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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
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
While you don't own the software itself, you own a licence to use the software, and it is ownership of that licence that brings economic benefit to your company.
It is the same as if you lease a car, or a building, or any other asset.
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.
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.
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!
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.