—NY governor proposes tax on digital downloads : If Gov. David A. Paterson’s budget passes, cash-strapped New York could impose a 4 percent tax on digital downloads of all kinds—books, ringtones, games, VOD movies, and of course, music tracks—to help balance its budget in 2009. The NYT’s City Room said the tax would kick in next June and bump up the cost of a 99-cent iTunes download to about $1.04. State officials say the so-called “iTunes Tax” could add as much as $15 million in revenue the first year it’s enforced, and about $20 million a year thereafter. States like New Jersey have already broadened the scope of their taxes to digital downloads, and in April, New York passed a similar measure (dubbed “the Amazon Tax”) aimed at forcing online retailers to collect taxes for goods “sold” in the state. Amazon is currently challenging the law, and there has already been some pushback about the new proposal. Apple’s official policy is that it will charge tax on tracks in states where applicable.

—Mixwit bites the dust : Online MP3 sharing and mixing service Mixwit is shutting down, blaming legal uncertainties. Like Muxtape before it, Mixwit let users create and share their playlists (it pulled many of the songs from music search engine Seeqpod), though it wanted to expand to include photos and videos. Users could also customize the appearance of their playlists, and the startup was working on deals with various labels to secure licensed tracks. But Mixwit’s founder Michael Christoff told TechCrunch that the costs (including potential legal action from the RIAA) outweighed the benefits: “I’m sure I don’t have to explain that our mixtapes are perceived to be in a legally ambiguous state (at least as far as the labels are concerned) ... We could never get assurance that the future of Mixwit would not be hurt by the perceived liabilities of its past, so we decided it was time to to shut things down.”

The RIAA actually forced Muxtape offline by filing a copyright infringement complaint with the site’s Web hosting service, and founder Justin Ouellette chose not to fight (nor continue to pursue licensing deals that had become “too complex” and “too restrictive” anyway). Of course, there are other online mixtape services: Mixaloo only lets users hear 30-second snippets of others’ tracks without purchasing them, blip.fm lets users pair their tracks with 140-word messages (a la Twitter) and 8tracks, which is currently working out a deal to let users buy MP3s through Amazon (NSDQ: AMZN). But it’s almost a question of when they’ll be targeted by the labels, RIAA or both, not if. 

—Billboard donates music to soldiers : Billboard is running a promotion giving U.S. Army soldiers the gift of digital music. People can sign up between now and December 31st to give two free music downloads to a currently enlisted solider, along with a short holiday message. There’s no charge to the sender.