Had the colonies been represented in Parlament, it might have been a different story.

    In this instance, the citizens of Wisconsin have their representation in the Wisconsin government and have a say in the matter of this tax.

    E. Zachary Knight
    Oklahoma City Chapter of the ECA

    E. Zachary Knight
    Divine Knight Gaming
    Oklahoma Game Development
    Rusty Outlook
    Random Tower
    My Patreon

  9. MaskedPixelante says:

    So basically, they’re taxing something because it currently isn’t being taxed.

    I’m no American history expert, but wasn’t America founded on the principle of NOT BEING ABLE TO DO THAT!!!

    —You are likely to be eaten by a Grue.

  10. axiomatic says:

    Hahahaha…. clearly Wisconsin does not realize which demographic they just went up against. Gamers are the most resourceful buyers on the planet. This tax will be worked around in short order.

  11. Adrian Lopez says:

    Right. It’s the same as with mail order businesses. Wisonsin can’t force companies with no Wisconsin presence to collect sales tax from Wisonsin residents. That’s why mail order businesses usually say things like "State X residents add Y% sales tax". They only collect tax when they have to.

  12. Icehawk says:

    That was my first thought as well.  A state sales tax can only be applied to those things that are purchased from a retailer in that state.  If I was to go buy something from Nevada for example I would not have to pay California sales tax (good thing too). even if I was a resident of California. 

    How are they getting justify this? Are the downloading sites owned and operated in the state of Wisconsin? What next, getting taxed at both ends, ie at the PoS (Point of Sale) and by your local state?  Going to start taxing Ebay or Amazon purchases recieved? 

    I agree, a lawsuit to block this is in order. 

  13. Austin_Lewis says:

    I’d like to see how this is legal considering that it is, technically, inter-state commerce.  If I’m downloading something from a facility in LA, why should I be paying a 5% sales tax in Wisconsin?

  14. olstar18 says:

    Possibly because you get taxed when you buy the card and from the sound of it the tax isn’t for the points but the actual download so you get taxed again.

  15. E. Zachary Knight says:

    You can also buy the points tax free online.

    But again, they will only be charging sales tax on real money transactions. Once your money is converted to points, whatever you buy with those points are no longer taxable, because you have already been charged tax for it.

    So $10 + $.50 tax for 1000 Wiipoints. Buying a 1000 Wiipoint game has already been taxed.

    E. Zachary Knight
    Oklahoma City Chapter of the ECA

    E. Zachary Knight
    Divine Knight Gaming
    Oklahoma Game Development
    Rusty Outlook
    Random Tower
    My Patreon

  16. sortableturnip says:

    I’m under the assumption that, if you go into a store and buy the points, you get charged a sales tax.  With this law, I can see the companies charging the sales tax for the points and the dlc, since in essence that’s what this bill targets.

  17. Duffy says:

    They’ve been doing it for years with other things, sometimes they come up with ways to get around the fact that it’s inter-state commerce. For example, in some states you pay the sales tax on a car when you register it, hence you could in theory pay the sales tax twice if you bought it out of state.

    Aside from the strangness of Sales Tax itself, I’m fine with paying it, I pay it on everything else anyways. The problem here is mainly for buisnesses. Since a buisness collects sales tax for the state at the time of purchase, they are basically saying that buisnesses outside of their jurisidictions now have to collect taxes for them. Good luck on that one.


  18. Bennett Beeny says:

    I have no problem with a tax on goods and services.  Heck, it was bound to come sooner or later.  What I do have a problem with here (and it’s something that everyone else seems to have missed) is that State Rep. Scott Suder, a Republican, says:

    "It’s basically taxing students to fill in the Doyle budget shortfall…"

    Isn’t that the same old tired notion that games are for kids?

    When will these politicians understand that most videogamers are adults who are long out of school?  The average gamer is in his 30s.  I mean, I don’t know any 30 year-olds who are still in school or college.  I’m sure there are some out there, but they certainly don’t represent the norm.

  19. strathmeyer says:

    Can anyone actually explain how this will actually be enforced? Is Wisconsin just going to be teaching all of its citizens how to buy points online?

  20. Geoff says:

    And so it begins.  This is going to be an interesting year in terms of DLC with several states proposing the taxation of online content.

    I’d like there to be no taxes.  But if I were a betting man, I’d actually put my money on the taxation laws.


    Tea and cake or death! Tea and cake or death! Little Red Cook-book! Little Red Cook-book!

  21. Neeneko says:

    How so?

    Seems like a pretty even-handed law that puts purely on-line transactions in sync with brick and morter.

  22. Neeneko says:

    *nods* which is the whole point behind state’s rights.  Giving individual states the ability to try things out on a smallish scale rather then the massive hammer of federal law.

  23. Chaplain99 says:

    The way I see it, Wisconsin has just become the guinee pig of the U.S.  If this tax measure shows early success, then it’s probable that other states will pick it up, too.  If not…well…  ^^

    "HEY! LISTEN!"

  24. E. Zachary Knight says:

    No. Sales tax will only apply to real money transactions. MS point or Wii point transactions will not have an added 5% point tax added to them. When you buy those points online however, you will be charged sales tax. Menaing, if you buy $10 worth of points, you will be charged $.50 in sales tax. But when you buy that 1000 Wii point games, you will not be charged an extra 50 points.

    Additionally, services that deal in real money transactions in exchange for product will be charged sales tax. That means when you buy something on PSN or iTunes, you will be charged sales tax on the purchase of the product.

    E. Zachary Knight
    Oklahoma City Chapter of the ECA

    E. Zachary Knight
    Divine Knight Gaming
    Oklahoma Game Development
    Rusty Outlook
    Random Tower
    My Patreon

  25. PHX Corp says:

    I agree with Scott suder, It’s a waste of time and if it dosen’t get profitible a waste of money

    Watching JT on GP is just like watching an episode of Jerry springer only as funny as the fights

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