iTunes Store Tax?

Considering free downloads are still an issue that record companies are battling, it seems silly to tax media sold online at this point in time. But that's what Gov. Paterson wants to do to help close the hole in NY State's budget. I understand that the State is facing a budget crisis. But the download industry is in its infancy. Plus this is the first time that the industry will be challenged by a recession. When everyone's making money, few object to paying for downloads. With consumers in dire straits, I imagine fewer will pay for downloads when they can get stuff for free. Long story short, I doubt much revenue will be garnered from this in the short to medium term. Time will tell I guess.

Hat tip [Economist]