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NEW YORK (CNN/Money) - Wisconsin legislators are mobilizing against a proposal they call the "iPod tax," in a battle over online music and movies that could soon spread across the United States, according to a published report.
Wisconsin Gov. Jim Doyle, a Democrat, now wants his state to start collecting taxes on digital music, videos and software, according to a report by ZDNet News. Key Republicans in the GOP-dominated legislature say they will block the proposal, but administration officials say they're just trying to make things fair.
"It's an issue of tax equity," said Jessica Iverson, a spokeswoman for the Wisconsin Department of Revenue. "If you go into a Main Street business and purchase a CD, you are paying tax."
Economists are split as to whether adding these kinds of taxes is a good idea. Some say that taxes on digital goods will hamper the growth of a potentially vibrant new marketplace, while others say that having taxes only on offline versions of the same goods distorts the operation of free markets.
Wisconsin state Rep. Scott Jensen, a key member of the state Assembly's Finance Committee, said he'll work to kill the proposed tax on downloads.
"Even if it does pass, it's unlikely that there would be much compliance," Jensen said. "But I think it is unlikely that the governor's proposal for the iPod tax will make it though the Legislature."
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