I'm a little late to the game posting this, but it appears as if New Jersey has imposed a sales tax on iTunes Music Store downloads.
While I hate taxes, this is a tough one to figure out the fairness. iTunes Music Store gift cards are taxed at retail, but I think if challenged in court, with DRM restrictions (Digital Rights Management) explained ad nauseum, and proving that nothing physical actually exists in "I can hold this" form ... I have a hard time seeing how this tax is fair, especially if purchased over the internet.
The new taxation law also taxes services, which I find impossible to prove that is not double taxation. If I get my yard mowed then my house is worth more because of appearance. Therefore I am taxed via property tax at a higher rate and homes are taxed at resale at a higher rate.
If I have an iPod, I paid tax on the iPod at retail ... I think a tax on "music" that that is not in physical form, is like a tax on air. You must pay for quality air (and air conditioning/ionization). What court could prove that I physically own anything that I could resell or throw away in a physical garbage can?
Some enterprising New Jersey residents have already blogged about creating "virtual iTunes accounts" in other states to avoid the tax.