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Illinois Considers Taxing Custom Software
Foobar_Zen writes "Illinois Governor Rod Blagojevich is proposing to tax custom software; he is hoping to generate $64 million.
You can read the story at burrwolff.com.
I am wondering if there any other states that currently tax for custom software? How is this going to affect Illinois? What does this do to independent application and software developers?" And what about software that adds value but itself is available without charge?
Pshaw. im more concerned about the watercraft tax....
Comment removed based on user account deletion
I doubt this could ever go through, since the definition of 'custom software' is too vague. Would this tax me if i installed a copy of ms office with custom options? What about 3rd party plugins (paid for by me, or free)? What about rolling my own linux kernel? Or even making my own distro. And as for little programmer shops that would ultimately feel the heat, does this mean that when they package up their software and put it up on a shelf it's no longer "Custom software"? Bad idea, bad definition, bad enforceability, bad tax revenue idea.
Will wank off Linus Torvalds for fame.
If this is going to affect the commersial use of opensource, this migth be a very bad thing.
The system had the verbosity of HTML combined with all the readability of compiled assembly viewed as bitmap images
Not too hard to figure out - pay $10 million for a custom system in Chicago, or pay $9.5 million for the same system in Gary, Indiana.
...and who gets to define it?
Just sell a license for a lifetime. You can just sell them licenses each time you charge for changes.
I think the fed should levy custom duty on software from India
And what about software that adds value but itself is available without charge?
I would think this has to be executed as a sales tax, where the tax is applied to the billed amount on the invoice. Value but no charge would be next to impossible to implement and audit.
-Pete
Soccer Goal Plans
3. Tax private non-retail sales of watercraft
What's watercraft? Like witchcraft, but wetter?
This is the sig that says NI (again)
Yay! Just what the world needs, more archane, archaic taxation systems that mean that you have to employ people just so you can be sure that the government is taking the right amount of money from you.
And if you pay too much - forget it, you'll never see that money again. If you pay too little, they'll take you to court and add huge fines.
You can't win, you can't break even, and you can't even quit the damn game.
'Don't worry' said the trees when they saw the axe coming, 'The handle is one of us.'
Well, 6.25% of 0 is... 0
(For those too lazy to read the article, the new tax is on "software licensed or leased by the developer", currently not taxed)
The governor estimates a business tax increase of $64 million by eliminating the distinction between canned software sold at retail (subject to sales tax), custom software (subject to service occupation tax on the value of tangible personal property transferred with the software) and software licensed or leased by the developer (currently not taxed).
Could anyone more knowledgeable about law explain the implications of this?
Ansi's and stupid tricks!
Would the governor pay tax for software he buys?
Be you Admins? nay, we are but lusers!
The relevant section reads:
1. Initiate sales tax on custom software: The governor estimates a business tax increase of $64 million by eliminating the distinction between canned software sold at retail (subject to sales tax), custom software (subject to service occupation tax on the value of tangible personal property transferred with the software) and software licensed or leased by the developer (currently not taxed). The Governor's proposal would either repeal the Department of Revenue regulation that distinguishes between a sale and a license of software or create an entirely new tax on revenues from software licensing.
If I were a company director, the first reaction would be to see if open source software exists to do the same job, and if it were cheaper to hire/contract to write inhouse software. Looks like this would hurt contractors/small companies than anything else.
The matter of the fact is, is that if this causes too many problems, people will just leave the state, or stop producing software. Then when the Govenor realizes that his tax is not working, or that he is causing a brain drain effect, he will wisen up. Taxing something as amorphous as custom software is a great folly, and honestly, people will not stand for it.
je suis parce que j'aime
Good April fools joke slashdot! Free Software indeed. There is no such thing...every store I've walked into sells stuff for money. I don't see anything free. Next, you're going to tell me that there are people distributing the source to their software openly! LOL.
I just wonder how big the check from the Indian government was. There's no better way to kill any possible IT revival in this country than to tax it to death. Way to go Illinois!
Tea and kung-fu. Life is good. Rising Phoenix
The governor estimates a business tax increase of $64 million by eliminating the distinction between canned software sold at retail (subject to sales tax), custom software (subject to service occupation tax on the value of tangible personal property transferred with the software) and software licensed or leased by the developer (currently not taxed).
The story made it sound like there was going to be a new tax on all software created and not sold in a retail store. However, reading the article carefully, it sounds like the tax is only going to be levied on software that is sold with software (hence, "customized" to the hardware). As noted above, software licensed or leased by the developer will not be taxed, and I believe that most software developed falls under this distinction.
Of course, I am not a lawyer, but it would hurt my business here if there were extra special taxes applied to my software (and the consumer, of course). I guess I will have to find a lawyer to explain this to me more clearly.
At least the proposed Illinois tax only appears to only tax the cash that changes hands. But again, it's only at the press release level and there's no real wording that I've seen.
The article isn't very clear.
So, the software component of a service that I provide is taxed as if it were shrink-wrapped software, and everything else (business analysis, support, etc) is taxed as before. What an extraordinary extra burden on both service provider and customer. Just the mechanics of deciding what is 'custom software', what is integration work on off-the-shelf software, and what is enhancements to existing systems makes my head hurt already.
Is this some sort of stealth plan to wind down the Chicago financial center and move everything to NY or something? Sigh.
Good news for Chicago tax lawyers, though.
Whence? Hence. Whither? Thither.
Illinois loses all in-state software development. Thousands laid off as those jobs are sent overseas.
If someone says he and his monkey have nothing to hide, they almost certainly do.
Now today, we get his quick fix plan to tax custom software! And I'm sure we'd all agree this is much better than a casino in Chicago, right? Right??
Bah! Me no like politicians.
Taft
As someone who has dabbled in and out of the IT business for almost 20 years (I'm also an attorney and CPA), I have an announcement: I'M LEAVING THE IT BUSINESS. You all can have it. I for one have had it with M$oft, their worms and viruses, SCO, their lawyers and boogeymen, and now all the government creeps who figure they can solve their own budget shortfalls on our backs. Good luck to the rest of you, and I hope you eventually get the professional respect you deserve. (Rotsa ruck....)
Why cna't human beings, particular the borderline variety known as politicians, get it in their head that just because [insert abstract concept here] exists, it is not a target for taxation. A much more fair and more logical system exists. That is, we decide what things need to be bought in common (military defense, roads, city water) and then we decide who it is that benefits from it the most. For defense, we'd all chip in, but that water main put in for the corporate headquarters that just moved in... well, they see 95% of the benefit for it, make them pay for the bulk of it. Tax whatever it is that they make. When they've mostly paid for that, repeal that tax... they should only be paying for their shares of roads/defense.
Politicians that wake up one morning with "Hey! If we tax air breathing, we can generate $9 trillion in revenue!!!" should be barred from public office.
Would the governor pay tax for software he buys?
I'm not sure about the governor, but I'm sure his staff would.
Writing software is a service. So is legal work, plumbing, lawn mowing, ... If they're going to tax custom software, then _all_ services should be taxed.
Maybe they'll outsource the custom programming to Missouri or Indiana er... India.
Offtopic, but on the case of collecting sales taxes online, how is a online business different than a mail order/catalog store? Why not use existing laws to collect state sales tax sold on goods to customers in your state? Is it really that hard to figure out?
"The problem with socialism is eventually you run out of other people's money" - Thatcher.
I'm pretty sure that this doesn't affect if you just give away your software for free. So, no worries, pals.
We already charge sales tax on the consulting services that are the development of custom software. Since we're not selling them "software" we're selling them a service they don't get invoiced for the software. The service is already charged sales tax.
On the other hand, 10% can easily be hidden in the price of the product. Any good product worth it's price is worth it's price at 10% higher.
Interesting to notice that most posters are talking semantics. Have you ever considered that it is basically an illegal action to simply tax something because the government runs out of budget? Who are they anyway to tax this randomly? I think this is a more important question than simply looking at the exact definition of the word 'custom'.
From the article:
"...and software licensed or leased by the developer (currently not taxed)"
As almost all software is "licenses" rather than sold, does this mean software in IL is effectively tax free at the moment?
I can see why they want to change it...
These people forget that if you tax an activity, it serves to discourage the activity. What this does is discourage software programming in Illinois.
Don't blame Durga. I voted for Centauri.
Well the trick is to find a Programmer who will do all this custom software development for free? Custom Software development usually always paid. Because with "Free" Custom Software development, first you will need to find a programmer willing to do it for free, which will be hard because a lot of custom software development is usually quite boring and the programmer will not get much credit outside the company that is using it. But say you did find someone to develop it for you for free the next trick is keeping them motivated to get it done,"its free so they can take as long as they want its not hurting them any", plus if the person is doing it for free then they probably have a paying job or are in school, the slim possibility of being independently wealthy. But in most cases the job will be worked on part time at best. So by the time the application gets done it will be a long time. and probably a lot of loss productivity.
Also most Custom Software doesn't bother with any sort of licensing basically as the programmer makes the code and sends it to the customer and they pay him for his hours the code is their they can do whatever they want with it.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
The software is free, and copyrighted, and useless without a dongle.
The dongle costs $$$. The only "custom" software in it is the authentication key, and if they're going to tax that, they'll have to tax RFID chips too.
Any other problems?
To a Lisp hacker, XML is S-expressions in drag.
Most countries that have a sales tax also have a tax on services. In Europe its called VAT and in Oz/NZ its called General Sales Tax (GST). If they start this, I expect it won't be long before every service is taxed just like current sales tax which sort of makes sense in a service economey. Of course the better solution would be get better value for our tax money.
Are there any services that will email you when a new /. article is posted?
Live web cams
Well I will just have to give them the software for free, but charge them a monthly fee for potential support calls. I'll probably get a much better revenue stream that way.
meh
Why does the governmet insist on defining software creation as a corporate-only activity?
should I put on my tinfoil hat now?
Why don't you embrace your slashbotness instead of living in a dreamworld?
Not only that, Ohio taxes services as well. If you get a flat tire, you not only have to pay sales tax on the tire but you also have to pay sales tax on the labor it takes to install the tire.
Our company is in Cleveland Ohio and we get hammered with an 8% sales tax on everything we code.
The fact that the majority of our coders ssh in from out of state doesn't seem to matter, Ohio still wants their cut. As a direct consequence our company is moving to Austin Texas next year.
I think that's what the problem with this idea is. If Company A hires Company B or Contractor B to write a custom piece of software for them, it would be exactly the same as if I had a person from Company A do it. In otherwords, I am not 'buying' software from anyone. I am 'hiring' a knowledge resource only. The software was never purchased.
I don't write custom software. I write commercial software that is so specialized that I only have one customer who buys it. It is not my fault that nobody else wants an application that opens the XBS Database and runs some queries on it. If they are out there they should call in and I can sell them the software. But I don't have the funds to advertise it so I only have one customer. But being a good business I listen to what my customers have to say about the product and in future releases I add features that the customers have requested at a nominal upgrade fee.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
As both a resident of Illinois and a freelance developer, this doesn't look good. While my paying clients might not like having to fork over another 5 - 10% above their quoted price, this could absolutely destroy free software.
Here's the dangerous part:
(subject to service occupation tax on the value of tangible personal property transferred with the software) [emphasis mine]
The law is written so that the tax is applied to the value of software transferred - IOW, installing Linux on a client's computer could cost the customer $250 - 500 regardless of how much you actually paid for it. Should the Illinois Government use the Microsoft pricing model ($5000 for a server OS...), a developer who volunteers to help out a client by installing Linux on their server could end up owing the state $250 to $500 in sales taxes.
The biggest threat I see to this is the destruction of free software. Since the tax is charged on the value, rather than the price charged, even giving away custom software would impose a tax liability on the author.
And believe me, there are a lot of programmers in Illinois that will remember this when the elections come up. With the economic downturn, quite a few of us have had to resort to picking up side jobs for extra income - the last thing we need is a tax which would take away our business.
The society for a thought-free internet welcomes you.
At least here in Brazil they are.
There is a TAX called "ICMS" (Tax over circulation of services and merchandise) that you have to pay if you sell stuff or if you are contracted as a professional to do some job. You as a service provider must have a registration under the city hall so they can track your profits.
... "custom software". You know, it's software someone customized. As opposed to, say, the software created by God that you go out and pick off a tree.
FLR
The one thing that jumps out at me is that Blagojevich and his staff have already determined that the custom software tax will net the state $64M in taxes, but my question is what goods will this tax pool come from? The definition is extremely vague, yet there is a hard number being discussed.
So either Blagojevich pulled this $64M number out of his ass and is wildly guessing, making him a bad politician (oh no! gasp!), or he's already defined the source of the new taxes and the proposal is too vague, meaning that more information about this needs to be made public.
Rule #1 -- Politics always trumps technology.
Also most Custom Software doesn't bother with any sort of licensing
That's because it's the very definition of a work for hire - the programmer is hired specifically to create that work on behalf of their employer. At the end of it, I think everyone would expect to own what they had paid to be created.
It's official. Most of you are morons.
Also most Custom Software doesn't bother with any sort of licensing basically as the programmer makes the code and sends it to the customer and they pay him for his hours the code is their they can do whatever they want with it.
In quite a few countries "service tax" (or "value added tax") is charged on this sort of transaction. Both are a flat rate tax on the billed transaction. It doesn't really matter if the software you use is libre/gratis, as long as your bill amount is nonzero.
Let's get this straight. I do custom programming work for a customer. I pay Sales Tax, Corporate Income Tax, and Sales Tax. And even though they are tools/ingrediants for resale, I also pay takes on codec libraries, compilers, and computers.
... why?
Now, as if it's some soft of sin tax (luxury items, copanies that polute, cigarettes) they want to tax us again because
I would rather be ashes than dust!
The relevant section is that software licensed or leased by the developer will now be taxed. Since Microsoft essentially leases their software under the Software Assurance plan, that means there will now be an extra tax burden on companies using Microsoft products. Microsoft will make sure that doesn't happen, because that will just be one more reason to switch to an OSS solution.
What, me worry?
What are the implications of this law mixed with the internet? Would I have to pay a tax to Illinois when people from Illinois buy my programs?
If I do have to pay taxes based on where people buys from, isn't that an incentive to discriminate customers because of where they live?
Diego Rey
diegoT
I don't know if that is the case in the US, but that's definitely wrong in the UK. If a company pays a contractor/freelancer to write some code, the contractor/freelancer still OWNS the code in question UNLESS an agreement is signed transferring ownership of the work. - This catches many companies out.
Greed.
Fertilizer tax, anyone?
Service tax?
Eliminate tax incentives?
Trucking registration fee increase?
The only thing worse than a tax-and-spend Democrat is a don't-tax-and-spend-anyway Republican.
I hope you are not supposed to pay for the benefit. I mean, just one linux installation is priceless. Tho if one could deduct the effort of installing one, I think I would compile Gentoo on my 386 with a smile.
Already been done and then repealed. In the early 80's the state of Rhode Island had a tax on "the efficiency of oil and natural gas burners". The tax was based on the rated efficiency of the burner when sold: the higher the efficiency, the lower the tax. Essentially, one recieved a tax break for consuming more air during combustion. The tax was ultimately regressive in nature and was repealed.
Why wouldn't they just impose a tax on ALL license fees and services? There is such a tax where I live and work.
I dont get it. When you employ someone, you pay taxes, they pay taxes. The development has already been taxed.
It is not uncommon for companies to sell custom software but retain intellectual property rights to that software. Chances are that if one client requires a solution, then there are others out there with the same needs.
www.timcoleman.com is a total waste of your time. Never go there.
With the massive outflow of programming jobs to other countries isnt' the usual policy to tax FORIGN work, makeing the domestic stuff more competitive?
I'm not even suggesting that much, but this is the REVERSE!
I would rather be ashes than dust!
Someone put this guy out of our misery, *please! Programmers here in the states are having a hard enough time as it is, and now this fucker wants to put an extra tax on our trade? Here's a better idea, all politicians who try to pass a stupid tax, bill, constitutional ammendment, etc. while in office should have their sphincter removed so their shit can more easily flow out the proper hole.
Seriously, do we have any politicians in this country who are even somewhat in touch with their consituents? Instead of more taxes, how 'bout we reduce the ridiculous pay many politicians get these days. Aren't they supposed to be public servants? Why does it seem that more often we are serving them?
* just to clarify, I mean by voting him out, not killing him :D
Sticking feathers up your butt does not make you a chicken - Tyler Durden
What is custom software?
Is a spreadsheet that contains data and calculates financial statistics 'custom software'?
Is a plug-in to a web browser 'custom software'?
Is an operating system that did not come pre-loaded on a computer 'custom software'?
Is any software that did not come pre-loaded on my computer 'custom software'?
Are those free AOL cds that you see everywhere 'custom software'?
Is TurboTax, the software I use to pay my taxes 'custom software'?
Is the website that I am running in my basement 'custom software'?
This legislation is WAY TOO VAGUE to get through... Stand up and make your voices heard Illinois voters!
Does that mean I have to start PAYING for the viruses I receive in my mailbox every morning? What about the virus updates I receive weeks later?
This is also the case in Canada. Copyright belongs to the author. I've used it many times
Don't the public universities write customized software for themselves and for companies?
Seems as if this tax would end up siphoning some money off federal grants and private funding. I guess such a tax would just get incorporated into the already ambiguous overhead costs.
To-do List: Receive telemarketing call during a tornado warning. Check.
The problem is that the state is running out of money - they propose to fix it by increasing taxes, something that they can do since they are effectivly a monopoly in the geographic area.
If I have a budget problem, I might try to charge my customers more; but I will probably cut back on what I do or choose cheaper suppliers.
How much money would the state save if it moved all its office systems from Microsoft to Linux ?
The Governor's proposal would either repeal the Department of Revenue regulation that distinguishes between a sale and a license of software or create an entirely new tax on revenues from software licensing. Umm I cant even recall the last time someone offered me software for 'sale' all I ever see is licensed copies. So the above definition would be irrelevant anyway?
Sick of stupidity? http://www.patentlystupid.com
This notion is made rather dubious by the well-publicised tax regulations introduced a few years back that mean that a contractor who is working for only one client at a time is probably, officially speaking, an employee. This means that he might lose those IP rights unless he has a contract that guarantees them. I certainly wouldn't want to run the risk...
created becauze of over Taxation by the crown?
Funny how it's comme full circle.
oh praise be that the infedels have seen fit to send my family even more work! my family thanks you, and my ancestors thank you. please now tax local call centers and make my extended family very very happy!
You're wrong about that. There is no "special tax exemption" in place here - custom software development is generally a "work-for-hire" situation. If someone develops custom software for a company, they get paid for the time spent on it. This is paid either as an employee of company (i.e. the standard paycheck), or as an independant contractor (billable hours).
In neither case is a bill of sale presented by the programmer to the company in question. In fact, in most (all?) states, you aren't even required to get a sales tax license if all your work is consultant in nature (which this would be considered).
Also, it is already taxed - namely income tax. This payment is even reported to the IRS - either as a paycheck to the employee (W-2) or as an outside programmer (1099-MISC).
What this bill is proposing (among other things) is add a new tax to custom development, by requiring the payment of sales tax in addition to the income tax already being paid on it.
They have plenty of money, and are wasting it all over the place, such as paying government officials millionaire wages and "Davis Bacon" going after overpriced union contracts instead of the best value contract. There are many other examples of waste.
In Ontario, Canada, for the longest time, if I made a program and put it to tape or to CD then gave it to the client then they had to pay provincial sales tax (8% today). If we lent them the tape or cd then took it back or went onsite, transferred the program then took the media back, then it was not taxable. A few years back the law changed and not just shrink wrapped software, but all software is taxed. The only thing that is not taxed are consulting fees.
Currently, there are three types of software transfers:
1. Sale (buy MS Office at CompUSA) - Has a sales tax.
2. Custom Software (have someone write a program for you) - Has a "service occupation tax"
3. Lisenced or leased (pay for a licence)- no tax.
What the govenor is saying is he wants the state to consider, for tax purpouses, the 3rd type of transfer the same as the 1st type, so they get a sales tax for the lisence.
Empahsis mine.
Interestingly, if you've ever read a EULA, you never actually BUY software. You usually are buying a licence to install and use the software. Which could, theoretically, have a massive impact on buisnesses in that state, if they had to pay for every license they bought, especially in multi-user buisness environments.
This PDF file offers a clearer explanation of what the Govenor is proposing (check page 2, 2nd paragraph).
In Canada, as I understand it, unless there is a contract saying otherwise the copyright is in the hands of the entity who hired you to write it -- but you still have some very small rights as the author... For instance, another individual can't slap their name on the code and declare it their creation, nor can they modify it and leave your name on it without citing that the code was modified. Note that they can remove your name altogether and just leave the copyright notice... which is pretty normal... I've had that done to me with documentation in my workplace many times.
This is somewhat sensible in that the company/person who commissioned the work provided everything which was needed for that software to be authored, including money to compensate your time. If it were not for them, the software would not be written. I think this is very similar to the way it works in the U.S.
The "author" normally must destroy all their copies of the code upon leaving, and they're not allowed to design a similar solution for anyone else. That last aspect is, IMHO, grey, fuzzy and awful... get a contract before doing contract work like this.
I'm surprised it isn't like that in Britain. Canada's laws are normally quite close.
There is no special tax for custom cabinets.
There is no special tax for custom photograph/art frames.
There is no special tax for a custom paint job for a car.
AFAIK, there are no special taxes for custom anything, whether it's a good, service, or form of information.
So what makes software so different?
It appears to me that all the gov is doing is trying to close some loopholes, not some evil scheme to take over the world as the post and most responses seem to believe. Currently the state taxes retail software (duh), they tax consultants when they write software (duh), but some people are bucking the system and not charging hourly consulting rates, only a license fee, and that is a tax loophole at the moment. So, unless you are against all taxes (and who isnt?) there is really no earth shattering meaning to this proposal.
Move along, nothing to see here.
Interesting news must be getting scarce.
slashdot troll = you make a compelling argument I do not like the implications of.
canned software sold at retail (subject to sales tax)
and software licensed or leased by the developer (currently not taxed)
Since (almost) all software is licensed not sold does that mean they are illegally taxing it?
I hate when government officials talk about new taxes "generating" money. When he says he hopes the new tax "generates $65 million" he means "steals $65 million from people who otherwise could have used it on something"
New taxes are shit. The government gets a TON of money already. Learn to balance your budget instead of just creating new taxes to take more from your citizens.
Bah.
In the United States the person paying for the
"work for hire" owns that work. IANAL
-- Programming with boost is like building a house with lego. It's a cool but I wouldn't want to live in it
Hey, I 'happen' to be writing some 'free' software -exactly- like you're talking about... Why dont you 'donate' say $3,000 to my project and I'll send you a 'free' copy.
WTIW is "custom" software? Software that someone wrote for a particular purpose? Hmm.... If someone comes across some software project that wasn't written for any particular purpose, let me know.
Don't become a regular here, you will become retarded. -- Yoda the Retard
Funny how the people on slashdot finally 'get' higher taxes costing jobs when their own necks are on the line.
Jack Valenti and the MPAA are to technology as the Boston strangler is to the woman home alone
It's always about the money.
When you hire someone to write custom software you're really paying for their development time. You may pay for the job rather than by the hour, but the fixed cost will just be an estimate of the time it takes plus some margin for error. If all "custom" software (whatever that is) is contracted on an hourly basis this will clearly be double taxation. If you've got a specialized product already developed and sell it to others, it'd be off the shelf and I'd expect subject to sales tax. Hmmm....
The profit from writing custom software is already taxed as income to the programmer or entity who wrote it.
I've copyrighted a few programs about 10 years ago, so I believe that was the case at least then. I believe that notice was listed on the actual forms to submitting for the copyright.
Now if you DON'T get paid for the work, then the AUTHOR maintains the copyright regardless of who uses it and for what purpose -- again unless expressly transferred otherwise (to another party, public domain, etc).
SPAM solution made easy: 1 spammer, 5 cords of rope, 5 hourses, and fireworks. Be creative.
Most custom software is written as a work for hire, and the customer only pays the hourly rate of the consultant/contractor. There is no "value" to tax.
All this proposal will do is force all software to be developed this way.
Stupid politicians.
Maine imposes 5% tax on custom software.
From Maine Statues, Title 36, Section 1752 - Definitions
1-E. Custom computer software program. "Custom computer software program" means any computer software that is written or prepared exclusively for a particular customer. "Custom computer software program" does not include a "canned" or prewritten program that is held or exists for a general or repeated sale, lease or license, even if the program was initially developed on a custom basis or for in-house use. An existing prewritten program that has been modified to meet a particular customer's needs is a "custom computer software program" to the extent of the modification, and to the extent that the amount charged for the modification is separately stated.
------
I called the Maine Revenue Service a while back and asked them how they determined the difference between a custom computer program, writing a maintenance script, making an application macro, spreadsheet formula or adding a Windows shortcut to a client's desktop -- at what point does this become taxable?
They replied: there's no one here that can tell you, and there's no one that will be here that can call you back with the answer.
So I stopped putting "custom programming" on my invoices, and all labor is now charged as "computer maintenance". IANAL, just a tech guy trying to comply, but there's just no way to.
1. You are an employee (i.e. paid under W-2). In this case, the copyright on all works created by you for your employer belongs to the employer.
2. You are a contractor (i.e. paid under 1099) and the contract explicitly states the work you do is "WORK FOR HIRE". In this case, the copyright again belongs to the client.
3. You are a contractor and the contract does NOT state the work is "work for hire". In this case, the copyright stays with you. It doesn't matter that the client paid you or not. I think there is case law that states the client is at least entitled to a de-facto license to use the work in question but I'm not sure about that.
Cheers,
Rob
F/OSS doesn't cost $0 to make, though. Perhaps there should be reverse-taxes for it?
Reimbursements to coders for their time/resource contribution (which now will conveniently have an objective dollar value) would be fair, right?
Yay! Another reason to leave this lousy state.
Rod simply wants to increase the rate at which Illinois is depopulating.
I'll be glad to help out.
-- Ziggy Sig Sig
Where, oh where did the U.S. tax code become so fucked up in the first place?
Why do we have to tax everything under the sun, just because we can get away with taxing it? Wouldn't life be oh-so-much-easier if we had just an income tax, and maybe a value-added tax for corporations? We could sync it to income level like we do now, and we wouldn't have to feel guilty about taxing someone who is trying to support a family on $15,000 a year when they go out an buy FOOD.
Seriously, I think even Illinois could get a lot more revenue from cutting out all the loopholes and shelters in its tax code than it could from just adding more taxes.
I think in the Uk it might make a difference who paid for the tools / libraries / computer /etc used to produce the work. This would likely be used to identify the relationship (employer/employee or customer/supplier).
This would only come into play where there was either no contract or a very badly written one.
>>I don't get it. When you employ someone, you pay taxes, they pay taxes. The development has already been taxed.
Assume you own a Taco Bell franchise. You hire an employee and both you and the employee pay taxes on their wages. (FICA, state taxes, etc.)
The employee makes and sells a Taco to a customer. The state may require you to collect sales tax on the taco sale.
Now assume you own a software development company. Your employee develops and sells or leases or licenses software to a customer.
What is going on here is that the state is proposing to tax your software the same way they tax tacos.
Don't try to differentiate between "products" and "services" as there are many states who already tax all kinds of services.
I'm not using this argument to promote new kinds of taxes, just to say that taxing software or software development isn't anything groundbreaking.
Live Long and Prosper - Thanks Leonard. You are missed.
I herby declare we throw all of our software into /dev/null ... lets see them tax that.
Jon Bardin
Whenever I go to the Doctors office, I see thery use custom software that manages their scheduling, billing, and records. How would this tax affect organizations like medical facilities that need to use custom software, but dont necessarily have the extra disposable income to pay a tax?
I found the "Any" key.
Just imagine a Burrwolff of ... er, wait a minute...
However, within just a few years, every one of these firms had left and relocated to California or elsewhere. Entire office parks, like sky harbor in Northbrook, and many of the office parks in highland park, the "heart" of silicon prarie, became completely deserted and desolate places, and the area has never recovered. With the eventual breakup of AT&T, even Bell Labs in Naperville is now lost, and I recall the big early contract companies, including EDS, long ago vacated Downers Grove.
The point being that rather than preserve and promote it's software industry, Illinios at one time choose to ignore it, and the result was that it lost the chance to be the third high tech corridor. Similarly, today, it looks like Illinois once again is choosing a path to further reduce it's potential economic development.
I don't know if that is the case in the US, but that's definitely wrong in the UK. If a company pays a contractor/freelancer to write some code, the contractor/freelancer still OWNS the code in question UNLESS an agreement is signed transferring ownership of the work. - This catches many companies out.
That's basically how it works in the U.S. (with certain exceptions, such as creating a module of a larger program). The poster of the message to which you replied apparently didn't know what he was talking about.
Understand the context, though: Illinois has a young, Kennedy-esque governor who claims to be a populist and is working "for the people." He has steadfastly refused to raise general sales taxes or income taxes and is instead turning toward businesses to blanace a 1.7 billion dollar state deficit.
This governor does not work in the state capital and instead spends all his time in Chicago because "he's got a family to raise, and he can't raise it in Springfield" (or something to that effect). So he spends lots of moola jetting back and forth.
The theory with Blagojevich is that he's positioning himself for a presidential bid in 2008 and is loathe to contradict his "populist roots" by imposing a tax on the "backs of the hard working men and women of Illinois."
In a sense, yeah, that's good. I can appreciate that. But the result of his fervent populism is a state government that's only a couple weeks away from a legislative break and is facing enormous pressure within the next two weeks to balance the budget and erase a 1.7 billion -- billion! -- dollar deficit from the state rolls.
He's in a tough spot, and because he's a union-guy and a guy's guy, Governor Sunshine has backed himself into a corner. The *only* things left are (a) massive taxes on businesses (bad for the state because we have lots of other states close by that would benefit from a business exodus from Illinois) or (b) gambling.
He's an odd bird, Blagojevich, and he's scraping -- literally, with a little plastic spatula -- the bottom of every barrel across the state to raise money.
Do I agree with what he's doing?
I'm not sure. I think Illinois government is in complete *disarray* -- lots of agencies are understaffed, for example -- but so long as he doesn't raise taxes on Ma and Pa, he's cool.
Welcome to American politics, I guess.
*shrug*
this is pretty vague in the article. Is having your admin run some shell scripts that modify a canned package count as a new piece of custom software? Would that be re-taxed then if it was bought in the first place? How many times can something be taxed? Or would it be proportional by..line count of code? If package x costed 100 clams, and was 50,000 lines of code and you modified x amounts of code and... you can see where this could go. Is it a brand new transaction then? The entire package, or is it proportionally taxed, or what? It's cuckoo really.
rhetorical question. If you follow around US federal reserve notes,from the second they are poof created, they are all tax dollars already, ie, it's all been taxed into government ownership previously. If you are dealing in FRNs, none of it is your property. None, zero. It's all the governments (well, a private banks paper), and they let you use some of it. And being legal debt instruments, they start out as a debt, and you get paid with a debt,you attempt to pay off a debt by transferring another debt, and so on. They retax their own debt, and so on.
Sound incredibly stupid? Why yes,yes it is, it is an extremely stupid way to create "money" for anyone productive, but it's a superscam con for the people who start it and have people faked out into using it. It's fat city for the other guys. Using future debt as a medium of exchange instead of having money represent produced-wealth is lame to begin with, but it sure is handy for government and some rich banks.
aaack, another time...It's such an overwhelming and successful con....
Anyway, without seeing how the law is worded it's hard to tell,I'm only looking at the article, but seems like it's so open ended and vague that it would rapidly rise (most likely) to beyond this 64 million dollars with the application of normal bureaucratic greed. Then come the lawyers and the courts and the judges and the lawsuits,typical government crap.
You know, the soviet union collapsed when their economy was so much black market and grey market and government bloat that it eclipsed the above board official "white market". It had as much to do with that as anything reagan did with military one upsmanship. Our government now is doing it's level best to force everyone into being a criminal it appears, doing it's level best to make the economy so incredibly lamer complex with regulations and scams that they think up that's it's almost impossible to deal with it. I wonder if they really understand what will eventually happen, if it's intentional, or if they are truly that incredibly stupid.
So if I write Macro in Excel will that be taxed too??!! And what about my .procmail script which dumps things from some people into a Folder. IS that also taxable? What is "Custom Software"??
The dangers of excessive individualism are nothing compared to the oppressiveness of excessive collectivism
Relax!
I RTFA'd and all it says is that they want to eliminate the difference between custom software (currently hit by a some odd tax which is probably a lower % and may be 0% in some cases) and shring wrap software (which is hit with normal sales tax).
Also, licensed or leased software (ala software as a service type things becoming common) will also have sales tax (currently is not taxed). I expect that latter change will spread quickly as "software service" business plan becomes more common.
My mind works like lightning. One brilliant flash and it is gone.
I'd write the custom software for free... just as long as they paid me a decent hourly rate to drink coffee while I was doing it! ;-)
well for starters, you need to look at the actual amount of money being brought in. They are actually talking about an extremely small amount of money. 50 something million dollars spread around isnt that much - so maybe this is a tax not on the software but on the SALE of the software? Could someone confirm that I am correct? In large transactions for custom installations, you have to tax the consulting time, but not the actual product its self right? While I dont agree with ANY taxes to begin with, this isnt as terrible and awefull as everyone is making it out to be - its just another tax. If you dont want them, dont vote donk ;)
The reason why custom software isn't taxed is that the client gains all rights & titled to the sources produced; --it is equivalent to have been developed in house. When the client doesn't gain such rights & title (i.e., copyright) many jurisdictions view the transaction as a sale for it is then a licence purchase just like software off-the-shelf.
Another Dem. searching for a cash cow.
This will be the end result.
:) )
Remember too that any salaried in-house programmer's code would be considered 'free' and not fall under the % of cost. So the rules will be changed.
( hopefully i didnt give them any ideas
---- Booth was a patriot ----
Here in TN we pay sales tax for custom software. Most likely all states would if they paid any attention; there's very little difference, legally speaking, between someone buying a web site from me and someone going into Wal-Mart and buying MS Office.
Do you have ESP?
NJ: It's All About The TAXES. NJ is about to pass a law that if you buy cigaretes online. YOU WILL GO TO JAIL FOR 6 MONTH for the first offense. 18 MONTHS for the second offense. NJ: has the highest cig tax in the country and as such residents are looking else ware for the goods. Since they can't stop or track online sales from out of state vendors this is their answer to the taxing problem. I can see the custom software tax coming next in this state! And the NJ governor is just a down right shithead!
Half of my income is from independent software developement. I make custom applications (mostly database related) for small businesses. If a tax like this were impossed in Colorado I'd lose lots of money dealing with it even if the customers would still buy the software. In all, I hope Illinois doesn't set a precedent (assuming it isn't already set) for this kind of behavior.
-Tim Louden
"custom software (subject to service occupation tax on the value of tangible personal property transferred with the software)""
I think the word 'custom' is being taken out of context here. They already tax custom, I read this as they mearly want to define custom so it maintains a clear distinction against 'licensed' software - which is currently untaxed.
"...and software licensed or leased by the developer (currently not taxed). "
"Collect sales tax on software packages (currently paid by consumers but not by business) - $64.0 million""
To me the above means, a large corp can go out and purchase one copy of COTS (commercial off the shelf) software, which is taxed, then purchase 1000 software licenses, allowing the use on the one taxed item to be used 1000 more times - which is currently untaxed. So as 'consumer' I go out and buy whatever, and I pay tax at the store. But a 'business' goes out and buys one, pays a tax, but does not pay tax on the legal additional use of the software. I read this as a way of taxing the now untaxed extra licenses, not necessarily 'custom' software.
I think it's more likely welcome Indiana. Companies which can gain from outsourcing aren't really going to change for this. But new startups with 1-50 employees likely are... given that (by my knowledged at least) most of the software development in this state is done in Chicago & the Champaign-Urbana area... that puts those companies between 15-60 minutes of the Indiana border... almost makes more sense to just lengthen everyone's commute.
Then again, I'm sensing a typical slashdot response of... THIS IS AWFUL, HOW COULD THEY!... without any real knowledge of the situation, myself included. Do other states do this, and if so what percent. The headline is a bit misleading, he's not really talking about some special tax, he's basically saying software falls into a grey area because it's often licensed and leased rather than sold.
Given that I work for a company which leases software, I'm very curious to see where this goes.
Sorry, but you've got things backwords in this case.
In Canada, intellectual property remains in the hands of the person who created it, unless a contract exists which specifically transfers it, or if the creator is an "employee" of the company.
So if I was contracted to develop a site for a client, and the IP issue was not discussed in the contact, then the copyright stays with me. This would restrict the business from changing or altering my code/design or giving it away to someone else.
One interesting copyright law which is in Canada (and most of the rest of the world) but not in the US is the idea of 'Moral Rights'. Unless waived, moral rights prevent a new copyright holder from altering the created work in a method which would distort, mutilate, or otherwise prejudice the honour or reputation of the author. It isn't in the US mainly because the entertainment industry wanted to use copyrighted ideas in hollywoodized movies ;-)
Links to back me up!
-
Rod Apeldoorn
When I first started working in a software company, Louisiana also taxed custom software. If a client was the Federal Government, the tax would not have applied. Since then, I believe (95% sure) that the law has since been repealed, due to the hard work and lobbbying effort of our local technology companies.
Writing stories for computers and humans since 1979
What the article says is that the proposed tax is for LICENSED software, which is currently not taxed. CUSTOM software is already subject to taxes (makes sense, if another company develops software for you it is a service so it is taxed as a service). Maybe the original post could be amended since the original poster did not know what he was talking about.
TANSTAAFL
If you give something away to someone, whether it's free books at your yard sale or free sample CDs of Linux® at a sales booth at some tech convention, how much sales tax does the recipient owe? Zero.
If you are running a store and sell someone a CD of Microsoft Windows® you're supposed to charge them sales tax on the $149.95 upgrade price or the $495.00 no previous edition price (or whatever it currently is).
If you are running a software house and you sell someone a CD of an application which costs $5,000 including customization, some part of that cost is for the software itself and thus should be taxed same as Microsoft Windows (if you believe imposing sales tax on items which are sold is a legitimate action of the government).
Raising the issue of a 'sales tax' on free items is a red herring here. The issue is whether custom software should be 'sold' for a fee untaxed, while commercial, off the shelf (COTS) software is sold for a fee is subject to sales tax.
This was an old issue, oh, 20 years ago when I lived in California and had a sales tax permit, and one of the items in the monthly newsletter the Franchise Tax Board sent out was a mention that while labor for customizing software was not subject to sales tax, the base price of software sold was, same as any other commodity. I don't think it's unreasonable to treat the non-labor tax aspect of custom software any different from the non-labor tax aspect of COTS software.
Paul Robinson <Postmaster@paul.washington.dc.us>
The lessons of history teach us - if they teach us anything - that nobody learns the lessons that history teaches us.
If you always give the thumbs up to every little thing (either if you're directly voting on it or if you're electing people like Chuck Grassley), they're going to take it out of you in some way. A better way of doing things would be to ditch the obnoxious and allocate that money for the reasonable projects, rather than raising new taxes for every reasonable thing.
I'm hopeful that this won't go through...provision 2 seems enough to kill it (go ahead, tick off the agriculture lobby in Illinois), and if not that, provision 3: tax big expensive yachts? Ha!
Instead, this seems like posturing to force the Republicans to raise the sales tax in the state (this will come after weeks in special session and Fox News showing their "Crisis in Illinois" logo too many times to count).
Allowing myself a moment of paranoia, however, I agree that "custom software" is too vague. Does this include websites? Macros, as the person in Maine asks? Changes to the registry? Ridiculous.
Geeze, I thought we were all past the stage where we read the /. summary, made an false assumption or two, and railed against a non-existant abuse.
/. crowd is so quick to dismiss out-of-hand non-techies complaining about (or cheering for) tech stuff b/c the non-techies don't know what they're talking about. And now the /. crowd is complaining about an issue which they haven't even made the minimum effort (Click the f'in link! The article takes 1 minute to read!) to understand.
I'll make it clear: there is no special tax being proposed on custome software. Rather, the state seeks charge the sames sales tax on custom software that they charge on packaged software. Just like you on custom frames, custom paint jobs and custom cabinets.
Honestly, the
(sigh)
Indeed, here in Greece, that VAT is 18% for any and all services rendered. Think about it. 18%.
IThe "author" normally must destroy all their copies of the code upon leaving, and they're not allowed to design a similar solution for anyone else. That last aspect is, IMHO, grey, fuzzy and awful... get a contract before doing contract work like this.
Imagine how many lawyers would be out of work if clients demanded the same kind of compliance with respect to the contracts they use in the course of their day-to-day business.
I can only think that you're imagining some distinction between a "contractor" and an "employee", but there's no such distinction in the copyright act. See Section 13, Subsection 3.
"Where the author of a work was in the employment of some other person under a contract of service or apprenticeship and the work was made in the course of his employment by that person, the person by whom the author was employed shall, in the absence of any agreement to the contrary, be the first owner of the copyright..."
Custom software is already taxed, it comes from my own income tax! The client doesn't pay for the software itself, they're paying for my time to create the software. So it IS taxed already.
The obvious way around this is free software. The independent coder will simply charge for his time to make the free software do what the client wants it to. The client can still keep the work to themselves if they want, even if it's GPL, because they are not distributing it. This will be harmful to people still clinging to the outmoded revenue model of charging for software.
Don't worry, Chicago will get it's silly casino. The governor is engaging in the age old bribe solicitation knows as "disastrous proposals". These kinds of proposals are usually suggested by members of a dying industry to check their new and innovative replacement. This disastrous proposal will probably be followed with others. He will ban the use of free software in government and place regulations on networks and will cost his government plenty of money. He'll then want a casino because it will give him more room for graft and he's too stupid to think of anything new.
Friends don't help friends install M$ junk.
Anyway the boilerplate code for contracts these days attempts to assign all moral rights, and copyrights for territory: the universe, time: perpetuity, equipment: all existing and to-be-invented media and systems. And as the ubisoft ex-employees found out, that after employees leave you must not work again in the same industry for two years.
Whenever the governments try to improve the bargaining position for workers/contractors, the company lawyers just tack on a few more pages to the contract saying you waive a few more legal rights.
Do lawyers in TN make their clients pay sales taxes on their hours? Why should you? What's the difference between their consultancy and yours? In the end, both of you are advising and representing your clients. The only difference is that part of your representation is automated and lasts longer.
Friends don't help friends install M$ junk.
Hmmm... in that case, we can tax the artist for making independent art, grandma for making her family history book, and the small time poet for making his poetry. Don't really see the difference. Under the law they are all copyrighted works. When you buy one, you buy a license to use, but not necessarily replicate unless specifically given, so what is the difference between that piece of code and that piece of art hanging on your wall, or that book sitting on your bookshelf of grandma's memories of World War 2?
It's also a real stupid idea. The idiot governor won't generate any revenue for the state, in fact, it'll cost the state. Pennsylvania required sales tax on custom software for years, and most of the software houses moved to New Jersey, Delaware, New York, Maryland, and Ohio. The rest just closed down. Finally, a governor with a clue rescinded the sales tax thing, and writing software became competitive again, but it hurt the state bad for a long time in the tech jobs arena.
Taxes do not "generate" money.
If he wants to make money, he should get a job.
-- this is not a
Could you think of a better way to retard commerce and place a disproportionate amount of the tax burden on the poor than shifting the entireity of tax income over to sales tax?
The compliance overhead for this law must be huge. Spend $2 on enforcing a tax that collects $1.
Then again, the state government gets more employees AND more revenue. Sounds just what the govt. wants!
We should vote for a tax on stupid governors. There's your complete medical budget right there.
-Billco, Fnarg.com
As I understand the complex and constantly changing sales tax rules, the state of Texas does not tax custom software -- when INITIALLY developed. But later maintenance of it is taxable.
Maintenance services of any kind are taxable.
Canned software is taxable.
Internet web page development is taxable. There is no distinction of being 'custom' for internet software.
The 'logic' on taxing custom software is that the buyer is receiving capital goods that will be used in the production of goods. And, these goods will then be taxed as they are sold.
On a personal note, the effect of sales taxes of 8 % (or more) is a LARGE percentage of the developer's profits, if he is hiring programmers, and nets only 20 per cent or so in profits. Also, most clients have a fixed limit or budget for their projects, thus the effect of sales taxes is to take money out of the developer's pocket.
Because custom software developers compete with other developers in other states or even other countries, any state applying sales taxes to custom development will tend to drive out high-tech jobs.
When such a large percentage of your profits are taken (and later squandered) by the state, the logical thing is to move out of that state, or to move offshore.
JohnD
Texas
Uhhh. where does the comma go in the parent's title?
Don't blame Durga. I voted for Centauri.
Taxation is theft. Think about it...
Would you steal from your neighbors? Then how could you authorize the government to?
But a 'business' goes out and buys one, pays a tax, but does not pay tax on the legal additional use of the software. I read this as a way of taxing the now untaxed extra licenses, not necessarily 'custom' software.
Interesting. So a business might be better off running applications on a single server with thin-clients, rather than buying software and running it on PC's.
It will be interesting to see how this would affect the ownership costs between PC and server based applications.
This will be one for the accountants to think about.
Here is the aforementioned service occupation tax in Illinois:
http://www.revenue.state.il.us/LegalInformation/r
A disclaimer: IANACPA (not a CPA).
After reviewing the tax code mentioned in the article, it seems to me that as long as you're not charging for packaged software or licenses, then you're pretty much in the clear.
Most contractors I've met, charge labor by the hour to compose, enrich or repair custom software anyway (as a work for hire), at which point you are not exchanging any "tangible property" (or "intangible property" for that matter). They charged labor for something of undetermined value, plain and simple.
However, if it ever became an issue that you absolutely had to hand your client a pre-packaged solution that needed modifications, then just go open source. Simply charge labor for installation, and enriching the product, but "sell" them the software for what its worth: $0. IMO, I think this could also has the added benefit of side-stepping the (existing) taxcode, since you're performing labor on a product of zero-value (labor performed on a product of value apparently has lots of implications in Part 140).
It's clear the state of Illinois wants to cash in on the Linux craze. "Free" is only as free as the amount of tax it is subject to. Perhaps we need to redefine OSS as "Gift software"
boycott slashdot February 10th - 17th check out: altSlashdot.org
I guess 10% of 0 is still 0 ;-)
Yes, but services which were not previously taxable, such as installation of free software might be now taxable.
Actually, it will have very little predictable effect on Illinois because if a software development firm does work for a party in another state, that will not likely be taxable, but if an Illinois firm uses such services from another state, they may be required to pay use tax.
However, the question regarding the effect is very valid: What sorts of businesses will be encouraged and which will be discouraged? How will this shape the business climate of Illinois?
Oh, and in-house development will not be likely taxable, so will this encourage more businesses to use in-house programmers?
LedgerSMB: Open source Accounting/ERP
IAAL. This is correct. The distinction, in legal terms, is between a "contract of service" and a "contract for services". In the latter case, the contractor is independent, not an employee, and retains copyrights unless there is a contract (not necessarily a written contract, mind you) to the contrary.
I don't think you're really understanding the amount of sales tax that would have to be charged per item to make up for a lack of income tax at current spending levels. It's a lot.
Also, you seem to be really poorly-informed about how the income tax system currently works. If you think that the poor have been getting some kind of huge handout from the Bush taxcut and refunds, well, all I can do is feel sorry for you.
The only reason Tom DeLay et al. are getting behind this whole thing is that the kind of income drop it would precipitate would force Congress to slash large swaths in the federal budget in such areas as Medicare and Social Security. Which is kind of odd, because it leaves me wondering how the Republican Party is going to fund further handouts to Big Pharma through Medicare, but I guess that's how things work in the Capital Hill Reality Distortion Bubble.
...retain intellectual property rights to that software.
That's where any tax should apply. If we can tax real property, why not tax imaginary property? They're making a profit with it. Or at least they're demanding their "right" to profit. So, I'm giong to demand our "right" to tax it. Not that I'm defending Illinios. They are one of the more corrupt states in the Union.
What?
I live in Illinois and this is typical of the shenanigans this Chicago machine politician is pulling that are angering many members of even his own party. There's no end to his ignorance about how to make things work in the real world.
"Do the Right Thing. It will gratify some people and astound the rest." - Mark Twain
Is it our governments choice to tax us for whatever it pleases whenever it pleases? I thought we had a tea party centuries ago because of this. If a state government is going to tax custom software, what is the tax PAYER getting in return for the taxation? Where's the representation? Or is this a an attempt to raise money and nothing more? Is it even legal to do this? I wonder when we'll start to pay a 'creative tax', whereby anything creative created by anyone shall be fairly taxed by the state... indeed. America is quickly becoming a stinky hole of politics that goes waaaaay beyond the realm of 'governing the people'. It's a shame.
The B-man is so damn desperate to actually look like he's accomplishing something in office.
He's trying to:
Raid the coffers of private institutions and governing bodies.
When they deny him access to funds that he has NO right to touch, he tries to undermine them and replace them with structures that WILL allow him to steal those funds.
Trying to put a tax on everything in sight (the fucker's probably going to try to institue a BREATHING tax next).
He seems hell-bent on making Illinois completely and utterly unfriendly to any sort of business imaginable.
Then he'll cry about how his opponents are predecessors have driven those businesses out.
Rod Blagojevich....Front-Running Candidate for Retroactive Abortion.
Chas - The one, the only.
THANK GOD!!!
is that they change. It may produce $72 million one year, but the next once everyone moves OUT of Illinois may only produce $1 from a farmer bob, president, mayor, governer, and emperor for life of Chicago.
You forgotten that a large part of the digits represented by the money supply is FUTURE debt, it's not based on past productivity of any kind. That's why they are called "notes" and not "certificates".
I understand a lot more about money, what it is, how it comes about, etc, than what you give me "credit" for, pun intended. I also know the difference between "wealth" and "money" and how you can't inflate or deflate wealth(short of physical destruction of course), but you can with "money", and also use the same money to dictate how society progrresses, instead of allowing society to dictate how wealth production progresses, so that money can be used to represent the actual produced wealth. Wealth - as opposed to money - can only come into true existence in one of three ways; it can be extracted from the earth in terms of raw resources, it can be grown, or it can be reassembled/manufactured using any sort of combination of the previous two. All other forms of human endeavor are examples of wealth transference, or re-arrangement, but they don't represent *creation* of wealth. And when your representation of produced wealth is not based on actual true created wealth, it's called "fiat", it's ersatz, and it only represents what someone tells you it represents, taken to an extreme when -say- a government just dictates that it is worth such and such. You can get away with that for awhile, but not forever.
Most examples in man's past history indicate once that is attempted, it invariably leads to the diminishing of the money, no matter how many digits of the example are "placed into circulation", or what sorts of arcane formulae are attempted to regulate it, which in our nation is primarily done through mortgages/loans starting with the central bank, who "loan" money that they create, then demand "interest" on it, or they "promise" future payments of the same sort of ersatz created digits sometime in the future, by placing their citizenry into future bondage, ie, they sell government paper or bonds or debt notes, sometimes called bills. They claim ownership over you and your future labor, you automatically owe them a "debt" because they say so, they are bigger than you, more organized, more ruthless, and have more guns and mercenaries than you do. And that's really it. You've been not only conned, you've been conquered, and even babies born today are born into what is in essence, conquered serfdom, those babies future labor, their created wealth or service to a created wealth, is already promised-by "law", to a huge degree now to the conquerers, to do with what they feel like, at some vague point in the future.
It's complicated, but simpler if you can always differentiate between wealth and representations of wealth that are not based on a one to one example, because the representations can be so hugely altered as to worth., or what they can be re-traded for, for a real produced piece of wealth-some product, or a service to that wealth.
IF our money supply reflected produced wealth,on ANY sort of one to one honest arrangement, I would be getting *more* in the terms of goods and services with todays buck then what I got decades ago, not less, because, well, I can't. I only get a fraction of what it should be, because they inflated it by loaning it to themselves in the future, and it's sheer lunancy to think it can be maintained forever. It's been "inflated", inflated beyond even where it should be by the accumulation of millions of people working and creating true wealth in the intervening years. That's why when I was a teen I could get 5 mickey D's and a shake and a fry and get a nickle back from my dollar, and today, well, not even close.
One of my other points (and I know I wasn't clear on it, my bad) was that, all considerations of what the digits represent put aside,to get back to these taxes, the government (the combination of fed/state/local) has already taxed 100% of the money in circulation. It's been taxed, and re-taxed, and re-re-re taxed. That's only one of the reasons why it's
True, 10% of 0 is 0. But if you're hired to make custom software, and that cost increases, they might go for something else less custom...
Might be a good way to encourage and efficient economy, or monopolies.
Candy-Coated Knowledge
Oh sure, now my remaster of Damn Small Linux will get taxed if I decide to give some copies to whoever...
Isn't your code simply more advice? There are "tangible" goods involved with every form of consultancy. Engineering consultants produce reports. Lawyers generate required forms which may be used again. Generally, consultants charge for their time. It's hard for me to think of a program as a tangible good, especially a one off program designed for a single customer. Code to me is simply something I've spent a little time with.
Friends don't help friends install M$ junk.
Any small software comapanies in Illinois should throw up their hands and give up now. I wonder if this idiot governor will use the money he gets from this new tax to fund programs to attract more "high tech jobs" to the state.
> Illinois Governor Rod Blagojevich is proposing
> to tax custom software; he is hoping to
> generate $64 million.
Did he say he wants to generate 64 million dollars or 64 million programming jobs moved to India?
(-1: Post disagrees with my already-settled worldview) is not a valid mod option.
If the programmer is being paid for the work, and is paying income tax, tax is already been paid on the software. Is this just another way to double tax a product.
it is only after a long journey that you know the strength of the horse.
Why get the public's consent to tax them, when you can do it invisibly by building taxes into the prices of products through business tax? And many people are dumb enough to cheer you on for taking the tax burden off the individual and putting it on those big corporations.
And pro wrestling is real too, by the way.
Well,
Now He can put a bonus Tax on Every Copy of MS software sold.
The older monopoly (government tax and police power) attacking the newer monopoly (Micro$oft)?
Hi!
I've lived and worked in Pennsylvania for many years--Pennsylvania enacted a law assessing sales tax on computer software back in the late 1980s, only to repeal the tax several years later.
Why? In short, it failed.
The law of unintended consequences
Simply put, one of the problems of taxation is that it can be very difficult to accurately assess how people (and companies) will respond. You simply cannot say "companies in Illinois [or Pennsylvania] bought $600 million worth of custom software in 2003, so if we assess a 6% tax we'll reap a $64 million windfall in 2005." It's not that simple--anybody who can avoid the tax will work to do so. And there are lots of ways that a tax like that can be avoided--and those ways generally will result in a tax loss for the state.
Example: A company is considering expanding its mortgage servicing operations. That includes a $10 million custom software project. Locate that operation adjacent to existing offices in Illinois, and you'll have to shoulder an additional $600,000 in taxes in your startup costs. Locate that project in Iowa or Wisconsin, and you get to keep $600K. What's the net result? First, the state of Illinois doesn't get the $600,000--second, the state loses the jobs that would have used that software, and (presumably) will continue having to pay welfare, unemployment assistance, or other government assistance to people who could have filled those jobs.
In Pennsylvania...
It sounded like a good idea. I was working for a software development company at the time--we were planning on opening a company office in Pennsylvania, and doing development here. Instead I worked as an independent contractor, and development (and the development jobs) essentially stayed in California. Lots of other companies did the same thing--or moved development work to offices outside the state. The net effect: practically no revenue for the state, and all sorts of (admittedly anecdotal) evidence of job flight from the state.
Memo to the governor:
Custom software is a capital expenditure. And practically any economist (you might start at the University of Chicago, and perhaps the economist(s) at Caterpillar) will tell you that taxing capital items is generally bad economic policy: you want companies making capital expenditures, because those create j-o-b-s.
Hopefully, the state of Illinois has economic development people who can address this issue before the governor does something stupid and causes a bunch of people to lose their jobs. If nothing else, they should be able to notice that economic development people from a lot of other states will start telling their clients (corporations considering locating in Illinois) about Illinois's new Technology Disincentive Plan. And if you happen to be in the custom software business in Illinois, contact your legislator. Your job may not be going to Bombay--but it may be going to Milwaukee.
Stop smoking pot, Andrew.
Custom = one of a kind.
So: make many copies of the software. Now it is no longer "custom" code but mass produced.
Cost of making copies of the binary: zero.
Tax savings: Lots.
Nothing to see here, move along.
You see? You see? Your stupid minds! Stupid! Stupid!
If we can tax real property, why not tax imaginary property?
WHAT?!@#?
18%? Wo. Here in India that's 8% and a lot of us think that's high. I feel a lot better now :)
Tennessee already applies a 7% "Sales and use tax" on services. This means it taxes contract programming work done for any company located in-state, whether the contractor is resident in Tennessee or not. Even if the work is done out-of-state, if an invoice is sent to a Tennessee company, that company is expected to collect the tax and send it to Nashville. There may also be a 2% local tax in some counties, when the work is done on-site.
This tax targets all "professional services", not just programming. And they don't tax custom programming performed by a company's own employees. Yet.
I may be mistaken but a family with a total income of only 15k a year probably qualifies for food stamps.
Hurray, with the saved money, you can buy yourself more curry!!
correct me if I'm wrong but IIRC, once you lose your ability to Moderate (for whatever reason, but usually being meta-moderated as "unfair" too much), its gone forever.
/. equivilant of being castrated.
As I see it it's the
That being said, why do you feel the need to advertise it on your sig? If you don't like it, email one of the SysOps or make a new Acct and check in on it periodically when you feel the urge to moderate.
The reason we had such an explosion in illegals coming over from central america was because of NAFTA, we put millions of poor campesinos out of work on their small farms when our corporate farms dumped on them. whoops. The amount of blue collar manufacturing jobs cshipped to mexico was not any where near enough to compensate for the other millions put out of work. It was nuts, way too fast, lopsided, no thought to social stability or where people were going to work, here OR there. And a LOT of people back then warned that this would happen, heck, I was one of them, exactly what I said and wrote back then happened. Sucks, because I know what's coming next, a really BORKED middle class inside the US, inevitable now.
All that will happen with this scheme is the dilution of the US's middle class's average worth, it will go down. And, well, it has, you can see it now, looking at *all* the stats. Just look at the real obvious biggee, since all this globalization started we have gone from being the worlds largest creditor nation-we had enough extra and surplus money handy to be able to loan and invest and just give it away around the world, to now we are the worlds largest debtor nation, only staying afloat from foreigners buying up our mortgages and government paper, and their phony buck has dropped in value severely. It's cuckoo,and happened within the last 20 years,exactly corresponding to their mass globalization efforts and transference of our economy, and they got the nads to call that a "success". Phooie. When I was a kid, one just normal mid level blue collar job could support a large family, home ownership, a nice car, vacation, a pension, benefits,put the kids through school, etc, now that is almost entirely gone, it take two such jobs to accomplish the same thing, and the prices are getting worse, so....it will destroy families. After two jobs you've run out of adults to work in a household. It causes a ton of stress, economics are a prime reason for family problems, divorce, etc. sucks. Kids suffer from this bad.
I think the really large powers-that-be are doing it on purpose,from a LOT of other references and research, again, way to long for a single post, they really don't like power sharing with a large successful middle class, they much pre
"well, sir, it appears from our records you only paid 120% of your gross income in taxes last year, I'm afraid we'll have to fine you and put you into the special "person of interest" surveilled tax class, at 150%"
"But, but, that's insane!"
"ARE YOU THREATENING ME, YOUR GOVERNMNET HOMELAND SECURITY TAX ADJUSTER? GUARDS, DETAIN THIS MAN, TAKE HIM TO THE RE EDUCATION CAMP FOR DISSIDENTS!"
That being said, why do you feel the need to advertise it on your sig? If you don't like it, email one of the SysOps...
That's probably a good idea. I never thought of contacting them about it.
I don't really see a need to make a new account. If I only used that account when I wanted to moderate, I probably wouldn't get mod points now, would I?
www.timcoleman.com is a total waste of your time. Never go there.