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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?"
Research and Development time is tax deductable.
Does this apply to non profit stuff like open source?
Hacker Media
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!!!!
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.
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?
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
The city did provide a decent location for the company to have it's offices. It had to provide schools police, etc.
You may argue that these costs are covered some other way, and I might even agree with you, but the city does provide many things for the company.
Companies (and the rest of us) want it both ways. Provide me a great place to live - no pollution, friendly people, good schools, open space, parks, recreation, low crime, chicks in thongs (oops I digress) and I don't want to pay.
These things cost money. Someone has to pay. If you live there, or have a business there, you should have to pay too.
I think this idea, though it may not be a good one is a way to help allocate costs to those that are there, even if they find a way to shift the monetary activity elsewhere.
Cheers!
So, the $6.50 in tax for a $100 trip to buy clothes hurts the mother of 3 earning $5.75/hr a lot more than the well-off geek earning $35/hr.
Now do you understand? Sales tax only makes sense for bloated local governments, and not the people who are taxed.
Why get taxed twice (or more) on everything you purchase? Ever look at a utility bill? Consumers are routinely screwed by taxes for utilities.
Method of processing duck feet
Well, Microsoft sure tries!
True, as do a lot of other companies. I remember Sun getting into a lot of stick because they claimed that Kevin Mitnick cost them "billions" (or maybe it was lots of millions). IIRC The IRS came sniffing around, basically saying "Oh really? Why haven't you reported these 'billions'?" I think Sun quickly retracted their statements.
As for taxes, property taxes are a really squishy area. It depends all on how the gov't decides to assess your "property." Of course, they're the ones assessing and collecting, so it always smacks of a conflict of interest. I say stick to taxing the things that require no guesswork. Tax monitary transactions (sales taxes) and income if you have to tax. Maybe property in terms of real estate. But that's about it. IP is a very, very, very vague thing that would lead to a lot of abuse (both by the gov't and large corperations trying to dodge it).
The gov't here in VA is already values my car more than the market would should I sell it now (and taxes me accordingly), I don't want some gov't accountant telling me that the software my company creates is worth $X (for very large values of X) and tax me annually on it (above and beyond the sales taxes, income taxes, SS taxes, etc that we already pay)
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.
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.)
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.