Talking Tax

Taxing Digital Is Hard, Former State Tax Chief Says

Feb 21, 2024

Discussing the challenges of taxing the digital economy, former state tax chief Gil Brewer reflects on his career in tax, the complexities of taxing digital products, and the risks of not developing thoughtful tax policies. Brewer highlights Washington State's efforts and the uniformity project to standardize tax approaches across states for digital products.

12:53

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Quick takeaways

Taxing digital products poses challenges in determining taxation criteria and jurisdictional sourcing.

Collaboration among states is crucial to develop uniform tax policies for digital goods and avoid tax pyramiding.

Deep dives

Washington State's Unique Approach to Taxation

Washington State stands out for its innovative initiatives in state taxation, such as the controversial capital gains tax and the pioneering taxation of digital goods and services. The state's approach to taxing capital gains as an excise tax on transaction privilege, rather than income, raises unique challenges and administrative considerations. Despite legal backing, the issue remains politically contentious with potential initiatives for repeal. Additionally, Washington's history in taxing digital products emerged from a broad definition of digital automated services, aiming to encompass a wide range of electronic transactions.

Introduction

5min

Navigating the Taxation Landscape of Digital Products

5min

Navigating Taxation Challenges in the Digital Landscape

2min

For more than a decade, states have had to grapple with the challenge of taxing the digital economy. Peering into cyberspace, tax administrators were often left with more questions than answers. What online products and services should be taxed? How does a state source a virtual creation to a specific jurisdiction? Can states even tax digital products and services in the face of federal limits on discriminatory taxes on electronic commerce?

State tax authorities now have to answer these questions without Gil Brewer, who retired at the end of January from his position as assistant director of tax policy at the Washington State Department of Revenue and stepped down as chairman of the Multistate Tax Commission’s digital products work group. Brewer assisted with Washington’s pioneering efforts to equitably and efficiently tax digital goods and services dating back to 2009. He lobbied the tax commission in 2021 to launch an ambitious project aimed at uniform digital economy tax policies across the states.

On this episode of Talking Tax, Bloomberg Tax senior reporter Michael J. Bologna caught up with Brewer to discuss his career in tax, his views on state taxation of digital products, and the risks the states and taxpayers face if they fail to develop thoughtful and legally defensible policies taxing digital products and services.

Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

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Talking Tax

Taxing Digital Is Hard, Former State Tax Chief Says

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

Washington State's Unique Approach to Taxation

Evolution of Taxation on Digital Goods in Washington State

Efforts for Uniformity in Taxation of Digital Products

Remember Everything You Learn from Podcasts