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The Smallest State Makes a Smart Move

Rhode Island, at only 1,214 square miles, avoided making a big mistake by removing a tax on digital goods from its budget.  Rather than placing it in its legislation, Rhode Island attempted to slip through a tax on digital goods as part of the state’s budget.

If passed, this would have taxed “specified digital products,” which includes “digital audio-visual works”, “digital audio works,” and “digital books.”  But such a measure might have caused more harm that good.  It would have driven away e-retailers, made Rhode Island’s ecommerce businesses less competitive, taxed Rhode Island residents, and hurt the state’s green initiatives (since digital goods don’t have boxes or require gas to transport).

We went out to help inform the state legislators of these harms.  We sent letters to every legislator, and we even went to the local Rhode Island radio stations.

But, in the eleventh hour, moments before the final budget went before a legislative vote, the Rhode Island legislators realized the harm they might be bringing their state and they removed the tax on digital goods.

So the home of the first discount department store decided to once again favor new business models and made the smart move to not tax digital goods.