Governor Doyle's Budget Proposes Internet Sales Tax

Governor Jim Doyle's (D-Wisconsin) budget proposal contains a provision that would extend Wisconsin's 5 percent sales tax to residents who download songs, books, movies, pieces of art, etc. off of the internet, according to the Milwaukee Journal Sentinel.  Compliance would be on the honor system, as there would be no internet tax "police". Republican legislators vow to delete the provision when the budget is passed. 

Doyle's office says the proposal is equitable because anyone who purchases the same thing in a brick and mortar business would be required to pay this tax, and it level's the playing field because buying online without the tax encourages people to avoid stores that support the Wisconsin economy by employing residents and paying sales and corporate taxes.  Some say Wisconsin would be the first state to do this, but the state Department of Revenue claims South Dakota does.  Doyle's office estimates the provision will generate $1.9 million, meaning they expect few to comply.  Currently, taxpayers are supposed to estimate what sales tax they owe on internet and mail order purchases and report it on their income tax, and fewer than one percent of the states 2.7 million taxpayers did this. 

Rep. Scott Jensen (R), who calls the provision an "IPod Tax", says he opposes the measure because it discourages electronic commerce.