Slashdot Mirror
Tennessee to Tax Software as Property?
thatkidkel writes "The Chattanooga Times Free Press is reporting that 'a state board is proposing a sweeping change to make computer software used in business subject to property taxes, a move that some business leaders contend could drive up costs and hurt job growth in Tennessee.'"
Does this mean that we (in Tennessee at least) own our software? Remember the software/game industry wanting us to beleive that we are just borrowing their code? This says their wrong! Or the tax wont go through. Either way I approve of this because it either legalizes buisnesses (or me claiming to be a buisness) to do what we want with their software (in Tennessee at least), or it will be deamed unreasonable because you don't own it. Win/Win who could loose?
Sincerely,
Andrew Allen
From The Fine Article:
That pretty much seems to say it all when public officials view taxation as "significant chunks of change", rather than the basis for sustaining government and infrastructure.
Interestingly part of the motivation for the proposed taxation is to allow for, and quoting from the article again:
So, in the interest of a uniform standard, they want to ratchet up the taxation, sounds pretty much like taxation without representation (I know, I know, home rule).
When governments start unilaterally considering these kinds of move, they may end up understanding "significant chunk of change" in a whole new context, as in significant chunk of change in the constituents' tolerance for government.
So, if Tennessee taxes software as property... How do they determine the market value of Open Source
software?
If a business had the choice of buying MS Office AND then paying taxes for the fact that they own it OR installing OpenOffice or AbiWord and paying x% of it's purchase price, that might drive a few more enterprises to at least consider the option, where it can make easy changes.
"If, therefore, any be unhappy, let him remember that he is unhappy by reason of himself alone."
~Epictetus
This could indeed be a big event for open source. If I was a small business owner in Tennessee I would definitely see a big benefit to open source (other than performance, innovation, etc.) by not having to pay additional taxes on it.
"Saying that Linux is inferior to Windows because more people use Windows is like saying that all restaurants are inferi
I really don't understand the reasoning behind this... I can understand a tax on actual physical property because one can gain equity on it, and in turn, turn a profit on a sale. You can't do this with software! How many businesses do you know sold their NT4 site liscense for a profit? Also one of the previous posters had a wonderful post about the implications for open source, how can you tax something that is free? I think that this will drive businesses away from Tennessee... Just my 2 cents anyway...
I am full of goo... black evil goo
I imagine it would be hard to tax free software, wouldn't it? This could be "Yet Another Reason"(tm) to move to open source.
Weaselmancer
rediculous.
Anyone with legal kung-fu in the house?
Out of all of the States in the US, the one no one expects comes out with something that would help fight against the stupid software ownership rights issue. I hope it passes myself, perhaps then Open Source projects will have to start conforming to a solid standard now.
Yes, I said it.
Good thing there are no businesses in Tennessee.
Is that merely a commercial product that you paid someone for? Or is it also something as simple as a perl script (that you paid someone for), that runs some essential function on your server.
Software written in-house? Excel macros?
What about some code that resides on a server in Denver, used by a user in Chatanooga?
Software is not owned--publishers license its use. EULAs have always made this very clear. We do not own the software we license, so I don't understand how a government can tax something not owned. For the government to make a legal determination that conflicts with the legal definitions created by the software publishing industry raises very interesting issues and consquences, indeed!
Sound like Tennessee is afraid of getting too many new jobs from companies running from California's workers' comp laws. :P
You know, being a TN resident, and seeing the current state of affairs jobs wise. I guess they are trying to drive even more businesses from TN. I understand their thoughts on it as a large number of folks are running businesses from their homes. Then when you couple that with the amount of money invested in a large corp network, it does become a significant chunk of change.
The problem they are going to run into is, who is going to do the audits. All these audits are going to require man power with the technical knowledge to find ALL software a company uses. So now, how much does that substantial chunk of change amount to. Not near as much as they think. A skilled workforce capable of travelling and auditing every company is going to cost as much if not more.
Lets try to wittle the number of required folks down further. Buy an auditing software system in which you will now be taxed on yet again. This sounds more like double taxation than anything else. First you pay the tax on the purchase of the software (TN does not have an income tax but does have a state sales tax,) Now you are going to have to pay an additional tax on that.
Now on to the question, what if you use an open source software package that doesn't have a cost. How are they going to tax that? Oh wait, they can't. Now who is going to scream, the closed source devs. Open source is getting preferential treatment.
This just is another reason why the US is falling behind, our educational system is nose diving. Our jails are filling up faster and faster. Could go into a huge rant on that alone, but suffice to say. I will be writing lots of letters.
My software vendor does not grant me property rights on the software i use, so i suppose i will not be the one to pay property taxes for it.
:-)
Whoever "owns" the software will have to pay the property taxes ? Fine for me - send the tax collector to Adobe, Microsoft or Oracle - they "own" my software, i am only "licensed to use" it
Wont this confict with most EULAs?
Start to tax software as property just as significant chunks of the software industry are starting to move to a leasing model anyway.
Then there's the open source world's "service model" pricing... how does open source software get taxed under this plan?
Irritable, left-wing and possibly humorous bumper stickers and t-shirts
Now businesses get to pay tens of thousands of dollars per seat for CAD licenses AND pay taxes on it was well... sounds like a great way to convince businesses within the state to upgrade to the latest and greatest version so that they can compete.
::sigh::
And how do you depreciate something like this? Most software is 'obsolete' (according to the manufacturer) by year's end... and many software licenses for corporations must be renewed annually.
Thumbs up to Tennessee.
I know open source is free, but that hasn't mattered to the government in the past. Around here, they tax bsed on how much they decide something is worth, reguardless of how much you actually paid for it. I've seen cases where people have paid more in taxes for buying the car than they did for the actual car. If your grandfather sells you his farm for a dollar, they aren't going to tax you on that dollar. They'll asses the local property value and tax you based on that. So who's saying Open Source will be excluded from the tax? I didn't see that in TFA.
Someone save me from this sanity.
We'd be seeing the Nashville Photoshop Party...
===
I cannot express in words how much of a bad idea I think this is.
MoM++ - A Classic Expanded - [Master of Magic 1.5]
http://mompp.sourceforge.net/
Presumedly the tax will be based on the depreciated value of the software based on the purchase price. If this is the case, it improves the economic value proposition for free (gratis) software.
I spent almost 8 years in TN and all I can say is it was the worst experience of my life. It's the 7th layer of Hell. If they really wanted to make money they should tax the drug problem they pretend they dont have. Im really surprised they understand the concept of software well enough to tax it. Or perhaps they really dont afterall.
Good luck enforcing this. Are they going to have the manpower to go after small business run out of a person's home? What about free software? This would be pretty much unenforceable for all but the largest companies, which would be the only ones that can audit. If they tried to audit all the small businesses, they'd end up spending more on manpower than the few bucks they'd make from those small businesses.
In short, Kelsie Jones, the moron behind this who works on the state board of equalization, has obviously not thought this through very well. Just another asshole bureaucrat who needs to be ousted from his position.
Capital substitutes for labor according to a function called "technical substitution". If the cost of capital goes up, firms will substitute labor: this will increase employment, not decrease it.
Consider that some software is already being taxed based on factors other than cost alone (from TFA):
What might happen in the future is that software might be taxed based on its supposed value to the business and not on how much it cost. So, each copy of a word processor, whether MS Word or OO.org, might be taxed a fixed amount of say $50 per year. Especially if certain commercial companies get their lobbyists in there to help them draft the new tax codes. I can see it euphemistically being called "non-discrimatory taxation"...
How do you cheaply compute what software? There are so many varieties of computer software and titles and the amount you can download every day becomes bigger. And what about Open-source? Does it then become simply a hardware/computer tax? What about PDAs? Or mobile phones? It seem like any scheme would end up hiring more state employees to calculate all this crap than it would bring it. But perhaps that's the entire point.
But that's government for you - instead of making one flat rate tax (perhaps as a sales tax on consumables) to pay for themselves - they end up chiseling money from you here and there. Of course, the purpose of all this diffusion is so that you don't realize how over-taxed you are (and how overbloated the government budget is) - it gives the people have too many targets to attack. And if the taxes are hidden, even better (like gas taxes).
I'm sure the same manipulative logic goes behind surcharges on (esp. utility) bills.
http://www.fairtax.org/
Good grief, yes. See, the reason the IQ 100 lawyers have been able to keep the IQ 130+ intellectuals under control throughout history is because intellectuals always think logical consistency is some kind of restraint on the law. The lawyers probably laugh themselves sick over that naive folly.
You have to view this understanding the tax problems in Tennessee. Currently the state has basically no state income tax. When the state legislature talked about instituting one a few years ago, a large group of (apparently upper middle class) citizens went on a near riot outside the legislature.
The citizens have little trust that the state spends the money well, so they fight all tax increases. Its relatively easy to increase existing tax rates, so TN has huge regressive, sales taxes. However, these are so high now that people often cross the borders or go online buy big ticket items.
The result is the state legislature trying to push through a tax that few people feel directly affected by.
Hopefully you don't have these sorts of problems.
Of course this is all nothing more than government trying to figure out where to get more money from.
Paying property tax on what you rent.....
Several posters have noted that it does not seem reasonable to tax something that is free. But tax collectors have been getting around this for years. They assess something at what they consider a market price, then tax it. ( You want to dispute their numbers? You gotta pay a lawyer to sue them. )
For years, cars here in California were taxed accoding to purchase price. Lying about prices became rampant on used cars. The seller paid less tax to the IRS and the buyer less tax to the DMV. Now, they have assessment tables, so they can lookup the alleged market price of any car of any age. You get taxed even if the car was free
I predict that the tax collectors in TN will assess free software according to the cost of its non-free competition. So you will pay the same tax on Linux as on windows.
Besides applying property theft laws, I thought of another reason why I think Intellectual "Property" is a misnomer and causes problems.
Come on, on this issue any half decent lawyer is going to be able to have his cake and eat it too. You can be quite confident that both the EULA and the tax will be found all legal and proper as Sunday, even if the judge(s) in the case have to do a little fancy twisting and turning when they write the opinion.
Just one example in another area would be zoning regulations or Federal land-use regulations: you think you own your property in fee simple once you buy it and clear the mortgage, and can then do what you damn well please with it, but oopsy, you don't, not really, because the city, state and even Federal government can just come in any time after you buy it, and tax it or impose pretty much whatever restrictions they want on your use of it.
In short, your rights to "your" property have always been at the pleasure of the majority. Make a note of that fact, and remember it next election.
You certainly do. They're part of the rent. It's no different from the way you pay gasoline taxes when you buy gas. The taxes are figured into the price of the gas.
You're correct that the government does not send leaseholders a bill for the property taxes. But surely the absence of a written bill does not fool you into thinking you're not paying one?
Ironically, the answer to "do you own it" may becoming to be yes. Historically you own the hardware and liscense the software. But with the resurregence of the propriatery platform such as the Xbox 360, the PSP, and apple commputer, they no longer care if you own or liscence the software since it only runs on their machine. So going to a software ownership model might be just fine with them. With propretary hardware and the rise of platform locked DRM they can even inhibit re-sales of the software. (note copying it for re-sale is normally illegal, but reselling your own copy after you not be possible if it was platform locked.)
Furthermore, this sort of cost structure where software is property can and will be gotten around by leasing software. There will be two ways this can be done. First software itself may be come ephemral with the rise of web-apps and web-served desktops. Second, how does one count the actual per-seat liscences of a time-shared server based application? Third, it can simply be normal software that is leased. That is some holding company in the bahamas hold all the licenses and rents them to you. You own nothing.
Another issue is the convergence of Operating systems, scripting, and applications. Is Firefox the app or the OS that the java/javascript program runs on. Is the OS really part of the firmware or is it the software. As computers move towards embedded entities the latter question gets blurred. You PDA and cell phone's OS are not prceptually general purpose operating systems they are more like firmware.
Now as for the tax happer bussinesses: what a steaming load of standard baloney. Everytime someone suggests taxing this or that some imbecile says no that will hurt bussinesses or hurt this or that. It's counter intuitive but the ideal taxation system taxes EVERY SINGLE THING IT POSSIBLY CAN. The only thing that matters in the end are two things 1) how much money do you need to raise. With any governent system in the end you need to raise $X and to do so you rasie rates till you get $X. So if you tax everthing then the tax rate on each thing is small. In the end on average everyone pays the same $X/NumPersons no matter what the tax STRUCTURE. Thus I might end up paying more for software due to taxes but I will pay less for food and gas and dividend and revenue. 2) The second thing that matters is if the tax structure causes a policy that alters the societal or economic structure in a way perceived as negative.
The latter could be interepreted in the case of software as possibly affecting bussinesses in a negative way. Generally taxes that tax fix cost, required items tend to impact small entities more than taxes on scalable/marginal items. the classic example is food taxes hurting poor people more than rich people. In the end however one needs to consider the tax basket not the individual components of the tax structure. For example, luxury taxes and progressive income taxes can easily offest food taxes. Some taxes are easier to assess fairly. SOmetime you want weakly regressive taxes as in instrument of social policy.
for example, perhaps tenessee is actually concerned about having too much white collar employment or a lack of competativeness in some industrial aream and wants thus to shift costs from blue collar (softwareless) jobs to white collar jobs. Having a lot of different sorts of taxes one can utilize as a means of setting coarse grained economic policy is highly desirable. Thus this whining about it hurting bussinesses is stupid.
Some drink at the fountain of knowledge. Others just gargle.
Politicians are smarter than you think. For example, this absurdity might just be stalking horse for a more normal tax increase. Think it through this way:
Let's suppose the TN tax board says, uh oh, the state needs more money. But citizens are going to resist an ordinary tax increase on, say, property or cars. Well, not all citizens. Only the citizens who actually own property and cars -- e.g. middle-class and above, entrepreneurs, business-owners. How can we recruit them to support such a tax?
Idea! Let's float some outrageous proposal about taxing some asset they use to generate their wealth. It needn't be a big tax, but just the idea that we're going to be poking our fingers into an area that has been blessedly free of Big Brother will make them freak. They'll think of all the new fees they'll have to pay accountants and lawyers and secretaries to figure out the right way to buy software and keep the records...
Then, in about 6 weeks, we can drop the other shoe. Or, gentlemen, we could just have an ordinary tax increase, a small one -- what say you to that? Chorus of assent, along with sighs of relief...and the tax board smiles privately. Mission accomplished!
You're talking like a lawyer, where the question of who is "paying" is some kind of subtle theological question.
Me, I think like an economist. I define the person paying as the guy who is out the cash when the dust settles, period, end of story, Khattam Shud. Doesn't matter to me who gets the tax bill or who writes the check to the government.
From that point of view, all taxes are paid by consumers and the final users of property. Doesn't matter to me who "legally" pays for them. That's just a shell game designed to fool the rubes.
What they would do about enforcing this for online sales of software, I have no idea. Send threatening letters to thousands of software companies?
And this is not even going near the issue of software ownership. They better be careful, or else somebody might get it in their head to challenge sales taxes on software which is not actually owned.
They say the first thing to go is your penis. Well, it's either that or your brain. I forget which...
This kind of quasi-legal tax reminds me of PA's 'view' tax. A few cities actually charges taxes - not necessarily on how much your house is worth - but what kind of view it has! The closest area to me that does this is the West Shore in Harrisburg. I heard about this last year and I couldn't believe it. Those who live on the the West side pay an extra tax now (as a property tax) based on the kind of view over the river they have!
Yes, PA is no stranger to a tax it didn't like. I wonder how long it'll be until we get the 'software' tax here as well. It seems anything PA can do to foster distrust in government or be anti-business / tech, they'll be there to 'help'...
"...Well, there's egg and bacon; egg sausage and bacon; egg and spam; egg bacon and spam; egg bacon sausage and spam..."
I think you are fooling yourself with this statement:
If the property owner so desired, he or she could pay the taxes himself/herself without charging the renter extra for it.
Not in a free market, he can't. The taxes are part of the cost of "production" and in a free market all costs of production must turn up in the price. Any class of producers who fail to pass the full cost of production on to their consumers will always lose money and go out of business. So the "choice" of the property owner not to pass on his taxes is entirely illusory. It's like the "choice" you technically have to not take the medicine when you get sick and just die.
Similarly, the property owner could refuse to pay taxes, and they would be the ones taken to court, not the renter.
Also not quite consistent with the real world. In the real world, your obligation to cover the owner's costs -- i.e. your obligation to pay the rent -- is covered by a contract, and if you fail to pay the taxes (part of the rent), you get taken to Court, and a lot faster than the government will take the owner to Court over taxes. So, yes, your obligation to pay the taxes is enforceable by law. It's not enforceable by criminal law, however, and that remains the slim difference between you and the owner.
I appreciate that there's a lovely word game going on here that the owners and government would like you to fall for, that tries to convince the consumer that his burdens are somehow lighter than those of the producers further up the line. It's a nice fantasy, very comforting.
Don't be a dumb ass -- There is no Senator Robert Cash. The story is fake, and you've bought it.
Stop being so gullible and get some critical thinking skills.
What's the point of this? Why not tax paperclips? Or pencils or desks? What on earth could be the point of picking out one particular form of business capital and singleing it out for taxation?
Just have a flat tax on every purchase. Once you own it, it should be yours without some government agency tracking you or what you own.
A flat sales tax model for every exchange of goods except between business entities and upon import and export of goods is the only way to let people control the taxes they pay and to really ever own anything, rather than renting it from the government.
When the government uses tax models where they need to keep files on every citizen and the files list everything that person has ever owned and lived and worked, then it is less about taxes and more about control.
that constituents are property, and thereby force them to tax themselves accordingly.
Wow. I'm from Cleveland and i totally know what you are talking about man!!
.. for legally owning commercial software and digital content just keep coming don't they?
Intrusive buddy DRM, unstable and annoying activations and copy protections and now, you have to pay taxes on it.
So in this light, expect big commercial software companies (i.e. Microsoft for example) to lobby heavily against this.
If even because taxing an abstract idea ('license') is nuts.
The point is to find some kind of tax that has enough public support to pass. In this case, perhaps the proposer thinks a little intellectual class warfare will work. Maybe he thinks there are lots of people in Tennessee who sort of resent the geeky kind of computer-savvy person who buys a lot of software, so that he can recruit them into supporting this tax rather than a tax on (say) paperclips or gasoline.
It's like the fact that the taxes on "sins" such as booze and cigarettes are very often much higher than taxes on "virtues" like bottled water and running shoes. Coincidence? Ha. Fact is, the fine art of taxation involves expertise in a little word game where you can talk people into parting with a higher fraction of their income by choosing carefully which of their expenditures you are taxing.
Of course, there are other likely side effects as well.
Companies will hire companies in other states (without software taxation) to host their websites - imagine the tax on a big Oracle setup.
Companies will buy only one copy of (say MS Office) instead of one for each computer (this is probably enough in itself to motivate software vendors to lobby (bribe) the notion out of existence). Unless, "operational" software (OSes etc) are taxed less than "applicational" software (Office, Databases and the like.) In which case, MS will make sure that Office is considered operational software, Oracle will move most of its functionality into its own operating system and charge only a pittance for the "applicational" part, and so on.
Personally, I'd like to trace the lobbying (bribes) if this actually becomes serious.
If they go against actual cost, then commercial software is screwed.
if they go against some abstract concept of 'value', then OSS gets the shaft as well.
---- Booth was a patriot ----
This is yet another attempt (probably pushed from higher, larger political groups) to tax and regulate software and the Internet. As was pointed out, the problem is that businesses rarely ever actually 'own' the software unless it is written in-house. The trouble with valuating such software is multifaceted, and not worth the effort to value it for taxation in terms of net return on the process. F/OSS software is yet another issue... While people are free to use and modify such software, it is not theirs, and they technically don't own anything other than changes that they have made even though the license to use it is zero cost.
Now, trying to view this from an angle that makes sense of it, I'd say that TN wants to raise taxes, and looking at businesses, think that taxing software as a property will generate revenue... but as we all know, that is total bollocks and won't work since no one actually ownes it. So the real thrust of this could be:
1 - Solidify the value of F/OSS software for business
2 - A flank attack on businesses to prevent use of F/OSS since it would be taxed the same as MS or others, thus nearly negating any benefits
3 - An attempt to distract from real issues such as Sony's DRM & price fixing, and the battle in Mass.
In reality, its probably a case of unbelievably stupid ideas being bought into by people with clout because they have absolutely no clue what computers really do or can do, never mind what the software does.
When they figure out that this software stuff is like knowing how to grow a nice lawn and anyone can do it if they study it enough and work at it, I'm sure it will perplex them to the point of apoplexy.
I'm hoping that this conundrum they have, or are trying to, create causes them to burst into flames in a case of mass spontanious human combustion!
Support NYCountryLawyer RIAA vs People
So, obviously there would be no tax due on Free software. This move may be a good thing...
Oh well, what the hell...
It doesn't seem unreasonable to me to tax a licence. The problem is that since it is not scarce, software does not behave like property. How much should one be charged for a Fedora installation? For using a web applet? The problem here is trying to reduce it to practice without discriminating heavily against in-state businesses and creating mountains of pointless paperwork.
Taxes should be designed to minimize friction, but some lawmakers will pass taxes which net them $0.01 for every $1.00 the taxee has to spend! Software taxes seem like they would fall in this category. If you're going to tax us, fine, but please try to avoid wasting our time and money!
Were this not so, there would be a great tax avoidance strategy available by deeding property to a government agency contingent on an ultra long term, ultra cheap lease (1000 year lease at a dollar a year).
Sorry, you are wrong. There are many Robert Cash's in America, but none of them have been elected to the US Senate. Before you just post "wrong" again please do some research, and if you still think this is real then please do tell the state Robert Cash represents and his party affiliation.
Computers allow humans to make mistakes at the fastest speeds known, with the possible exception of tequila and handguns
Tracking individual installs in barely feasible within one organisation; either you use this to give the BSA a mandate to monitor business software installs for you (because this would give them increased regulatory power to detect piracy), and/or you take the music industry approach and make assumptrions about what individuals are doing, Ummm, let's say every PC has Windows, Office and a couple of games on it.... Naturally big companies will be able to "negotiate" favourable rates lest they leave the state (tax breaks are a standard deal remember), presumably leaving SMEs and individuals to take the rough end. This proposal has so much potential for government and industry to collude!
"Everything is adjustable, provided you have the right tools"
Although this may hurt Tenn. in the short run it will help the country as a whole in the long term.
IP (intellectual property) should be hit with the same property taxes as are houses, cars, possessions, and other "real" property. If the corporations and their lawyers want to call ideas "property" then I think we should legitimize that for them by taxing it for them.
There wouldn't be such a large amount of patent, trademark, ect. hording if the owners were forced to pay a market value taxation on those holdings.
The public wins either way. Either there is more tax revenue generated for the common good -or- more patents, trademarks, ect. fall into the public domain.
Tax Disney's rat and let the revolution begin!
and they will then come up with a regulation which does put a value on your free software.
A government agency isn't going to allow someone to sidestep its authority when it comes to getting its hands on money. They will create an unlimited amount of BS to justify their theft.
What some may see as a boon to open source could become a pox upon it as well.
* Winners compare their achievements to their goals, losers compare theirs to that of others.
... why exactly is that funny? tennessee is a state in america much like the other fourty-nine ... what would lead you to believe there are no businesses here? have you been to tennessee? did you stay in a hotel, or did you just drive the 500 or-so miles of i40 that runs through it?
... in fact, those reasons are why we have such big industry here, granted mostly manufacturing ... we use computers, i swear we do. i own software, i promise.
... ever. good people, which is more than i can say for the likes of Cali, or New York, or Texas, or any number of other states ...
we have a VERY low property tax, and no state income tax, making it an all-around cheap place to live, but what would lead you to believe that no one here owns or works at a 'business'
your comment makes you look as uneducated as you assume the population of tennessee is, mr coward.
i've lived in a number of american states, and visited a number more, but never before have i found a place so peaceful, cheap, and crime-free as tennessee. so before you are quick to judge, visit. there is a big stereotype surrounding this whole area, which is unfortunate. most beautiful place
[insert all the rest of the arguments about promoting oss or the legal issues of ownership vs. right-to-use software here] and you come out with a generally wonderful place to be.
and kind sir, i assure you, we have businesses. country music, to name an obvious. you've heard of nashville, no?
you can't have everything, where would you put it?
then do I need a shotgun and a "No Tresspassing" sign?
"Ya'll get - out - of my sourcecode, now!"
Look at all the money that could be had from the RIAA and MPAA as they pubically advertise thier right of ownership of creative property.
"Enjoy what you're doing! If it becomes drudgery, you're doing it wrong!" - Jim Butterfield
See, the part of this I find interesting is not the direct economic impact of businesses having to pay more taxes (indirectly or not). The aspect that interest me is that the person who the government holds accountable for paying the property taxes must be the owner of the property. Tennessee is about to settle the question of software ownership. Taxes can be passed and repealed. The ownership question, once determined, has much further reaching consequences.
"The chamber of commerce is a business organization, not an arm of the government."
Yeah, but just try telling them that.
With reasonable men I will reason; with humane men I will plead; but to tyrants I will give no quarter. -- William Lloyd
One classic politician rationale for extending the tax base is "consistency".
How about a nice level taxation on software (and much else) of, say, ZERO.
That's consistent.
Not that I am totally consistant on this, but I think it makes sense to tax the things that you want less of, or the things that you want less hoarded.
With that principle, you can make a case to tax smoking; the health effects have costs that we would rather avoid. You can make a case to tax land; it is a limited resource that we want as many people as possible to get their piece of. You can even make a case for taxing other physical property; physical property takes resources to make which could be used for something else.
You may or may not agree with these simplistic arguments for taxing items, but the point is there is some case to be made. Why tax software. Why would less software be a better thing?
I hear a lot of folks saying that the gov will have an army of people assessing companys computer software...well, if I am the IT manager, I say "You arent getting to touch a PC or set foot in the data center 'till I see a fucking warrent! fourth ammendment bitches!"
... are they going to tax it based on how many copies I have made of it? If I put MS Windows on 100 PCs legally, I have to either buy 100 copies, or get some enterprise licensing that still amounts to a discount times 100 or so, well more than the base price of one copy. Yet with many retail open source packages, I buy just one copy and can install it on those 100 PCs. And what if I downloaded it? Does that count the same as buying one copy?
What if I have one piece of software worth say $100 and use it on 2 PCs, and have another piece of software worth about the same but use it on 50 PCs? Is that going to be taxed differently? What if both are installed on all PCs? What if all software is accessible to all PCs via network file sharing?
While I have some concerns over being taxed on it (aside from the fact that I don't live in Tennessee, though this could potentially happen in other places, too), I'm actually more concerned about the impact that as-yet-unknown methods of counting will have on how computer and networks have to be managed. For example, it can be very convenient to have every program accessible from every computer on the network, but if the tax structure counts each PC the software is usable from (as opposed to is used from, which would be even harder to do), then I would be forced to make technical changes in the network structure that have no technical merits.
If I did live in Tennessee, I guess I would have to put my data center in another state.
now we need to go OSS in diesel cars
I went back into the corporate files for fiscal 1984 and took a look at the business personal property tax return for Randolph, Vermont. Software was taxed the same as hardware. Anything that had been deprecated to zero for federal purposes was taxed at 10% of it's purchase price. Other items were taxed at their fair market value. Nothing new here, move along.
"IP (intellectual property) should be hit with the same property taxes as are houses, cars, possessions, and other "real" property."
They're called "sales taxes".
It's pretty simple to spot the cause whenever anyone in Tennessee proposes new technological legislation... It's generally corruption, pure and simple. Someone who would clearly benefit from this happening has simply been passing out the bribe money. Louisiana might be have been polled as the most corrupt state government, but Tennessee works hard at catching up with them.
If software is taxed as property, then it's going to be able to have it's value depreciated as well. This is just going to mean a tax break on software for companies who use a lot of it, particularly when it comes to software that comes from a company who tends to obsolesce their old releases with new ones every three years. This will in turn allow the consultants who originally got these companies trapped in the never-ending renewal agreements with no way to test a migration to some other platform, to convince these companies to spend more money on their software, because with the tax break Uncle Sam is picking up part of the tab.
There's another sinister side of this as well. Leased equipment is not taxed the same way, so neither would leased software. Taxing _owned_ software would give a distinct advantage to companies dealing in mere site-licences, since it would be a simple wording clarification to make these entirely equivalent to the software leasing agreements that they already are.
Let's look at some of the other telling details... The board *proposing* this change admits they do not know how much money this would bring in. Normally these guys have a very clear idea of how much money a proposed tax is going to represent--so what's the source of their interest in trying to get the money in the first place? (Bribe money. Pure and simple)
Tax the licensor. Tax based upon net income.
Microsoft would pay tax on Windows income.
Opensource project X would pay tax on Project X's income.
If Project X licensed for $1000, even under GPL, they'd pay the percentage tax.
While your at it, TN., tax patents, too.
WhiteWolf666 an exBush supporter. All you new-school,compassionate,save the children Republicans can rot in hell
Incorrect
Don't most EULA's in commercial software inform you that "you DO NOT own" the software. How can you be responsible for a property tax on something you do not own? Of course they could always write stuff into this or another bit of attached legislation that addresses this by taxing your "rights to use" software with such EULAs as a "service". Does this legislation address this with service or usage defined taxes? I did not see in reference to such in the article. If they are not addressing this EULA issue, then this could be seen as preferentially supporting software as a service.
;)
If you use in house customized free open source software are you going to be assessed for at a "equal commercial value" for the result? Are you going to be re-taxed on the in house development costs of the product? Or can you just get by paying taxes on the "copying fees" for these free open source resources? I am sure this is just scratching the surface of possible legal issues.
I realize that there are going to be indirect cost increases for me caused by such taxes. I guess it could be worse, it looks like they could tax my business software, a $5.00 distro of Fedora Core 4, without too much direct damage to my bottom line.
Matthew
Win/Win who could loose?
LOSE is a verb. Example: You lose your car keys.
LOOSE is an adjective (although in a more antiquated parlance--like in certain versions of the Bible--it could be a verb, but its meaning would be quite different than "lose"). Example: Your shirt fits too loose.
To hijack the software than buy it ?
How does the state going to control how many pieces of software one own?
That's why Nissan is moving it's North American Headquarters here...
c le/2005/11/10/AR2005111000988_2.html
;-)
http://www.washingtonpost.com/wp-dyn/content/arti
Sorry California
http://www.senate.gov/general/contact_information/ senators_cfm.cfm
Nope
Computers allow humans to make mistakes at the fastest speeds known, with the possible exception of tequila and handguns
Solves both of our problems.
The Governor has run successful technology ventures in the past and is doing a pretty damn good job with the state.
What does the whorehouse story prove besides your interest in 15 y.o. hookers?
I heard it was all just a plot by a group of political lobbyists hired by the enlightenment project. The future of enlightenment needed a good funding base, and while Tennessee isn't the richest state, they figured it might not be found out there...
Of course, it also has a clause for Linux installation on all the government owned desktop installations. It's going to be quite a windfall, I hear.
We could have the 2006 Music Row CD Party here in Nashville! ;-)
;-)
ha ha ha
Don't forget this is the state that gave us Al Gore- the inventor of the Internet
Libertas in infinitum
A) If I were to wright a piece of software for my own use, at my company, but not distrubute it to anyone outside said company, can it be taxed?
B) If they tax the 'right-to-use' software... Well, technically, everyone has the right to use a free software, that's what makes it free. So, can I be taxed on software that I don't use?
C) If they can tax computer software, does software for gaming consoles come next? (If this was, as was commented, an attempt at getting support from the non-tech community, would they do the same thing with the non-gaming community?)
D) For software that has both client and server parts, will companies be charged for the use of both the client, and the server it connects to, or just the client?
This opens too many doors for my taste.
I own a business in Tennessee, and I can tell you that state government is EXTREMELY unfriendly towards operating in this state. You have to pay countless petty fees and taxes for any aspect of operation, and then you have a HUGE tax called the "Franchise and Excise" tax. This worthless tax is absolutely just a cash grab. It is a 6% tax on NET profits after all other tax is paid, and is simply a "right to operate in Tennessee" tax.
I live in Memphis, Tennessee right now, otherwise known as the tax capital of the United States. Along with having the highest sales tax in the United States history (right now the state tax alone is among the highest at 7% + city taxes, county taxes, etc... sales tax is about 9.25% iirc, but there's talk about raising it closer to 9.8%). We are taxed so bad here; even our food tax is 6% - the highest in the nation! Now they are thinking about doing this - well I'll tell you why. Our city and state government always overspends their budget and gives too many handouts; not to mention that most of those involved in our governments are criminals as proven in the FBI investigation Operation Tennessee Waltz.
This might be a good thing, if it's a tax based on the cost to purchase (err license) software that'll help move people to open source. Hmm lets see what 10% of $0.00.....
If a business buys a copy of MS Office, what exactly would you tax?
The $500 the business paid for it? Or the $139 the upgrade costs?
Or the current market value of a used MS Office license?
A lot of small businesses don't track software licenses as an asset, its expensed when its purchased same as a a thousand other things businesses buy. And if the state starts taxing it, it for sure won't be tracked.
A more practical matter is enterprise class software. This software usually has a high purchase cost, but a big chunk of that money is in the customizations. How do you value customizations for tax purposes. Also, licenses for this type of software is usually very specific about your rights after the "sale". In many cases, the license states that you have no right to resell the software, so arguably, the value of the software is $0.
You were mistaken. Which is odd, since memory shouldn't be a problem for you
Follow me here...
If you BUY microsoft software for $350 a license you pay an annual tax.
If you download Openoffice for free, there is no tax.
I expect M$ to lobby hard against this one.
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
"First, you can sell software."
Like a lot of things in life "it depends".
Yes, you can sell certain software...buy MS Office and if you save the box and disk and license key, you can sell it.
If you lose all that, according to MS you can't sell it, so there is no value there.
On the other hand, there is a lot of software that you can't resell, particularly enterprise class software. I don't think you can resell your Oracle licenses, so again, arguably, the value is 0. Remember, the value of something is the price you could arguably get if you resell it.
I think the only way you could tax software is if the software was listed in a company's balance sheet as an asset. Most desktop software is expensed and not typically shown as an asset, particularly in small companies.
If they pass this law, I suspect they'll find very little to tax.
You were mistaken. Which is odd, since memory shouldn't be a problem for you
This is called "daddy I want a pony".
It goes like this:
Child: Daddy I want a pony
Dad: You can't have a pony
Child: But daddy, I want a pony
Dad: Don't be silly. Ponies are expensive, I'll have to buy a stable, and the cost of feeding and boarding it will be huge. No.
Child: DADDY, I WANT A PONY. WAAAAH!
Dad: No, but don't cry. Here. Here's a doggie instead.
Child: (sniff) Oh, well, I'll do my best with my new doggie instead.
You were mistaken. Which is odd, since memory shouldn't be a problem for you
How do you tax a revokeable right-to-use as property?
My company has two different lawsuits against counties in a Midwest US state due to taxation issues. In both cases, the county tax assessors (two different counties) fabricated tax demands respective to real estate.
In one instance, a computer system owned and operated pursuant to a service for the city operated by our company in a city water resulted in the county taxing our company for the water tower (which was city property). After sending a registered letter notifying the county the tower wasn't company property, the incompetent assessor "clarified" that it was the personal property computer "affixed" to the tower. The assessor was presented a receipt for $450 for the embedded system purchase price, but arbitrarily decided it was worth $20,000 (the property also does not meet real estate definitions for tax purposes). This monitoring service for the city runs $35 a month - as if we intend to pay $300 a year in taxes on a PC in a water tower billed as "real estate" for $35 a month! The county appeal process also rejected our company's appeal, and specifically said "We need the tax money" as the reason for the rejection. Over a fraudulent $300 annual tax demand, we've cost them over $6,000 in legal expenses so far (which also affect us). Guess that tax money (and a whole lot more where it came from) is going to attorneys, not ineffective county budgets.
The other is a $25,000 tower we purchased that a second county decided was worth $350,000 because it has 17 old AT&T horn antennas (all of which are long decommissioned), and their auditor "figured" each antenna on a tower was worth $25,000 a year in revenue. Did they ever ask us about the antennas? Did they notice the waveguide was stripped years ago rendering them useless liabilities? Did they notice the tower was in the middle of nowhere and worthless for even cellular service? Nope. They made it up. So far, they've stalled in court on demands to substantiate their valuation basis to the point the court is now being asked to find them in violation of discovery requirements. This is our government that is ignoring the same laws we'd go to jail for violating.
The good news is that the accountants and executives at Worldcom, Global Crossing and so on also made their numbers up and they finally are being held accountable. What all of us need to do is quit putting up with fraud at any level of government. Yes, it'll cost us more to fight the taxes in the shortrun (and it takes a lot of time to get the state to investigate the criminal acts of some of these assessors), but unless we do so, they're going to keep up their practices.
My advice? Dispute your taxes every year and make them prove it. I've had more than one assessor tell me that they don't check their assessment facts until there is a dispute - If you are too lazy to dispute them and call them on their sloppy work, they're going to take you for the extra tax revenue.
http://www.ryanco.com/gateway/elec-tn.html heres a few of the things pissin on software! looks ok to me!!!
Hmmm, could be some smart politition or his/her lackeys do not read forums? If a pol can push a tax, that pol and lackeys will find wording to pad it to cover all angles. Such as not taxing the ownership/leasing(ship) angle but the revenue of use. (or potential revenue based on whatever the hell they want to base it on, again....wording....
I think the only fair way would do the following...
Scrap property tax. (Enjoy no income tax and the lack of red tape that comes with it.) Increase sales tax. Stop wasteful spending. Problem solved, right? Also, I don't know how many states have different sales tax rates for different stuff. Like maybe purchasing an item in a hotel will have a higher sales tax percentage than buying the same item elsewhere, I think.
I live in Tennessee and pay the highest sales tax in the country.Something like 9.75%.So now they are wanting to double tax software sold in Tennessee that i don't even own? NICE!
Crisis is the rule, not the exception.
If this lame-brain scheme actually does get implemented with a high enough tax rate, it could drive businesses with a large tax bill to "offshoring" their software use to out-of-state "IT hosting" companies.
...
Of course, since almost every electronic device nowadays is digital somewhere, this tax should also logically extend to many or most: telephones, programmable advertising marquees, microwave ovens, CNC and other industrial manufacturing equipment, cars, trucks, air conditioners,
Wow. That's one hell of a tax!
You show 'em Tennesse! Let buinnesses know that no way shape or form Tennesse is going to let anyone avoid paying the state it's cut! Tell those stinkin' companies they can go to China if they want low taxes!
Taxation Perversion Module
Hugh Manatee
...email him at KelsieJones@state.tn.us . I seriously doubt he has any idea how wide and deep this lovely little tax proposal goes. But then again, politicians and bureaucrats tend to be some of the most unintelligent and greedy people alive, so that's not surprising.
"Tennessee to Experience Enormous Rise in Business Software Piracy" would have worked better.
Property tax is payable on most(all?) rental property. I know I pay it on my apartment. Ownership has no bearing on property taxes, except on who is liable for the tax.
What I'd like to know is this.. Would software with $0.00 cost, have $0.00 taxes payable? How much is a freely distributable linux distribution worth for assessment purposes?
No one has a right to their *own* opinion. They have a right to the TRUTH.
Use a pencil and go to jail for tax evasion?
...to beleive that... believe.
...says their wrong... they're (as in: they are wrong).
...legalizes buisnesses... businesses.
...be deamed unreasonable... deemed.
...who could loose... it's lose FFS. 'Loose' is as in morals or trousers.
I give this service for free. No doubt you spent little time concentrating in school...
for the intellectual property industry.
Property is property, is it not? And when we are talking about property that is worth as much as IP, we're talking about something far in excess of cars, boats or even large homes.
We're talking about companies fighting for, bidding for and suing over millions of dollars' worth of patented or trade secreted algorithms.
If you can make so much money and hold so many people hostage over intellectual property, then by God, states can tax it.
Of course, corporate campaign contributors and slick campaign ads will ensure this logical consistency is never brought to the light of day for long.
--- Grow a pair, liberals... stop letting the Republicans bully you!
I would venture that Business' are already taxed plenty on income, appreciating assets and any time a business makes a transaction (sales tax) as well as a variety of other business related taxes.
Truthfully, this sounds like a very greedy entity that wants to make it more expensive to do business in its area of influence (and it does so simply because it can). I don't see any new benefit that is derived from this tax increase, it's just more money that can be funneled to the insiders by the State. Where's the accountability?
State and Federal Governments seem to have this attitude that they are DUE any money they request, with no accountability for what is done with that money. States aren't interested in providing services to their residents, they view those residents as an excellent source of revenue, nothing more.
It is very frightening that the Matrix is such an excellent analogy of the relationship between citizens and their government.
All this talk about taxing software as property has me thinking about other property hot topics on Slashdot. Particularly I wonder what would happen if we taxed intellectual property? Think about how this would work with patents and copyright, two examples of where exclusive ownership is assigned for a period of time before eventually giving the property to the public.
Since the value of a granted monopoly grows with time, so should the taxes. Sort of a reverse amortization. We'd just need to come up with an equation for determining the tax as a factor of age and value. Might I suggest Initial_Value * Factorial( Age_In_Years )
Wrong again