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Tennessee to Tax Software as Property?

Posted by ScuttleMonkey on from the pad-the-bottom-line dept.

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.'"

5 of 312 comments (clear)

  1. chunk o' change! by yagu · · Score: 3, Interesting

    From The Fine Article:

    "This would be a significant chunk of change," said Hayes Ledford, the Chattanooga Area Chamber of Commerces director of public affairs.

    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:

    The new rule would provide a uniform standard across the state

    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.

  2. Re:Do we own it by thogard · · Score: 5, Interesting

    When Microsoft owned software attacked my news server, they were claiming it wasn't their problem because it wasn't their software. I think they are going to have to take a stand on this issue at sometime.

  3. Re:Do we own it by keithmo · · Score: 5, Interesting

    I leased a truck for 5 years. I had to pay property taxes on it. I tried the same "why should I pay property taxes on something I don't own" argument, but it fell on deaf ears.

  4. he may be smarter than you think by Quadraginta · · Score: 5, Interesting

    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!

  5. Valuation by jefu · · Score: 3, Interesting
    Should this nonsense actually go through, it is quite likely that vendors of software will lobby seriously (that is, bribe generously) (does anyone else think we need a new word for that - "lobbribe" perhaps?) for open source software to be valued at the same kind of valuation as their proprietary software.

    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.