Are you ready for the iPod tax?

The next big casualty in our current recessionary era is the good old state budget. Many states (including my own California) have been fiscally reckless for years, overspending ruthlessly and then trying to figure out how to make up the budget shortfalls after the fact -- and generally failing at it -- just like the federal government. Now, with sales, property, and income taxes rapidly shrinking, things are looking extremely dire as state coffers are quickly emptying out.

Case in point: The state of New York, which now faces a $15.4 billion shortfall between revenues and proposed spending -- the collapse of Wall Street (and the loss of the taxes it once generated) has hit New York especially hard. The result? Lots of budget cuts, and tons of new fees and taxes, including a new tax on the sale of digitally downloaded music and movies, per a budget proposal from Governor David Paterson.

Pundits have already dubbed it the "iPod tax" (though, oddly, it does not actually create new taxes on iPod hardware or other gadgets -- perhaps "iTunes tax" would be a better moniker). According to the proposal, new taxes would also be levied on everything from movie tickets to taxi rides to massage services.

New York has been anxious to get its tax hooks into the Internet for some time now. This summer it finally enacted a law that forces out-of-state companies to collect taxes on Internet sales to New York residents. Amazon promptly sued. That case is still pending.

Paterson's budget proposal now goes to lawmakers for approval. Any New Yorkers out there care to weigh in on the issue? No one likes new taxes, I know, but are things getting truly dire to the point where drastic measures are required?