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Washington State Debates Taxing Software Creation
zzyzx writes: "An article in the Seattle PI discusses the existing tax on software creation in Seattle. The law was clarified recently to allow the taxing of the software that was created in Seattle, even if the manufacture of the discs occurred elsewhere. Some Washington state lawmakers are working to overturn these changes. The issue at the heart of the matter:
Should an intellectual activity such as programming be taxed in the same way as manufacturing is?"
This will surely destroy Open Source.
Cunning linguists
Do they use a Vulcan Mind meld?
This is my opinion. To make sure you don't steal it, it's covered by the DMCA.
Research and Development time is tax deductable.
We could expect this from a state who's:
.. and finally ..
a) So close to Canada
b) Doesnt Impose State Taxes on Working Students
c) Helped the Spead of Communism (In the form of Starbucks
d) Their only Claim to Fame, other than Coffie, is Nirvana.
You would tax the manufacture of a whole machine, but not separately tax the solid state boards that did the "thinking" for that machine.. how is software different?
"I do not fear computers. I fear lack of them." -Isaac Asimov
For 'Hello World'?
Does this apply to non profit stuff like open source?
Hacker Media
this post has two problems:
1. it's not long enough
2. it's not wide enough
Klerck's PWP embarrasses yours consistently. make it better!
-A Troll Who Cares
I'm sure microsoft won't will miss the money. just put it on bill's tab
Making the assumption that programming is any more intellectual than manufacturing is absurd. Both require a tremendous amount of planning at first and then become grunt labor. Don't try to move programming above any other labor that exists.
But you're missing the most important ingredient which is to actually be funny or have some humorous content.
+1 for "delivered in the style of funniness, sans comedy"
The entire fleet of Bekins moving vans was last seen converging on Redmond, WA. A company spokesman reported that they had received "one hellacious moving order" from an undisclosed client. This report came on the heels of a sudden dip in the housing market in and around Seattle, as home prices fell 73%, while listings increased 800%....
Do they tax the creators of other ethereal intellectual property? This is the state that wanted to collect sales tax from operated coin-operated machines. While likely intended for companies that run things like video arcades and commercial laundromats, or service providers for vending machines and payphones, it could have just as easily been extended to apartment building owners who happen to have a coin-operated washer and dryer in the basement. Washington (state) really wants to pass a personal income tax, but probably never will. The money that a software "writer" (define writer. would this extend to all the students in the state's educational system writing code? Would the Univ. of Washington then be held by the state to owe some sort of back tax on Pine or all the code its students write? Would Microsoft and Aldus Corporations be included, or would some convenient loophole be found to not include them?
Why should intellectual property be treated any differently than physical property when it comes to tax laws? If businesses are taxed based on their revenue, they should be taxed separately in each jurisdiction based on the value of goods they produce in said jurisdiction.
I'm reminded of the Cola bottling cases, where syrup was manufactured in a low-tax locale and "sold" to bottling companies (wholely-owned subsidiaries). The syrup price was being set in order to ensure that the bottling companies never made a profit, in order that profit would only be reported in the locale where it was almost tax-free. It was ruled that the sale had to take place at market rates -- in other words, you can't hide money from the taxmen by transferring property from one jurisdiction to another. This is exactly the same issue.
Tarsnap: Online backups for the truly paranoid
Software creation requires mainly man-hours, and since employees already pay state income taxes I'd think the state already recieves their share and doesn't have the right to double-tax for intellectual work.
I loved this quote...
"Taxing the intellectual property of software companies makes about as much sense as taxing the thought process of a university professor, said Rep. Jeff Morris, D-Anacortes".
So, all teachers, writers, musicians and similar should be tax-exempt?
At least nobody would think of taxing the thought process of a representative. It just wouldn't be worth it.
hahahahaha
isn't that the truth.
... per SLOC or per unit copy licensed?
Ascalante: Your bride is over 3,000 years old.
Kull: She told me she was 19!
Given that software companies tend to provide high-end jobs and generally non-polluting production to a city, you would think that you would want MORE of this industry in a city, and would structure the tax code to encourage them to set up shop in your city. At least some of the legislators appear to be aware of this fact.
Some men spend their entire lives trying to kill themselves for having been born. --Ross MacDonald
Now I'm gonna have to pay taxes on all my "million-dollar ideas".
Joy.
-------------------------------------------
Saving baby carrots around the globe.
They could just add a tax on cocktail napkins, sort of like the tax on recordable media. After all, isn't most good intellectual property created on the back of a napkin, in a bar, just before last call?
Go here for more information...
http://www.mackinac.org/3832
Next, using my HIGHLY encrypted network, I ship it to DupIt Corporation in Taiwan. Boom. Product. But how do they determine I did it?
Sounds like a law that can't be enforced to me!
IANAL, but I've seen actors play them on TV
I'm not sure that ultimately the issue at the heart of the matter is whether or not intellectual work should be taxed the same way manufacturing work is (though that plays into it). At the heart of the matter is the fact that the government (whether city, county, state, or federal) is expected to provide certain services and needs to pay for them. The government needs to create and maintain roads so people can get to work. Since Seattle has the 2nd worst traffic in the country it also needs to provide public transit or keep building more and more roads. It needs to provide education for all of those people who are going to grow up and write software. It needs to provide emergency services so those employees and executives don't die in a fire or a car wreck. Etc. Etc. So how does it pay for them? Of course, everyone wants someone ELSE to pay. They can have a flat sales tax on anything sold in the city (or King County, or WA, or the US). They can really highly tax certain types of items (booze, cigarettes). They can tax individual's incomes. They can tax corporate profits. Et cetera, et cetera. With the Seattle economy being what it is, it seems that some folks have decided that taxing software is a necessity, or the city will deteriorate so much that it will be impossible for those software companies to run in this town anyway (especially with the loss of Boeing and the shipping industry in decline). Now this doesn't necessarily mean that I agree 100%, or that I'm some huge big-government fanatic, but I think the basic economic realities have to be understood before folks start flinging out dogma.
Microsoft isn't in Seattle. They are in Redmond which is not part of the city of Seattle.
Avoid Missing Ball for High Score
If all service are taxed then software development should be also, otherwise it shouldn't be. I never understand why people try to make special laws for digital media (or software as this case is)
The Economics of Website Security
If they're proposing a tax on innovation, I don't think Microsoft has anything to worry about.
American Companies outsource large portions of their production to companies in India and the rest of Asia. These foriegn companies do their job better and at a fraction of the salary than their American equivalent.
Who am I talking about? Nike? Kathie Lee? Disney?
or Microsoft?
In many ways, Software companies are already much like manufacturing companies.
Quote 1:Microsoft says Commercial software pays taxes
Quote 2:...Microsoft Corp., are pushing for an amendment to a municipal tax-reform bill to block the taxation of such intellectual property.
Microsoft's talking out of both sides of their mouth again.
Nothing new!!!!
How would in-house software be classified? Would this apply to only software made for public sale?
The city's business and occupation tax is 0.215 percent of gross receipts, minus credit for money spent on research and development, he said
This seems contradictory doesn't it? I mean I would consider software development R&D too... I don't really think that is going to be effective at all. But governments have a wierd way of making the most hair-brained schemes appear to work.
So, if all your software development costs are actually R&D, this is worthless... they'd have to tax something else, like publishing software. But that can all be done out of state.
--
Some weasel took the cork out of my lunch.
Does anyone know what the existing ordinance says? Is it a VAT kind of thing, or what? How do they measure the value of the software created?
---
It seems that the washington software alliance kind of screwed up when it was working with Seattle legislature to come up with this; it would have been better if they had said "no way" and walked.
The lawmakers in Seattle must be idiots if they believe that a firm that deals with intellectual property cannot relocate at the drop of a hat. Good luck to Microsoft in their new home - 49 other states WOULD LOVE to have them.
There is a difference between taxing thought and the income made from the result. IMHO, evelopment should not be taxed, but the money made from the sale of the product should. Otherwise the danger is that of reducing development simply because it costs too much to think - programming after all is more about thought than creation.
Heck, why not tax students for going to school!? (Hmm, maybe that is already being done? - that's why we see more money in the detention system than in the edutcation system).
Jumpstart the tartan drive.
But i wonder if they would force OSS/Free software programmers to pay. That would suck.
Especially if they assess tax on a per-byte or a per-intruction rate.
WinXP has many, many millions of lines of code, which Microsoft and its pirates reproduce endlessly. If Each of those lines of code had a $5 tax on it, Microsoft would be forced to start streamlining their code, using less bloaty software production methods... using more tight, sleek assembly code instead of fat, saggy Visual Basic.
Every line of code will have to be evaluted on a cost to benifit ratio!
This has the added benifit of speeding up applications and systems and elminating unecessary
The same holds true for other software projects. Something sleek and sexy like Winamp 2.x would be more cost efficient than the Winamp 3.x line, which is getting pretty bloaty. Of course, I don't see how they could tax winamp since it's a 'free' project. n% of $0 is still $0.
By this same token, it suddenly becomes more cost efficient for Microsoft to give all its software away for free and *only* charge for services.
The next Slashdot story will be ready soon, but subscribers can beat the rush and slashdot the links early!
Fist Prost!
All joking aside, I really would like to know how the state intends to set a specific value on code. Clearly, source code such as a TCP/IP stack, VMM, or GUI toolkit are extremely valuable to a multitude of very intelligent people. But while I may be interested in seeing how the process of opening a socket or swapping a memory page works, my hacking skills are nothing compared to the people actually writing these things, and thus their code, while interesting, doesn't hold much value for me. For Joe Sixpack (clueless user extrodinaire), the sourcecode is totally worthless.
Clearly, the functional aspect of the code is what is being considered for taxation. But how do you set the value when nobody can agree on what it's actually worth?
Perhaps taxation by the size of the codebase would work. There is obviously a difference in the size (and inherent IP value) between a TCP stack and a "hello, world" exercise. But again, a "hello, world" program is worth more to the beginning C student than a complete TCP stack, because that small little program is exactly that: small. Being small, it is easy to understand, play with, debug, and do generally useless things with. Give a beginning student the full kernel source, and they'd probably give up within hours (maybe even minutes)
So we can see that taxation by the function of the code won't work, since everybody places a different value on each module (A network driver is useless to someone without a network, and a VMM is silly for someone just starting to learn assembly on an 8086). Taxation by the size of the codebase won't work, because again, smaller programs are more valuable to beginning students, while larger, more complex programs and libraries are more important to experienced developers.
Despite the obvious piracy whining from the usual sources, and the share and share alike from the oss/fs lobby, there is another, less recognized idea behind the "Information wants to be free" mantra... Any given piece of info is worth different amounts to different people, and because of this, attempting to place a fixed value (for taxes, or any other purpose) on a bit of data will ultimately be futile.
I suspect that one of these choices is incorrect. Correct.
This is just reductio ad absurdum of the concept of taxing labor at all.
Writing software or digging ditches or making Beanie Babies with your own labor and the people you employ is a right, not a privilege. You shouldn't have to pay the government for exercising your natural rights.
Obviously, when you tax something people will do less of it. Does Seattle really want less software to be written there? Fewer widgets built? Fewer ditches dug or Beanie Babies made?
We should be taxing pollution, use of resources, taking up space, and all other forms of Privilege.
Tax bads, not goods.
A software company makes use of community services - Fire Departments, Public Transportation and so forth. It should pay to support them, just like any other business should support the infrastructure of the economy in which it operates.
Software companies may be more or less subject to the various pressures imposed by such taxation on other forms of manufacturing activity - including the tendency to move their operations overseas. However, software shouldn't be any-more-exempt for these reasons than any other business.
The good and new comes from no quarter where it is looked for, and is always something different from what is expected.
This appears to only pertain to Seattle at the moment, though Microsoft is gunning for it. Probably don't want other cities to think they can do the same thing. Lawmakers occasionally push a little too hard when trying to tax stuff. Usually after the affected company or companies threaten to leave, the lawmakers rethink their strategy and everything goes back to normal.
But... think about it for a second here... an "Intellectual Property Tax..." I'd love to see the companies represented by the RIAA assesed for the value of their property and handed a tax bill for several billion dollars. Never happen since they own the lawmakers, of course, but it'd be mighty amusing...
I'm trying to teach myself to set people on fire with my mind... Is it hot in here?
Base it on how much money the thing being written or created it worth and tax the person(s) who wrote it.
Then, since laws raising taxes like this bring money into the state coffers, they should impose taxes on legislators who raise taxes...because the result of their "intellectual" activity is increased revenues for their organization.
Well, I can at least dream, can't I?
Best. Comment. Ever. Enjoy!
Well, your Cola explanation does make sense, maybe I'm thinking too little.
If I'm Amish, and I make furniture, would I be taxed while I'm building the furniture?
R&D is not taxed, ie. Blueprints.
But actual progamming is? The manufacturing process is taxed?
That just doesn't seem right. I don't even have any income until the product is finished and sold, and I've already been taxed on it.
"I can't give you a brain, so I'll give you a diploma" - The Great Oz (blatently stolen sig)
Micro$oft is based in Redmond, WA -- which is not, I repeat, not, Seattle, WA
(Thank god...)
Who's in Seattle?
umm..
I think Real (Audio..) is, and Adobe is still...
t_t_b
I'm on PJ's "enemies" list! Are you?
Gee I'd really love to fix that bug, but I wouldn't want to place any undo tax burden on the company :)
Not necessarily, especially if the "bloat" is contained in a system-distributed shared library and code links to it. you can theoretically write a relatively tiny program that links to all sorts of system dll's or .so's and calls dialogs contained therein, etc; your instruction count goes down, size of the binary goes down, ergo taxable assets go down.
Aldus is still doing anything that can be taxed at all? Hm.
In any case, people, *please* understand that what we're talking about is a business tax, *not* a "software tax." No, students aren't going to be taxed. No, your "hello world" in FORTH isn't going to be confiscated. Yes, you have tax liabilities if you sell software.
My God, the noise ratio in this thread is high.
-Baka!
What's that old saying - what's good enough for the goose is good enough for the gander? (That's gander - male goose - not gandolf, you goof!)
If they want to claim Intellectual Property is the equal of Real Property in terms of legal protections, etc., then they should carry the same tax burdens. Property tax, creation tax, whatever. It's time for that corporate free ride to end.
My only concern is that a poorly-written law that targets predatory monopolies could also affect sites that just provide Linux or BSD mirrors (if there's a tax fee per download), or worse would cover the "lone wolf programmer" who just wants to write a better widget for some OSS application.
More generally, there's the issue of whether other services are also taxed. I know some states charge sales tax on *everything* - including the hourly charge for the car mechanic and plumber, for the lawyer, etc. Again, this law should be fair - only tax programmer time if lawyers and accountants are also taxed. Only tax volunteer services if other volunteer services are taxed.
But on this particular issue, if the producer gets as pissed off at you sharing a copy of their software as they would if you set up a family picnic on their campus headquarters, then the IP and RP should either both be taxed or neither be taxed.
For every complex problem there is an answer that is clear, simple, and wrong. -- H L Mencken
No... This would just make software companies in that jurisdiction LEAVE. No other place structures taxes like that, nor should they. Companies are usually taxed on income and/or sales, not on production of a product.
Madness takes its toll. Exact change please.
A great big honkin' thing popped up right in the middle of the "article".
(Sorry if I've missed this before -- I was using Lynx all yesterday...)
t_t_b
I'm on PJ's "enemies" list! Are you?
What a joke! An incredible shortsighted move, really... As American firms compete to keep programming jobs in the country, a state tax is going to drive firms not only out of the state, but may drive them overseas (i.e., "if we have to move, we might as well make sure we only have to move once").
The question of whether it is appropriate to tax software creation like manufactoring is another matter, but simply from a competitive standpoint, this is a really, really dumb move.
I bet it made tech leaders in countries like India happy!
... that April 9th falls on a Tuesday too?
lol>
printf("I'm okay, you're okay, everyone likes me!") ;
oh me, oh my, that was SO funny.
Microsoft software development lacks "intellectual activity"!
How clever!
I'm gonna forward this one to everyone in my office.
where's the freedom to speak/think/writecode? The US is getting really good turning ideas into crimes, taxing thoughts, protecting the interests of DMCAA, talk about dictatorship...
wasn't there some sci-fi movie about controlling what people think? Lots of my software development is done in my head, so they're going to tax my thoughts? great..
I was in Olympia a couple of weeks ago (that's the state capitol) to talk to some of my reps about the latest tuition hike for state schools and saw some of this going down. The software guy was a real shady character but definitely smooth with the legislators. It was watching him talk to my reps (when we couldn't get their attention) that made me realize that our government is corrupt beyond hope. Well, maybe not beyond hope. There's always room for hope...
Should five per cent appear too small
Be thankful I don't take it all
'Cause I'm the taxman, yeah I'm the taxman
If you drive a car, I'll tax the street,
If you try to sit, I'll tax your seat.
If you get too cold I'll tax the heat,
If you take a walk, I'll tax your feet.
Thanks, Stevie!
... consider the following partial-prohibition legislations. The Brady Bill and the Clean Air Act. Like them or hate them, their effectiveness is limited because determined manufacterers found loopholes. In the case of fire arms, the manufacterers made some cosemetic and title changes, essentially selling the same weapon under a different name or classification. Same is true with emissions standards, where the auto makers created an entirely new vernacular to get around the law.
... perhaphs via an offshore offshoot names PatchSoft ... only they're not kiddng around.
Obviously this bill is aimed at MSFT. Like them or hate them, I would think their lawyers might employ similar tactics to get around the letter of the law. They're selling "services"
Once again, only penalizing those of us who can't afford big-bad lawyers with even larger price tags.
healyourchurchwebsite.com - WWJB?
Let me see if I can interpret this information correctly: They wish to penalize intellectual activity in the form of programming? And I do have to ask, why is city of Seattle even debating such an issue when this sounds like a state responsiblity(even though it is a bad idea)? This sounds like a really bad attempt to siphon money from the Micro$oft green machine for purposes unknown.
Marge: Fox turned into a hardcore sex channel so gradually, I hardly even noticed.
If you write a book, do they tax that or just when the book gets manufactured.
Well, I guess this place figures that since they don't tax our income, they have to tax the hell out of us on everything else.
You cannot draw a parallel here. Manufacturing operations don't have to pay taxes on the materials they need to make finished products. Software operations, however, DO have to pay taxes on the materials they need to make software; Development tools and the like. Sure, there are people out there making money using nothing but free tools, but those aren't the organizations we're worried about anyway.
The solution is just to tax all the finished products in the same way. There's no room to complain, there. As for providing services; Isn't that what property taxes are supposed to be for? Income taxes pay for personal services, and property taxes pay for services to establishments or businesses. At least, this is how it's supposed to work, right?
In other words, if you own property, you want it to be protected by police and fire. You want the paramedics to come if someone is in trouble on your property. I dunno why they decided to get school money out of property taxes, except that a school in your neighborhood (a loosely defined term if ever there was one) is supposed to raise property values. On a personal level, some of your taxes go to pay for police, fire, and schools et cetera as well - This is to cover you, personally (or can be seen this way.)
So if you own a house and live in it, you are paying for both your coverage and your house's coverage between your personal income taxes and the property taxes on your dwelling. If you just rent, then your property owner is expected to take care of their share of things, and then you pay for yours. It's not complicated, conceptually.
One of the problems is that cities court tech companies by giving them tax breaks to convince them to move into the area, and then they discover that, shock amazement, the tax break inhibits their ability to provide services that those taxes would ordinarily pay for. You can have your cake right up until the point where it is eaten, and then you don't have it any more. Seattle has discovered this, and they want to make up new rules that allow them to basically steal the ingredients they need to bake another cake by changing the rules.
This is of course the risk any company runs and must weigh before opening their establishment - How likely are these people to actually end up screwing themselves over and then pass the screwing on to me? But it's still immoral. They made the bed, and now they want someone else to lie in it with them.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
I've read some comments about taxing software the same way that physical stuff is taxed.
I've also read comments saying that some taxes are base on the perceived value of a good.
I believe that we cannot apply the same rules to software that to physical goods. Why? It's very simple, physical goods requires money to produce (I'm talking about construction and assembly of physical goods, not the creation - as in R&D - of physical goods). However, software don't cost anything to produce (ok, if you produce physical package to distribute your software it does cost something). Because it's only information, you can reproduce it at no cost.
How is value of a good determined. In general, R&D is not a big factor (it is but only when the product is introduced), the cost of producing the good vs demand is the way to fix the value of a product. Because software cost 0 to produce, even if there is strong demand, you can fulfill it at virtually no cost. So how does one one calculate the value of software... You can't (based on current economic principle).
As we transition in a new kind of economy (note that we will, probably, never completly leave the current economy behind), new laws and new economic rules should be created. The current way of trying to apply the same concept to software (and intellectual property for that matter) will never work. At some point, the system will collapse and new rules will be built.
I don't know the timeframe for this, but I'm sure it will be a lot sooner that we think.
No, intellectual property and it's production cannot be seen in the same light as manufacturing. In manufacturing there are controlled increments of various units liable to a costing procedure that fixes overal costs and allows for a Normal Profit in an open market. In producing software there is no way to account for costs but by billed hours and hardware and possible licensing costs, also the production of the final product is a test of the products working viability in the market. It's no wonder Venture Capital is so drawn to the biz.
For the case where software creation is regarded as a typical industry, their efforts could be seen as a form of Value Added Tax, about which, I believe, our colleagues in the U.K. could comment further.
The interesting part is where in the equation free or open source software enters.
While I believe that much of the free software I use on a day to day basis provides me with much "value", does it really possess value, if I haven't paid for it?
And, if free software does have value even if it is given away for zero money, if it is to be taxed, then one might well argue that other similar creations would be subject to taxation, such as artwork, literature, acting, music and scientific research that is openly published.
"Provided by the management for your protection."
To the morons here in
To the morons in Seattle who thought this was a good idea: That sucking sound you hear is hundreds of high-tech businesses leaving your city.
If all this should have a reason, we would be the last to know.
I'd rather tax companies (and have those costs passed on to consumers) than pay more in income taxes.
According to this article this tax is for companies in the city of Seattle, not the entire state of Washington.
The legislation in Olympia is looking into blocking this.
start charging TAX on the air we breath. Just imagine wearing a mandatory face mask with built in measuring device. Wonder what would happen if we don't pay.. Little value to stop the flow of air?
what will they tax next....
Do the Washington DOUCHE BAGS also tax authors of literature? Those STUPID fucks, domestic enimies of the State. Kill 'em all!
Eloi are stupid, throw morlocks at them!
Sure, you can tax the manufacture of disks, but how do you tax the creation of software? Do you tax it based on lines of code, on size, or do you tax the number of copies created? And how do you determine all of the above? I'm sure the businesses are already paying taxes (business income tax, sales tax on what they buy and sell directly, etc.), and their employees are also paying taxes, so who cares if they don't get to make a few bucks off of manufacturing a couple of CD's?
It's the DMCA wielding, BSA hiring corporate thugs that say "Code is PROPERTY!" Then, when they hear "Property is subject to taxation," they say, "uh, but it's, uh, special property, and, uh, shoudln't be taxed like other property." Quite laughable. If they want to be able to lock up bits as property, then they can damn well pay taxes on them, too.
No, that's not the least bit interesting. Software doesn't fall under the city's gross receipts tax, which is what the article is about... until you sell it. See, that's what "gross receipts" means.
Sheesh. Like it's so hard to read the article.
The State of Washington is heretofore declared to be a "non-cognative" zone.
After-all, any thoughts you may have could advance a programming effort, which would then make you liable for non-payment of taxes.
McFly777
- - -
"What do people mean when they say the computer went down on them?" -Marilyn Pittman
Seattle misuses so much of its funds (mass transit, anyone?) that I guess the politicians are desperate to get more money even though it will certainly hurt its future. Remember a few years ago when every city was boasting about its incentives for software companies and coming up with moronic names like "Tech Alley" to get companies to move there? Now they're apparently trying to get rid of them.
#include <state\wa\govt.h>
void main()
{
while(1)
printf("go fork yourself");
}
Karma? Karma? I don't need no stinkin' karma.
What it is, IMHO, is simply the city attempting to find a method of collecting revenues to cover budget items. It's a ridiculous, attempting to capitalize on M$ success and creates a Byzantine taxcode which would discourage other business from setting up there. If the existing taxcode for Seattle doesn't gather enough from office space (property tax), income tax, use fees and service fees, they should modify those. Either cut services or increase taxes in a fair and appropriate manner.
A feeling of having made the same mistake before: Deja Foobar
I appreciate your help in making my point for me. Thanks =)
"Do not seek to follow in the footsteps of the masters; seek only what they sought!" - Dogo -- Lambo
Politicians here, at every level, are trying anything they can think of to maintain their revenue streams.
Government at all levels here in Washington is under a tremendous pressure to reduce taxation thanks to several populist initiatives written by Tim (I'm a liar) Eyman, and passed for the most part very succesfully by the voters each time one has come up for a vote.
The State legislature has just passed a $0.09 per gallon gas tax increase, and they are down in Olympia squabbling at this very moment about whether they dare let the voters have the final say-so on the tax increase by voting for it in a referendum some time this spring.
Most of the career politicians don't have the backbone to let the public vote, because they know people will vote it down.
So it's not surprising Seattle is going to tax thinking.
They tax just about everything else...
t_t_b
I'm on PJ's "enemies" list! Are you?
No seriously. Will universites be taxed now for software research? Or will they tax the individual writers of the code? I'm sure that will go over well with them. Maybe some of the Universities/Colleges in the area should look into this as well. If their weight is behind it there should be no way in hell this will pass.
"If a quarter is two bits, then a dollar's a byte." -R Deric Miller
I'm off to the Reg®...
t_t_b
I'm on PJ's "enemies" list! Are you?
The question boils down to whether Seattle should apply the business tax to the development of software -- essentially a thinking process -- as it does to the manufacturing of off-the-shelf software products, software lobbyists say.
"The business tax"? Shouldn't the tax be applied to the business's profits, and be dependent on where the business is headquarted?
If I own ABC Software, and I'm located in Seattle, I can contract programmers in India, and contract a manufacturer in Taiwain, and sell the software all over the world. But the profits are going to be recorded in my ledgers in Seattle, and are therefore subject to any local, state, and national taxes. Am I missing something?
...so quit hitting refresh waiting to see -3 flamebait.
This comment is fully compliant with RFC 527.
legislation from clueless legislators. Why dont they just classify the iso the companies produce to be the taxed product instead of the disc. How do they tax the documentation? The software companies must be sending their docs out of the tax area to be printed. How is this taxed? And if its not then why is this an issue?
What the hell are you talking about? Should we start flowcharting millions-of-line programs down to the function level again, dish them out to individual programmers, and tell them that their function can be no more than one screen in size, all because you think we should tax software by the byte? What kind of development process is that? I sure as hell wouldn't work for your company, much less on your planet. Code size is not indicitive of the value of a particular piece of software.
And assembly language? Not that I'm defending Microsoft here, but let's see you manage a project the size of Windows XP with something as unmanageable as assembly language and see how well your development process turns out, and in what timeframe.
Get a clue, please. That type of thing only could fly in the academic world, and not the real world.
That's a great move for Seattle! That will curb and eventually inspire negative growth in a huge sector of your local economy. A classic case of biting the hand that feeds you. OK, so that was sarcastic... but maybe that means that tech jobs will get spread around a little. Software development is one industry where the only resource you truly need is smart people. Unlike the chemical industry where you need things like cheap water and power, or auto industry with good transportation infrastructure. A good software company can equally exist in towns like Chattanooga, TN as it can in Seattle. Tax the software developers... they may not move right away due to large capital investments. However, they won't ever build a new investment in that community.
Programming is an art, everybody knows that.
As far as I can tell from reading the article, all they are doing is trying to leverage the state Business and Operating tax (B&O) tax on every business in the city and then increase the R&D tax credit once they are getting everyone to chip in. Kind of a more people pay but everyone who does pay, now pays less. Except of course for the people who didn't pay anything before.
My brother and I run a small software/hardware business in WA state (not in Seattle) and we don't pay any B&O tax because of a graduating small business tax credit. But since B&O tax is based on gross revenue, I don't see how software companies should be any different. I never for a second looked at our business tax forms and thought that we should be completely exempt from B&O tax, but I'm glad the credit makes it so we don't owe them anything yet.
Is there something in the article that I missed? All I see is some politicians blowing things way out of proportion with regards to "the taxation of intellectual property". I imagine that Sam Goody pays B&O tax even they are just retailing intellectual property (music). I imagine that the all along the way, the companies involved in producing, recording, and mastering a CD all pay B&O tax, or something similar that is based on their revenue.
But maybe I missed something...
------
Where are the slash-groupies? I distinctly remember being promised slash-groupies!
This is as repugnant as the 'bit tax' proposed in the early nineties. If you don't remember, legislators were considering taxing every digital transmission that related to business. That's right, every fax transmission, every X-Y-ZModem upload and download, every corporate communication on CompuServe or Delphi. It never made it into law because everyone realized how insidious it was.
Or, if you prefer, consider the continuing debates about whether or not to tax commerce via the internet. If we allow this, we open the door to taxing everyone who purveys the internet, in order to assure the state that they will recieve the required money not provided by rogue internet brokerages.
From a human rights point of view, this law is about as nasty as you can get. What's next, taxing mathematics! Remember, software is just controlled mathematics.
Okay, okay, end rant
I've got something long and wide enough for you.
"You're just scared like a little white pussy. I'll fuck you till you love me, you faggot!"
Bah - with C/C++ (Java? C#?), whitespace is ignored. Just reduce that million line source file to one line. One very long line, but still one line none-the-less.
Go ahead, Washington State, tax those jobs right outta there!
Why, I think I here something... sounds like a phone ringing. Hello, Chicago?
For all intensive purposes, "whom" is no longer a word. That begs the question, "who cares"?
This could very well change if they extend the tax to include innovation. oh, I forgot, we're talking about MS.
If code is taxed like manufactured goods, will old code stored on servers be taxed, too? Is open-source software exempt?
Unfortunatly, it is anyway. We pay sales tax on these products, and the question is, should it be double-taxed?
"And we have seen and do testify that the Father sent the Son to be the Savior of the World"
1 John 4:14
taxing manufacturing or software creation just encourages businesses to relocate elsewhere. (look at BC's economy vs. Washington's economy)
If you want to tax, tax income. That way the people who live in a place, pay for the services they get in that place.
No, programming should not be taxed like manufacturing. Neither should manufacturing for that matter!
I do everything the voices in my head tell me to...
"Should an intellectual activity such as programming be taxed in the same way as manufacturing is?"
I think the question should be "Should manufacturing be taxed in teh same way manufacturing is?".
Reminds me of story I read a while back that was a collection of letters to the editor in Moscow, Russia. A lady complained that government mandated size of a flat per number of residences was rediculous. And then rather then say that the whole concept of only allowing a flat to be sized based on the number of people that lived there was rediculous, she went on to argue that instead of 30 sq feet per person it should be 40 sq feet per person (or whatever numbers). It was a case of not thinking about the overall situation, making assumptions and thinking in the paradigm they are used to.
I think the question asked here "Should software be taxed like manufacturing" points to a bigger question of taxing manufacturing. We're so used to taxes that we consider it just when perhaps it may not be.
like any other business..
myCompany.com sold $100 of it's flagship product,
it had paid a programmer $30 to develop (R+D cost), pays taxes on $70.
Univ of Wash gives away pine for free, after it paid it's students nothing to develop it, pays taxes on $0.
myCompany.com sold $10 worth of it's other product, after paying a programmer $20 to develop it, pays taxes on $0. (hope it does better next year, hope it can carry over some of it's losses to next year)
one major difference between normal profit taxes and this, is it sounds like you need to seperate the R+D expenses from all the other company expenses (i.e. advertising costs, administration and legal fees, etc)
LOL that is mad funny, bwahahhaha!
Well, as a Washingtonian, I'm glad to see that they're at least actually delving into other options than those already on the table.
With Washington having the second highest unemployment rate in the country, 7.5%, with oregon being the highest, 8.0%(Current Data Jan 2002, Bureau of Labor Statistics), the situation here is beginning to get downright nasty.
Coupled with all the layoffs in the hard hit sectors(Boeing, etc) and the anti-tax inititiatives by Tim Eyman that have been passed, such as the ones that limited car tabs to $30, or the one last year limiting property tax increases to 1%, the state legislators have been forced to seek other sources of revenue. Granted, they always find loopholes to nullify the anti-tax initiatives, or to get at least a portion of the tax from the areas.
Anyway, to get back to the point, many of the people of Washington really enjoy the services the government provides, yet due to the way taxes have been handled in the past few years (Especially in King County, the largest country) people are rather stoicly opposed to any new taxes. So, the government is forced to try and find additional sources of revenue. Right now, they're working on cutting any extras from the budget, borrowing against Tobacco settlements, and implementing a gas tax. These won't be enough to cover the projected deficit should it actually turn out as projected, so at least legislators are looking somewhere(instead of the infamous bickering they're known for), though I don't believe Software is the best solution.
Or is there going to be a progressive tax like the income tax rates?
$0.50 per 1KLOC .. up to 10KLOCs .. $0.35 per 1KLOC from 10KLOCs to 50KLOCs ... etc.
Or will there be a per character fee?
$0.04 for a { or } ... $0.035 for a & ... of course $150 for a or copyright symbol ...
Boy ... this could really change the obsucation contests ...
Karma? Karma? I don't need no stinkin' karma.
only if you are from redmond :-)
I am the Alpha and the Omega-3
Lars T.
To the guy who modded me down from perfect to terrible Karma - Apple haters still suck
I find it amusing that the companies that argue intellectual property is the same as physical property for control issues (eg. copying is theft), are the same companies that now say IP and physical property are completely different when the issue is taxes.
When you claim you never do that?
businesses don't just pay taxes. They COLLECT taxes.
I dependant upon every level of government to either raise money or close up shop. The only means that government has to do this is to take it from constituents (by force). How to do that fairly is an extremely subjective area. Taxing manufacturers who export goods has the effect of passing the tax burden onto people not voting for the current people in power. Hence, the popularity of hotel and restaurant taxes. The locals are happy, since their property taxes aren't raised, but what they don't realize is that the manufacturer passes the losses onto the employees by forgoing hiring, raises and benefits. This is one more case of politicians looking for more money without being up front about it.
Aah, change is good. -- Rafiki
Yeah, but it ain't easy. -- Simba
Obviously, Washington lawmakers have their heads up their asses. Most governments try to encourage these kinds of businesses, rather than tax them. Ireland, for instance, allows writers, musicians, and artists to live there tax free- knowing that building a tax haven for creative tycoons pumps billions of pounds into their economy. And it creates good jobs- high paying service jobs, which most people would prefer to logging or fishing. All Washington will accomplish with this is to hasten Microsoft's migration to India.
Plus, as if the highest sales and gasoline taxes in the nation aren't enough already...
If a book is out of print and no longer being sold, should the gov't have the right to continue to tax the author simply because the gov't feels that IP has value?
Yes. This is called a "copyright renewal." It was a feature of the Copyright Act of 1909, abolished for new works in 1976 and for all post-1964 works in 1992.
If I create a GPL'ed program, retain the copyright to it many folks the world over find it to be an incredibly useful bit of code (one that helps lots of companies save money / generate revenue) should I (as the owner of the IP) be taxed year after year because the gov't determines that bit of code has value?
After ten years, how much value do you still perceive in that code? You could just donate the code to the PD and stop paying the renewal fees.
Lawrence Lessig, a law professor and author of popular books about thought monopolies, has advocated a return to copyright renewal. Here's my slightly modified version of his system: Make copyrights on new works last 10 years. Then every 5 years, you have to file an extension to keep your monopoly, you can only file an extension a small number of times (I'd say 13 times, for a maximum term of 75 years), and after 25 years have expired, compulsory licensing under RAND terms for both verbatim copies and derivative works comes into effect.
Will I retire or break 10K?
Also, Seattle != Redmond as they are different cities.
It only taxes software developed for sale.
If you work for a non-profit or open-source programming - there is no taxable event.
End result - more open-source software in Seattle.
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--- Will in Seattle - What are you doing to fight the War?
You're wrong. They have a building (Visio is located there) downtown near Pike's Market.
Politicos need tax dollars anywhere they can find them. The object is to redistribute income from those who make it to those that don't since those who don't now are more than 50% of the population. The fact that they might kill an industry is of secondary importance to tax revenue and besides corporations don't pay taxes individuals who buy the products do (all corporate taxes are passed through to the consumer). Repeat the following manta: Politicians work for no one except themselves and those that consume tax dollars.
It is not like Seattle is the only place you can write software. They can always move to another state to avoid the tax. If they stay in Seattle, it is their own choice; they should not complain about it. Since it is their own fault for staying!!
That is what I would do if it was my software company and they where targeting extra tax's on me, I would move the day after the law passed to another state!!!!
Wise men speak because they have something to say, Fools because they have to say something!!!!
The idea of taxing people for creating, appears to be a DISINSENTIVE to create! I guess they want those who can afford to pay the tax the ability to play in the software market. DIdn't they try to do the same thing on voting?
--Perhaps if they passed a law that said people who votes for shabby legislation must have their kneecaps br0ken, that would disinsentivize bad code?
We have companies leaving Seattle because the town is wallling down around it it's ears. The roads are a mess. Boeing just moved it's HQ to Chi-town to avoid the trafic. And we all can see the rest of their assembly work following soon. If a city does not keep it's infrastructure up companies can not prosper, or even function. Seattle is sinking for lack of funds.
If a software company has many Seattle employees yet it sell nothing from it's Seattle location then it pays no Sales or B & O taxes (the taxin the article) and Washington has no income tax so why should this software company get a free ride while everyone else has to pick up the cost of roads, fire protection, etc???
Grow-up and stop free loading. We all have a responsability to where we live.
Just makes me ask isn't there enough governing to be done off in the realms of catching bad guys and providing good roads, etc... without stuffing up things they don't know much (read anything) about.
I think it's important to realize a few things...
First off, in case you aren't from Seattle (or Washington State), or don't pay attention to local and state politics and economics here, you have to know that the State of Washington is panicking right now trying to figure out how to pay for a big budget short-fall. They don't want to raise taxes or cut programs. This isn't much different from many other states right now.
What's going on here however, is that the State level government is looking for tax revenue without raising general taxes on the people. Washington State is mostly democratic and most controlled by the west side of the state. This means that we have alot of taxes and alot of "programs" to support our urban areas and their social needs. I think *all* of the politicians (especially democrats) are too afraid to raise taxes for fear of voter backlash.
We had a referrendum here called I-747 that was passed by the voters but recently repealed by the State for various reasons (most of which were political), but it really pissed off all the politicians in the state because it said the State couldn't raise any tax more than 1% with out putting it to the people for a vote first. I think it also made them fear the voters a little bit. Hence why you will see things like this, the legislators looking for a way to gain revenue and protect their favorite programs without directly affecting the general public's pocketbook and vote.
Next, you have to look at the economy in our state. We have tons of little and some large software and web companies who develop here, but do not actually conduct the pressing, shipment or production of the software here. So for tax reasons, the State is looking at these and seeing dollars flying by that it wants a piece of. What's really interesting, is that companies like Amazon (I know they aren't software really) just have their corporate and web site operations here, but the actual shipping takes place elsewhere, probably mostly for logistics reasons, but I bet it's for tax reasons too. Starbucks is the same way, and so is Microsoft. But imagine the money the State would get if they taxed development. All those web companies would have to pay, as well as MSFT (who gets pretty big breaks for it's R&D work currently).
I wouldn't be surprised if this software "development" tax issue expands to include web development directly. Right now that is what many small companies produce as their sole product, but it's not taxed that way because it's currently considered a service. I see it as the State trying to keep up with the present, but still trying to apply a 20 year old tax model to a modern day industry.
The last thing to look at is the fact that Boeing just left and what it left behind is quickly starting to consolidate and dry up. So I think our politicians are now looking at the loss of tax revenue from Boeing manufacturing (which was HUGE here for many years) and they want something to replace that.
I tend to be on the more liberal side of the fence for politics, but I think we are currently faced with a bloated government in Washington State that is very ineffecient and needs to trim down. I also think because we sit in a very divided (almost 50/50 split) in the house and senate (Wa. State not fed) no one wants to, or maybe even can, cut taxes and programs when it's probably the best move right now given the current economic conditions in the state.
My wife, who is an economist and fairly conservative, calls Washington "tariff town". Just another example, there's tax on the boards right now to raise the gas tax by $0.07 a gallon. Currently it's $0.23 per gallon (not to mention local taxes). We need some relief, but dinging the software businesses is just going to drive them away. In the end it's probably a bad idea because fewer businesses = fewer jobs = less peronsal income = less tax revenue.
My $0.07 (per gallon) on the matter,
-s-
Seattle, WA
Software companies DO pay for the services you just mentioned, in the form of property taxes.
Not really. Property taxes don't exist for:
1. contract programmers working at home (which is something we encourage here with tax breaks for companies);
2. foreign contract firms that outsource the coding elsewhere (but this taxes them);
3. the buildings - software development uses less square footage per product developed and thus pays fewer taxes, while incurring more city services for fire, police, libraries (especially this) and everything else that the human capital consumes.
Basically, the State of Washington just wants a free ride. They force us to build stadiums here, even when we vote them down, and then impose a tax paid mostly by our city for stadiums mostly used by the dark minions and lords of Mordor//////Microsoft across the water in Redmond and Kirkland and Issiquah.
We will not be cowed by the influences of the dark minions. This tax actually helps Open Source, which mostly thrives in Seattle whilst it is crushed in Redmond. For you can't tax software that has no cost.
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--- Will in Seattle - What are you doing to fight the War?
If you ask "should the creation of software be taxed", that sounds just weird. If you ask, "should a company like Microsoft pay a small part of their revenue stream, however generated, into the local economy where the revenue is generated", I think the answer is pretty clear. How you calculate that tax is another question. Talking about "taxing software" may not be the right way of doing it. Maybe they should simply stick with business real estate taxes and tax proportionally to the number of employees (because that's what creates the costs for the city).
Software creation requires mainly man-hours, and since employees already pay state income taxes I'd think the state already recieves their share and doesn't have the right to double-tax for intellectual work.
Since we don't have an income tax in this state and cities and counties cannot impose one, this is a bunch of tripe.
The only income tax we pay in this state is to the Feds.
They get a free ride. We only make sure they don't get an unfair ride here in Seattle. What the dark lord wishes to do in Redmond or Kirkland or Issiquah is none of our concern, as all the lands under his thrall are across the waters of Lake Washington.
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--- Will in Seattle - What are you doing to fight the War?
I think that there should be a tax on new laws. Each time that a new law is created it should cost a certain amount of money from the people who draft and pass that law.
We should charge double for stupid laws.
42 - So long and thanks for all the fish.
I'm not sure if this point has been made already (not in the mood for sifting today), but taxes are not supposed to be a profit sharing cut for the gov't. They are ONLY to alleviate the cost incurred by the gov't in question to help support the creation and deployment of a company's service/product. Some where further down someone mentions Coca-Cola and their case, but it is completely different with the creation of software. Software does not impact the environment at all where it is created. Nor does incur costs to anyone other than developer (or sponsoring publisher). Not even the machines it is created upon, as these have already been taxed for their creation. The gov't is going after software because they think we make too much money. When you say my brain is worth $75/hr it's not just that hour your buying it's all of the hours of sifting through endless amounts of information on new/old techniques, technologies, and costings.
There is no reasonable reason why software "manufacturing" (coding) should be taxed as it makes no impact on anything other than the coder's brain. Not to mention that the whole argument is totally contrary to the logic of a "tax break" for R&D. I think further down someone mentions this already.
Another point is that there is no way to establish how much the code was worth to produce unless you tax based on the time it took to create it, special licenses required (use of logos, SDK's, and other copyright material), and the hardware it was developed on (which is reusable across multiple projects). All of these things have already been taxed, including the time it took to create it (in the form of income tax AND the "employer's burden" for same). Also if the intention is to tax time then what is to stop the developer from saying it only took 10 hours to bang out said code instead of the 10,000 hours a year long project with 5 coders takes (conservative estimate).
None of this even takes into account the Internet, where you can make money in a round about way from making a cool app (like slashdot) that people can use for free via advertising and such. Then what do you tax? The whole infrastructure down to the server? They all had a part in making this engine function and thus creating any income derived from it. Then the gov't will need a "special task force" that is comprised of "experts" to make assessments of the value of the software systems that have been created, which of course costs more money and who's going to pay for that?
Ok, one last point. How do you tax an idea? Some would say that your entire life experience helps to shape your view of the world and thus create your moments of enlightenment or bursts of inspiration. So do you tax the coders entire life every time he concieves a new line of code? Of course not, but how could you draw the line. Any argument you can use to say Intellectual Property can be taxed by , I could use to argue an unlimited and completely arbitrary system of taxation for the same that would sound ridiculous even to the most ignorant "ludite".
Never mind that!! The whole concept of taxing people for developing software as a "manufacturing" tax is just another MORONIC attempt to gain an upper hand on people the gov't can't seem to grasp. Which is self defeating because, as we see in my province (BC, Canada), when you take the money away from coders in one place they will just pick up and move somewhere else where there is money.
"Do not seek to follow in the footsteps of the masters; seek only what they sought!" - Dogo -- Lambo
or we could just not tax it in the first place.
Of course corporations and individuals should be responsible and contribute to society!
But taxing software dev. is ridiculous, they're basically slowing down technological innovation instead of encouraging it!
Where I live (Quebec), the gov. actually encourages R&D by contributing up to 80% of the salaries of startups doing R&D. (Personnaly I think that's too much, but that's another issue)
If Washington states still wants to tax software dev.. Good for us then!!
The question we should really be asking is this: Shouldn't there be a tax on progress in general? Obviously progress is the cause of all our problems these days, so maybe if we tax it, we can stop it.
I think they should do this...
Why?
Because of the following:
a) it will act to cull the heard of professional and non-professional coders. This will lead to more stable code, solid programs, and better stabilty while getting rid of the hackney shareware and open/freeware crap that is out there today just waiting to dump your system in any of 100s of creative ways thanks to lack of skill and ability on the programer(s) part.
b) if federal, the monies could be rolled back into technology programs, education, and technology initiatives to upgrade or give low income users a computer (thus creating more IT knowledgeable and exposed people and more end purchasers).
c) it will stratify and force definition on the muzzy and hazzy world of GNU/Open licensing systems. This is actually good, because they will go away if they are bad or be held up and (maybe) not even taxed while proving their premise.
Do it!
It's not like we aren't taxed too much already. Taxation is just a form of subjugation. Cities which enact this sort of legislation, are going to lose their software industries, and a few elections to boot.
If you want to see what happens to a city which overtaxes its workers and businesses, look at Philadelphia. Whole sections of the city are empty of people since the jobs needed to occupy those homes are not available due to the presence of Tax and Spend operatchiks who drove the companies away.
Every city, without a single exception, that engaged in this punitive behaviour has found its revenues going down and its crime rate going up. This party responsible for this behaviour has nothing to lose since they are merely adding to their constituency by creating more miserable people who are likely to vote for them.
Taxing software development is just another form a class warfare enacted by the jealous upon the talented for the socialist robber barons to create homogenous misery.
Fast machines, powerfull AI, impulsive invention,... All I lack is a good espresso machine!
It's a great idea! I think that all software companies based in the state of Washington should be taxed 3000% or more on everything they create, acquire, sell, think about, or come within 100 feet of. If the federal government can't rein in those monopolists, perhaps the Washington state government can. (grin)
Tired of FB/Google censorship? Visit UNCENSORED!
Most European countries have a VAT (Value Added Tax) or GST (Good and Services Tax) so development of software is taxed. This is in addition to other taxes such as income taxes, forced retirement contributions and a mess of other taxes that would never go over in the US such as dog taxes, tv taxes, taxes on putting money into a bank account.
Australia just killed about 20 of the silly little taxes and put in a 10% GST (one of the lowest in the world outside of the US) an claimed they would be getting rid of other taxes soon. Now everything has 10% added to the prices and there is a long chain of paying and claiming taxes that is much more complex than a typical US state's sales tax. The resulting paperwork is causing some small businesses lots of problems.
Taxes are different than fees. Paying a fixed fee for a copyright is different than paying taxes on a percieved value of said copyrighted material.
Taxes and user fees are no different if the copyright law assumes a fixed dollar amount $X as the value of a work and then charges Y% of $X as the property tax^W^W renewal fee.
Will I retire or break 10K?
You're missing your own point here... If the contract programmer is working at home, then the company isn't using city resources to support that person. The work-at-home, though, IS paying taxes to support police/fire/medic/whatnot services by paying their own personal property taxes. Granted, it may not be the same city/state/country, but the services are being paid for.
I don't know enough about how foreign things work. I suppose I'm just a typically world-naive' American in this respect (Though I suspect if you asked a Brit or Frenchman how these things work, they'd be equally as clueless, unless they actually worked in foreign business)
I'm not quite sure what you're getting at here... Software dev does require less space than manufacturing, but there is an associated decrease in the public services required (When's the last time a hacker got their hand mangled by some piece of machinery?). You're right that software jobs typically "consume" more libraries, but even with that, few libraries I know of stock the kind of advanced programming books a coder would need. They'd have the beginner and intermediate stuff, because they're trying to appeal to as broad a population as possible. Dev would would require less in the way of fire support (save when those pesky UPS generators misbehave), less police (hackers generally don't resort to petty theft... they've already got the cheap stuff), and less medical support (No heavy machinery to eat people).
I can't say much for what Washington is trying to accomplish, because as a Midwest native, and an East Coast nerd, what WA is doing is totally counterintuitive to what I would see as good business sense. There is no free lunch (spoon?), and I suspect your politicians will learn this quickly, should your populace wield the weapon known as "voting" properly.
I suspect that one of these choices is incorrect. Correct.
So if you tax my intellectual property, and thinking makes me exist......
Tax by what, weight? IQ?
--Stupidity is Self Curing!
Taxation of manufacturing, software creation, and even income when used for revenue purposes are really just a second best option. Politicians lose votes when they set up taxes that directly effect their constituents, so they try to get around the people by using indirect taxes like those placed on the production process or by making the voter think someone else is being taxed more than they are (the rich really are the only ones paying the income tax, right?).
A better option would be to tax the people using state resources. A tax on gasoline that reflected the real public cost of driving a car (road construction and upkeep, pollution, etc) would help pay for transport improvements. A usage fee for public libraries would help defray their cost. Obviously in a real world situation this must be supplimented with an income tax or other form of state revenue in order to make necessary services available to those who can not afford them, but such taxation must be seen for what it really is: income redistribution.
ops,
They should implement "debate" Tax first.
each time they debating about implementing tax, they must pay tax.
-- Hasbullah bin Pit (sebol)
Hey, free software and open source are not non-profit. Take a look at this company.
Hmm, maybe it would actually be a good idea to tax all non-free software development and forward the collected taxes as aid to the FSF or some other organization.
Some folks need to get their facts straight before they go off on their Libertarian rants. This WA state tax is on GROSS RECEIPTS. Not on pure thoughts, ideas, bits, bytes, or neurons firing in your head. It is a tax on business activity conducted in the city of Seattle.
Most all businesses in Seattle (and in the state) are assessed a "business and occupation" tax. Why? Because we have no state income tax. Small businesses pay it, manufacturers pay it, retail companies pay it. I paid it when I was a self-employed web dev. Without a state income tax, we are forced to create a hodgepodge of sales, user and property taxes to fund basic public services. This is one of them.
Many software companies have avoided paying this tax because they take advantage of loopholes that allow them to conduct 98 percent of their productive business activity within city limits, and then avoid the tax entirely simply by burning and packaging their CDs somewhere else. There are also numerous exemptions targetted specifically at tech companies. I believe if you don't make a profit, you don't have to pay this tax at all. So it really does not adversely affect startups.
The city has argued, quite reasonably, that coding is part of the process of manufacturing software. Any idiot can see that. Therefore, developing software -- a core part of manufacturing a software product -- is taxable business activity. This is NOT about singling out software companies for taxation. It is about ensuring that software companies carry their fare share of the tax burden required to support services provided by the city.
Those who argue that software companies have less of an impact than polluting industries such as aerospace or pulp mills have a point. To a degree. But software companies clearly use city services and infrastructure. Their employees drive on city roads, and they make demands upon city fire and police. And these companies use the city's power, water and sewage infrastructure. Why should they pay no city biz tax, while all the rest of us do, either directly as employers or self-employed workers, or indirectly as customers of stores and restaurants etc?
IT employers love to kick and scream about not being able to find enough skilled employees, about our secondary schools not producing enough grads skilled in math and science. And they want the public to pay for all training costs, they want skilled "plug and play" workers trained in all the latest technologies, but they don't want to pay ANY taxes. Here in WA, the biz community is strangling our public education system to death as they bitch and moan and get more tax loopholes and exemptions, and put more and more of the tax burden on individual citizens. They talk out of both sides of their mouth.
If you want a top-notch city infrastructure in which to run your company, and you want skilled local and regional job applicants, you need to buck up and help carry the load with all the rest of us.
Corporations the size of Boeing and MS don't really pay enough taxes to make or break a budget when compared to the thousands of people they employ. They need to consider changing their tax policy in Washington in relation to private citizens. The government officials may have to take a bullet and do something unpopular to balance things out. Until then I'm just saying that no new software business will ever move into that community and some developing businesses may leave. That's a side effect of being a hot spot for a certain industry... You have to cater to them or they will leave and take your job with them. Then who are you going to count on to pay taxes? The thousands of people now without jobs?
Tennessee is 350 million short this year on its budget. They're not about to tax industry to keep up the pace. They're targeting consumers and raising the sales tax if a new bill passes. No one is going to pick up and move over it... Its too hard for a family to move considering no one is going to give them millions in incentives and tax breaks to move to Chicago and do their jobs.
I'm not free-loading, I take great pride and responsibility in where I live. That is why I'm trying to encourage development which ultimately with smarter taxing and smarter spending will lead to prosperity.
In the late 1980s Big M$ (more like Medium M$ at the time) was located in Bellevue, WA, not Redmond. They tried to negotiate a lower tax rate with the city of Bellevue. The city said no. Microsoft said good bye, we don't need no stinkin' taxes. Care to guess how many dollars Bellevue lost to Redomnd that way? Boeing showed the way, it's probably easier to move a software company than a manufacturing company, just unplug the boxes one place & plug them in somewhere else. Tax xomething and there will be less of it...
So why not impose income tax? That's what pretty much everybody else is doing; it's less likely to backfire than target-speficic novelty taxes mentioned inn the article.
Why compare an intellectual activity to an industrial one? I think the question they should be asking is whether to tax software the same way as other creative works, such as books, art, or music. Do novels get taxed by the state in which the author lives, or by the state where the publisher has them printed?
There's a better article about this in the Seattle Times at http://seattletimes.nwsource.com/html/localnews/13 4418970_software12m.html
Four fifths of all our troubles in this life would disappear if we would just sit down and keep still. -C. Coolidge
There are too many to go into in details. Let's just focus on the main one.
There are no major theoretical differences between Property Tax and Income Tax in terms of their impact on personal privacy.
1. What you do on you land, in fact, DOES affect how you're taxed. (It's called zoning.)
2. Income tax as it's implemented in the US is so complex and invasive only because the govenment is trying to implement social policies.
3. Property tax or wealth tax could be even more complex and invasive than Income tax is today. (Look at Estate Taxes.)
4. A simple income tax is entirely possibel theoretically.
But I think your real beef is with the progressive tax rate:
It is the income tax that allows the government to bribe the majority with money coerced from the minority. It is the income tax which spawns most of the tyranny that the US government practices (admittedly, still less than most places in the world). It is the income tax which sterilizes citizenship by removing the ability of citizens to control their government's behavior by changing their own behavior. It is the income tax which poisons public debate by allowing people to obtain benefits without costs, and thus makes the incentive for an individual to go along with a government program - lest their own government teat be attacked by the beneficiaries of another program - unless they are in the unheard minority who have to fund whatever the latest government program might be. It is the income tax which is LEAST useful and sensible to a free people.
A couple of points:
1. Those with higher income usually amass more property. Thus, they are using more government services, i.e. the police, army, and fire department, who are defending their property rights.
2. It's facinating that you don't mention VAT which is heavily used in Europe. While similar to Sales tax, it taxes each components of a final product at each assembly step. It has minimal impact on consumer privacy.
3. US conservatives dislike the VAT because they feel it hids the amount of taxes being collected. They PREFER the income tax because it keeps reminding the voters how much the government is 'taking' from the people.
4. You can breath easy. Since the US Supreme Court has ruled that money is speech, those with money should be able to continue buying politicians as needed regardless of how the unwashed masses votes!
The problem with an income tax in Washington State is that nobody here trusts the politicians (wow! really? how unusual!). We'd probably go for an income tax if it replaced existing taxes, but everyone knows that none of the other taxes would go away, or even be significantly reduced.
What might fly is a constitutional amendment that forces the Legislature to totally re-structure the tax system such that they can't impose the old taxes again once an income tax is in place. And that'll never happen, because in Washington only the Legislature can amend the Constitution.
If all this should have a reason, we would be the last to know.
The Wasington B & O tax is simple tax on gross sales (Like a sales tax only taken away from the sellers gross, not added directly to the buyers cost). B & O taxes were created, in part, to handle the case of wholesale as Washington sales taxes apply only at retail.
Seattle is simply saying that software is just the same as insurance claims processing, car repaire or airplane building. The tax laws also handle the case of making a part in one location, say Seatle, and shipping it to another location, say LA, where it gets included in a second product even if it is all don einside the same corporation. It's no different here. Tax laws handle internal transfers just fine.
As far a an income tax. Washington has among the most regresive taxes in the country and they are geting worse. We have a half-wit tax crusader who keeps cutting progressive taxes (progressive is a term of art that means the rich pay proportionally more) and then businesses bot to the legislature screaming that we need to fix our infrastructure so they are forced to raise regressive (regressive==the poor pay more) taxes such as sales taxes and gambling. And the voters are in no mood to use their brains.
We need better, broader education in this county, but that is off topic.
This and other tax law of Washington is why this state may not see the recovey that other state are seeing now. I am moving to Flordia because this state is unfriendly to business.
They are:
Now, lets apply these to the proposal shall we?
Point 1 isn't questioned here. Point 2? You blew it. Point 3? Very doubtful this proposal makes it. Point 4? Hmm..50/50. Easy to pay, but due to point 3 it might be costly to work out what should be charged.
So, the proposal failes on at least two out of four of the rulse, and arguably on a third as well. So it's between 50% and 75% 'bad' according to classical theory.
Time to think again.
Cheers,
Ian
1. contract programmers working at home (which is something we encourage here with tax breaks for companies)
You're missing your own point here... If the contract programmer is working at home, then the company isn't using city resources to support that person. The work-at-home, though, IS paying taxes to support police/fire/medic/whatnot services by paying their own personal property taxes. Granted, it may not be the same city/state/country, but the services are being paid for.
It still costs the City of Seattle money. We have to provide for the landline there and its integrity, the ability for the home worker to visit the HQ (roads, other usages), the phone line to the HQ - and in Seattle we OWN the land line space which we RENT to telecoms, unlike other cities.
You may not like us, but we are our own city. If companies don't like it - they're free to move elsewhere. But a LOT of companies seem to like it, so we're not about to change to please the tax leeches///////avoiders nearby.
Right now more than 1/3 of our taxes collected in the city are sent to the county and state and never spent here. We have the highest rate of that in the whole state among cities.
You reap what you sow.
--- Will in Seattle - What are you doing to fight the War?
Our citizens LIKE this program.
It's the dark lord in Redmond who dislikes it.
When he moves to Seattle, he can vote on our taxes. Until then, we decide how we tax those in our Emerald City - and the State would be well advised to stay away - for if we pull the plug on the budget, nothing will get done - and since we subsidize the county and the state very highly, we actually can fill those services locally, whilst the rest of the state learns who really pays the taxes. It's us.
-
--- Will in Seattle - What are you doing to fight the War?
Isn't it?
Consider..
When I log my hours, I log not only time spent, but on what I was working on..(obvious enough)
Mgmnts justification is that expenses that are related to Capitalizable projects are taxed at a different rate.
With that in mind.. isn't your work taxed? I guess it does raise some intresting questions for the open source community..Like.. could hours donated to an open source project count as a deduction? Why not?
The problem with washington is they have a massive budget short fall, but really no programs that can be cut. There was an initiative that barely passed, limiting government growth when the economy was booming. The idea was to create a rainy day fund. And surprise surprise, the planning worked. We had a massive surplus that would have helped us ride out a rough spot and avoid binge and purge spending so common in governments. The only problem is the economy was booming, and there was a huge surplus so the inbred hicks that account for most of washington state, just naturally assumed that the economic boom would continue indefinately. A perfectly reasonable assumption. So they decided on significant tax cuts, most significantly in the taxes that went to pay for road repairs and construction. That surplus that should have protected us? Not what it was. Government can't get much smaller without eliminating important services thanks to the limited growth. And government has to create innovative ways to raise taxes as most of the normal routes require approval by the voters, who are inbred hicks. Sure, in King County and most of the metropolitin areas things go in a more or less intelligent manner, but state wide people vote for these insipid initiatives assumeing that government should run on prayers and wishful thinking. I literally could not have more contempt for these people. The people responsible for the current state of affairs are the hick, conservative voters. Not the politicians, no one else. But hey, maybe next year washington will be forced to teach the "intelligent design" version of creationism. After all there is "no evidence of evolution".
Personally, I think we need a law that would return taxes to the community that paid them. Sure, I realize it would probably be unconstitutional. But if these idiots had to pay their own way, and didn't have the wealth of cities subsidising them, they'd change their tune about the responsabilities of government real quick.
Oh, and Boeing leaving. That has nothing to do with seattle's infrastructure. That has to do with their plans on moving to ever greater amounts of foreign outsourcing. And strikes outside your corporate head quarters are a little more difficult to pull off if the workers are far away. They made a lot of excuses about how washington wasn't competative tax wise, but Boeing got spectacular tax exemptions.
--Jimmy has fancy plans; and pants to match.
thats what the title should be.. ugh.. mod -1 for shitty typing.
Software development is one industry where the only resource you truly need is smart people. [...] A good software company can equally exist in towns like Chattanooga, TN as it can in Seattle.
Yeah, right. Like smart people would want to live in Tennessee.
This is such a great Idea I'm surprised that San Francisco didn't try to pass it. ;)
What if it is just turtles all the way down?
Doesn't income tax do this already? Aren't they effectivly taxing the creating of my company's work by charing me income tax? The flow of much is circular so a tax here or a tax there doesn't change the big picture.
There is a very convenient loophole to exclude Aldus, for sure. That loophole being: they no longer exist. ;)
You probably mean Adobe, current guardians of the PageMaker legacy, also with Seattle offices.
Carry on...
//
The one thing that really gripes me about inheritance taxes, though, is that in order for them to hold water, they necessitate a gift tax. It's there to close a loophole, to prevent Rich Dad from slipping a few million untaxed currency units to the kids sometime before he joins the choir invisible. IIRC the gift tax imposes inheritance-equivalent taxes on any transfer of assets exceeding $10,000 in the US.
...when you're writing a game...tweak the difficulty of "Easy" to something [your mother] can cope with. -- onion2k
I mean, where does it stop? If I create a shell script to add users to my e-mail system, does that get taxed as software? What about web scripts that talk to databases like PHP; do you tax someone for that? Do you tax it if it's for business use but not for home use? I don't know software development is too much like writing to me. We don't tax authors for books written we tax them on the profit they may from the books, seems like it should be the same. I mean, talk about an innovation killer (well, I could write you a shell script to do that, but I can't afford the taxes on it...) This is just nuts (and the only Seattle company that could afford it....Microsoft....oh joy
My short version I:
- A high sales tax can kill your economy
- A high income tax can only slow it down
My short version II:
- A high sales tax kills all high-volume low-margin bussiness
- A high income tax can only cut profits
My short version III:
- Look at Argentina's economy, which is collapsed due to 21% VAT + 3% gross sales tax (income tax doesn't matter when you don't have profits).
unfinished: (adj.)
It is the income tax that allows the government to bribe the majority with money coerced from the minority.
No, it's the sales tax that rapes the masses spending-power so that the goverment can "secure" some companies revenues even when they do not innovate and battle against competition.
People that earn $2000 a month spend something like 95%. People that earn 100.000 a month spend about 30%, the remainder is savings.
This is ok, if you want the USA to be, for example, like Brazil.
unfinished: (adj.)
can't let anything go buy without taking a piece of it. i hope they all even up dead in a desert with vultures picking pieces off them. that would be justice.
Now if we could just get them to move that tax a little north.... Say to Redmond....
The race isn't always to the swift... but that's the way to bet!
That Dwight Dively guy.
Dively added. "There are those in the software industry who basically feel that they shouldn't pay taxes at all -- and hence this amendment."
Nuff said.
Since the government is the entity responsible for manufacturing the money, and the people are the consumers of that money, then why does the government need the money back? Sounds rather inefficient to me.
It's not that simple. What the government needs to run is various things of value -- equipment, land, faciities, supplies, labor. It takes these out of the pool available for private consumption, one way or another. Whatever the government consumes is by definition not consumed by the private sector. Taxation is just the way we distribute the removal of value from private uses and put them to public uses. The taxation would still exist whether you actually filled out a form and sent it in or not, so long as the government is consuming. What you are proposing amounts to a consumption tax on goods of the kind which the government needs. That is to say you pay in terms of higher costs for factors that the government uses.
Suppose businesses A & B produce the same economic value, but A uses goods which the government needs much of and B uses goods the government needs none of. Then A effectively pays taxes and B does not.
And what happens when the economy contracts? You still need teachers, firefighters and policemen.
the economy would be a great deal more stable since the primary instability in any ecomomy is fluctuations in taxation.
I'm curious where you got this particular factoid. It seems more like the opposite to me -- tax revenue fluctuates with economic performance.
If the amount of money they receive is directly proportional to economic health and stability of their region, the politians will be more motivated to selecting sound laws and policies as opposed to the parasitic ones they foist on us now.
This, I think, would be a terrible idea. Poor regions need to create infrastructure so businesses that might locate there can ship their materials in and goods out. They need to provide police services so that they aren't robbed blind. They need to provide a literate work force. A region that had a string of bad luck -- for example when an industry moved out, would sink like a stone and stay there. You would have the regional equivalent of slums. Slums do not benefit the cities they exist in; mega-slums will not benefit the country that tries this scheme.
The bottom line is to control government spending, you need to control politicians. Without control of politicans then spending will never be controlled under any system you might want to impose.
the politians will be more motivated to selecting sound laws and policies as opposed to the parasitic ones they foist on us now.
The problem with all the clever hacks I've seen proposed for the taxation system is that they are ass-backwards and pie-in-the-sky. You need spending reform, to control the diversion of goods from private consumption. You need taxation reform, to distribute this in a fair way and a way which does not interfere unduly with economic systems that are working well. But to get any kind of reform, you have to start with political reform, which means an end to plurality voting and the two party system so that new ideas are possible in the public sector.
Post may contain irony: discontinue use if experiencing mood swings, nausea or elevated blood pressure.
An actual incident:
Several years ago, one of the big aerospace corps (I forget if it was Lockheed or Rockwell) wanted to reopen a plant up here in Palmdale, California. This would have resulted in about 5,000 new high-paying jobs desperately needed in the severely depressed local economy, plus all the construction jobs involved to upgrade the facility, new jobs in the various support industries, etc.
The city of Palmdale said, "Sure! But first, pay us this $10,000 fee. BTW, here's a copy of our new, higher tax schedule for incoming businesses."
The aerospace corp said "In your dreams," and reopened a plant in Georgia instead.
Real smart, Palmdale.
Seattle, are you listening?
~REZ~ #43301. Who'd fake being me anyway?
So, does this affect ASP's? What if the s/w is developed in the burbs, but hosted in the city? Or vice versa?
Definitely yes, software, just like any endeavour should be taxed.
Why developping software be any different than building a house, drafting a set of plans or publishing technical books?
>they're based in Redmond, across the Lake, where the demons lie.
It never fails to amuse me when native WA'ers point frantically at Redmond as the source of "evil". As if there's those Microsoft flags waving on every flagpole. As if the Microsoft buildings weren't a hell of a lot closer to Bellevue/Crossroads than they are to downtown Redmond. Let's hear it for "unincorporated King County".
'Course, downtown Redmond's city planning map resembles the average Microsoft product, so maybe they actually have something there...
--
That would be cool. Imagine the incentive to write dense, compact code becase you'll be charged by volume. Windows would be taxed like a Detroit gas guzzler and things like QNX would pay zot all.
Xix.
"Everything is adjustable, provided you have the right tools"
I lived in Seattle for about 20 years, and I can tell you that politics in the Pacific Northwest are weird (if by "weird", I mean short-sighted). Olympia has a history of trying to piggyback financially by taxing the **** out of large companies in Washington state. It amazes me that they're continuing this route after bending Boeing so far over that it has started to move its operations to a more tax-friendly environment.
moto411.com
Microsoft closes its Visio branch in Seattle, moving the teams to open space on the main Redmond campus in building 16, 17, and 18. And I was wondering why I was moved...
RealNetworks moves to Canada.
Amazon.com doesn't turn a profit. Oh, wait.
Wow, I think this is the first Slashdot post in a long time that caught news after the paper.
If software creation is going to be taxed, it should be on a per-seat basis, and per the functionality of the software, not the price it's sold for.
That way, companies like Microsoft will pay a higher tax than companies that develop small packages that don't generate as much revenue.
Also, this means that Free Software packages that are popular will place a considerable tax burden on the developers. The irony of the GNU project being charged a tax for every copy of GCC that is shipped with NetBSD, FreeBSD, OpenBSD and CygWin is amusing.
Linus Torvalds will quickly be driven to bankrupcy, as will the Apache, Gimp, and any number of other popular team-developed projects.
People that earn $2000 a month, if they have any kind of clue, are spending about $800 of that money on real estate, which represents a certain amount of 'savings.' Granted probably most of the money is going toward interest payment in the early period of their mortgage, but it's not money straight out the window.
Does anybody really still not understand this? Companies do not PAY taxes, they COLLECT taxes. Business tax of any kind is just another expense that has to be built into the price of the product. Any legislator whose version of tax relief for us peasants is to tax those big old evil corporations is lying, plain and simple.
If we completely did away with all corporate taxation and replaced it with a national sales tax, properly calculated, the net cost of living would be the same. The differende would be that we would KNOW how much tax we were paying. Congress wouldn't like that at all. Educated citizens (oops, sorry, I meant "consumers") are the last thing they want.
This looks like a subversive attempt to backdoor recent efforts to deem source code "speech" by way of a legal precedent. If this thing goes through, code becomes a product, and begins to fall under regulations by the US Dept. of Commerce, among other entities. It will no longer be protected by the First Amendment of the constitution.
Cool! Amazing Toys.
* income taxes - The government's motivation ... tax rate as high as possible without sparking a revolution ... Since there is no feedback loop ...
there is a feedcback loop, but it is a much longer-term one than for the other taxes.
the richest / most productive people will tend to migrate out of a highly-taxed society.
e.g. look at france.
Working for necessity's mother.
The people who build expensive boats remember 1991 as the start of a war. That's when Congress imposed a 10 percent tax on all boats costing more than $100,000. While it's true that most folks who can pay $1 million for a boat can pay $100,000 more, many potential buyers flat refused. Couple that with a bad economy and high interest rates, and the big-boat industry was knocked flat. Viking went from two plants and 1,500 employees to one plant and 70 employees.t ures/pawlingYacht.html
Shamelessly cut and pasted from an article found here. http://www.shorecast.com/html/Features/PawlingFea
Try that tax and you'll probably see Bill Gates and Co. pack up and hire Mayflower Moving Co.
When will they ever learn?
The truth shall set you free!
umm.. not defending VB here, but since you were talking about number of lines, wouldn't assembly code be like twice the line count in VB since you'd have to explicitly move stuff into registers, into memory, push parameters to the stack on function calls and the like?
"It is the income tax which poisons public debate by allowing people to obtain benefits without costs, and thus makes the incentive for an individual to go along with a government program - lest their own government teat be attacked by the beneficiaries of another program - unless they are in the unheard minority who have to fund whatever the latest government program might be."
And that I d say is a positive effect, since it is the duty of the citizen of a republican democracy to work with the government. Wether he was in the minority or the majority electing the goverment is irrelevant, he/she has freedom of expression, a right to vote, but surely not the right to work against the goverment. It has been elected only by a relative majority, but it is recognised by *everyone*.
The tax is only on intellectual activity, so Microsoft is exempt.
People that earn $2000 a month, if they have any kind of clue, are spending about $800 of that money on real estate, which represents a certain amount of 'savings.'
Yes, they are paying it to the guys that had a 70% savings ratio. A sales tax cuts their $1200 like butter, which is worst imho.
But I don't care. People that run the stuff try do their best and that's fine (I guess).
unfinished: (adj.)