If you live in New York, you could end up paying taxes on songs you buy on iTunes or additional content you download for your Xbox 360 games. Times are exceptionally tough in the state because it has always depended on sizeable tax contributions from wealthy Wall Street brokers. Problem is a lot of those brokers aren't quite as wealthy as they used to be, so New York Governor David Paterson has proposed a new budget to scoop up desperately-needed funds wherever they can be found while also cutting spending and laying off state employees. One of the proposed changes: charging sales tax on purely digital products and services you buy online, such as songs from iTunes or Amazon MP3.

The Governor believes this regressive tax is necessary since the income tax isn't bringing as much from the top earners as it used to, and characterizes the lack of taxes on digital downloads as a "loophole" that should be closed. That's not an unfair description; the law has never been adjusted to accomodate the cultural changes that came with technological progress. The budget is opposed by New York City mayor Michael Bloomberg, albeit for reasons mostly unrelated to what's been wryly dubbed the "iTax," and there are no guarantees the state legislature will approve it.

There was a time (not all that long ago) when idealists saw the internet as a place free from government interference and, for that matter, commercialism. Things have changed quite a bit over the last few years, haven't they?

This story around the web: