Chairman Smith and Rep. Cohen Introduce Digital Goods Bill

Washington, D.C. -- House Judiciary Committee Chairman Lamar Smith (R-Texas) and Representative Steve Cohen (D-Tenn.) today introduced legislation to protect consumers from unfair taxes on digital goods, like those purchased over the Internet or on a smartphone. The Digital Goods and Services Tax Fairness Act of 2011 (H.R. 1860) ensures that digital goods are not taxed at a higher rate than their tangible counterparts. For example, H.R. 1860 prevents taxation of mp3 and software downloads at a higher rate than the tax on music and software CDs. The legislation makes sure that consumers do not suffer tax discrimination because they choose to purchase a good in digital rather than tangible form.

Senators Ron Wyden (D-Ore.) and John Thune (R-S.D.) today introduced companion legislation in the Senate. Representatives Howard Coble (R-N.C.) and Alcee Hastings (D-Fla.) joined in cosponsoring H.R. 1860.

Chairman Smith: “In our modern economy, more and more consumers are buying digital goods and services rather than tangible goods. While books are still sold in stores across the country, readers can now download hundreds of digital books, newspapers and magazines instantaneously with the click of a mouse from the comfort of their home. But as technology advances, it is important that tax policies do not unfairly penalize consumers who choose to download digital goods rather than purchase their tangible counterparts. This legislation promotes tax fairness and ensures that consumers are not discouraged from purchasing digital goods.”

Rep. Cohen: “Digital goods and services are quickly becoming a driving force in our national economy. We need to establish a uniform framework for the taxation of digital goods and services so consumers won’t be double-taxed. Our Digital Goods and Services Tax Fairness Act of 2011 would accomplish such a goal.”

The House Judiciary Committee also announced that the Subcommittee on Courts, Commercial and Administrative Law plans to hold a legislative hearing on the bill later this month.