The Digital Goods and Services Tax Fairness Act of 2013 is the right first step

The Digital Goods and Services Tax Fairness Act of 2013 (S. 1364) has been re-introduced by Sens. Ron Wyden (D-Ore.) and John Thune (R-S.D.). When enacted, the act will set up a much-needed national framework for taxing digital purchases, clarifying the rules surrounding which state has the right to tax digital transactions, and thereby protect consumers from the possibility of multiple instances of taxation on a single download.

Digital goods, such as apps and downloaded music and movies, could be subject to a confusing web of taxes under the current system if the numerous state and local jurisdictions around the country all adopted different rules for how to impose taxes on this new segment of the economy. For example, a traveler from Ohio waiting for a flight at the Houston airport who purchases a movie stored on a server in California for his or her tablet may face taxes not just from Ohio where he lives, but in Texas, California and a host of other states based upon how the transaction may have been routed.

Without a national framework guiding taxation in this area, consumers and developers of digital goods and services could pay multiple taxes on a single transaction, which would significantly hamper one of the biggest growth sectors in the U.S. economy. Apple recently reported that its App Store had surpassed the 50 billion download mark, and Google’s Android isn’t far behind. As these products and services become increasingly vital for healthcare, education and the American economy in general, it is crucial that Congress establish a viable framework that will help continue the growth we have seen in digital commerce.

There is still a good deal of work that needs to be done, but the introduction of the Digital Goods and Services Tax Fairness Act is the basis from which we can finally give consumers and producers of digital goods and services the rational framework they need to thrive in today’s global economy.

Whitehorn is the executive director of the Download Fairness Coalition.