Bleeding money

The so-called California "iTunes Tax" (bill AB 1956), which calls for an added tax on digital media and was tossed earlier this spring, is again up for debate, reports Wired.

Assemblyman Charles Calderon, who introduced the bill, has proposed a second bill called ABX3 22, drawing ire from Democrats and Republicans alike.

In an email to Wired, Republican Senator Tom Harman wrote:

California has a spending problem, not a revenue problem. The iTunes and Internet tax bills illustrate a complete disregard for sustaining a healthy and vibrant business climate in California. These measures stem from an arrogant assumption that the government must find a way to tax because of overspending legislators' own fiscal irresponsibility.

Harman added that if California wishes to remain a leader in the global market, it must maintain competitive pricing in digital media and online.

In April, when the iTunes Tax was first proposed, New York State passed a law requiring online retailers to collect sales tax on items shipped to New York inhabitants. It is expected to generate $50 million in revenue for the state in its first year.

Dubbed the "Amazon Tax," the law resulted in lawsuits from both Amazon and Overstock. The latter also severed ties with all New York-based affiliates.