A wily bill from Assemblyman Charles Calderon, D-Whittier, failed in committee last week…. the bill would have authorized the taxation of music downloads.
It was wily for two reasons: first, though the bill was sold as a music download tax, it would have also opened the door for taxation on other downloads that have not yet quite become the revenue generator that music has: books, articles, movies, TV shows, etc. It could even go beyond that in its reach…. with a new amendment the bill now reads that the tax “includes, but is not limited to, products like music, movies, and books.
Secondly, the bill aimed to tweak an existing tax code that allows tax only on “tangible property.” Through some legal wrangling, that would allow a straight majority vote in the assembly, rather than the normal 2/3 required to pass a new tax.
The real kicker on the bill though, was that tax would only be allowed on in-state companies. With web sales, of course, you can purchase downloads from anywhere in the world, allowing a huge disincentive for web companies to base themselves in California, and a huge disincentive for people to buy anything from a California-based company.
The bill stalled with a split 4-4 vote. Four Democrats, including Calderon and Mike Eng, D-El Monte, voted for the bill. Three Republicans and one Democrat voted against it. The committee voted unanimously to allow another hearing on the bill in the future