It’s funny how schizophrenic governments can be in their goals. At the same time that the federal administration is siding with copyright owners on punitive damages for copyright violations, state governments are busy inciting people to violate them.
What do I mean? The North Carolina House’s recently passed budget contains a provision for a "download tax" – a tax on downloaded media, such as from iTunes. It’s being called part of the state’s efforts to "modernize the tax code" – but the only thing a download tax will do is prevent the modernization of copyright law.
Relatively low sales taxes can and do work reasonably well. But the greater the difference between the market price and the sale price (in the case of physical goods, that difference is the sales tax), the more incentive for a black market. The problem with downloads is, the difference between the market price and the sale price of a download is already essentially its whole price: downloads can be (and are) produced much more cheaply and efficiently than the distributors will do – effectively without cost. Thus, there is a major black market of piracy. Taxing downloads will further increase that price difference, and drive more people underground.
But that might be acceptable, even good as a catalyst for change, if not for the further consequences. North Carolinians learned in 2001 that new revenue is addictive to governments. A download tax will invest our state in maintaining the status quo with regard to already failing copyright law, since you obviously can’t tax a black market of free stuff. And as much as the copyright lobbies have already gotten governments to invest, the last thing North Carolina (or anyone) needs is an internal motive as well.