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Maryland To Tax Custom Programming and Computer Services

Posted by kdawson on from the strangling-the-golden-goose dept.

mcwop writes "Early this morning Maryland passed legislation to apply a new 6% sales tax to 'custom computer programming' and other computer- and hardware-related services. Computer industry groups lobbied hard against the measure to no avail. Purchasers of IT services may find that in-house IT and buying out-of-state become attractive options, as well as cutting money out of other projects."

13 of 395 comments (clear)

  1. This is awesome. by Anonymous Coward · · Score: 1, Interesting

    I do custom programming work in Missouri. All you Maryland folks can call me for tax-free work.

    Oh, and congratulations to the Maryland government for chasing those pesky high-paying jobs out of your state. I'm sure your citizens will thank you.

  2. So is this good or bad for coders? by phorm · · Score: 4, Interesting

    In one case, it adds to the cost of hiring a contractor, thus raising the price of short or quick contract work (bad for contractors). On the other hand, hiring an in-house IT guy to do coding (which I'd assume isn't taxed beyond normal income taxes) may seem better, which perhaps means more permanent jobs.

    Stupid taxes are still stupid, but is this one good or bad for the IT sector in general?

    1. Re:So is this good or bad for coders? by funaho · · Score: 3, Interesting

      A 6% sales tax means that it's no longer worth it for me to do any work in Maryland

      And this is where the real victims will be, those of us who do programming work on the side for some extra income. The hassle of getting a tax ID (which might require setting up a real company), collecting and passing on sales tax to the state is pretty big when all you had to do previously was declare a couple thousand extra dollars on your income taxes at the end of the year. The big consulting companies will complain about it, but in the end they'll just keep on rolling. The little guys will get rolled over.

      Michigan (which is where I live and work) recently passed a large tax law change that will charge 6% sales tax on consulting services, among many other things such as massage services (yeah you'll pay 6% on your happy ending!) I'm still trying to decide if its worth the hassle anymore.

    2. Re:So is this good or bad for coders? by Bluesman · · Score: 2, Interesting

      There are even additional hassles. I'm no longer a Maryland resident, but I'd probably have to file a non-resident income tax form at the end of the year just to pay this tax.

      Previous experience shows that when you file such forms, the state of Maryland tries to tax your entire income for the year, not just the income you earned in Maryland. Simply submitting the form opens you up to all sorts of legal hassles and inquiries from an extremely incompetent government agency. When I lived there, I had such a problem with one of my tax forms that took over a year to correct.

      No thanks.

      --
      If moderation could change anything, it would be illegal.
  3. It's not a sales tax if it applies to services by GnarlyDoug · · Score: 1, Interesting
    If the tax is being applied to services like computer programming, then it is no longer a 'sales' tax. It's effectively a income tax. No goods changed hands here, this is work for hire and services. What next for MD? 'Sales' taxes on mechanics and plumbers?

    To sum up, less attractive to business, higher cost of living, more of the economy goes underground and out of the tax system, precident of selecting specific service industries to be taxed at special rates and the corruption that will engender, and overall economic damage to MD. Brilliant.

  4. Re:buying out of state isn't an option by superwiz · · Score: 3, Interesting

    Funny how you said "cases". A friend of mine recently avoided most of the tariff for a computer he sent to Germany by declaring it as a computer "case". Yes, I know you meant something else. I am just wondering... what pun?

    --
    Any guest worker system is indistinguishable from indentured servitude.
  5. Re:Idiocy like this... by tkrotchko · · Score: 3, Interesting

    "'boy is this guy trying to make a 5->6% move sound like a bigger deal than it is'."

    Yeah, how dare he do the math and quote the correct percentage increase.

    --
    You were mistaken. Which is odd, since memory shouldn't be a problem for you
  6. Time to Move. by theskunkmonkey · · Score: 2, Interesting

    As a 43 year lifetime resident of Maryland, I've had it. I've loved living here and am damn proud to be a Marylander, but this is bullsquat. I had been thinking of moving and this seals it for me, I'm outta here as soon as I can.

    We're also getting screwed with one-armed bandits too.

    http://www.stupidprize.com/?name=Maryland

  7. Re:So... by trolltalk.com · · Score: 2, Interesting

    Sales taxes used to be thought of as regressive - but when you consider that, as Leona Hemsley said wrt income taxes - "taxes are for poor people", and how they have the $$$ to pay less than what would be considered "their fair share", a sales tax isn't all that regressive. After all, if they spend it, it will be taxed. When they buy a Rolex, they'll pay more tax than you will for your Timex.

    --
    Kevin Smith on Prince
  8. Re:buying out of state isn't an option by RareButSeriousSideEf · · Score: 2, Interesting

    I recently bid 5% over my nearest competitor on a somewhat lucrative project (by my standards) for a Maryland client. The competitor happened to be in-state for the client. I'm not in MD, and the (extremely price-sensitive) deal with the competitor isn't yet inked. I'll be giving them a follow-up call in the morning.

    Thank you, Maryland legislature! And to all you other MD-based purchasers of "custom computer programming," I'm as custom as you can get, I have good references, and I come with a built-in 6% discount. Hurry, availability is limited. ;-)

    --
    Pi Ran Out
  9. Re:buying out of state isn't an option by Red+Flayer · · Score: 2, Interesting

    Thank you, Maryland legislature! And to all you other MD-based purchasers of "custom computer programming," I'm as custom as you can get, I have good references, and I come with a built-in 6% discount.
    No you don't. They'll still need to pay Sales & Use tax on that; the difference being that they need to remit the tax themselves, rather than you billing them for it and remitting the tax.
    --
    "Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
  10. Re:buying out of state isn't an option by ahodgson · · Score: 2, Interesting

    The founding fathers were willing to go to war over something like a 1% tax. They lived in an age where it would be impossible to imagine paying 25% taxes, let alone the 60% that is now common in the OECD. Virtually no one had that much surplus wealth; only the exploitation of free energy on a large scale, in the form of fossil fuels, enable that sort of excess now.

  11. Re:Taxing services by gmcraff · · Score: 2, Interesting

    How about taxing political campaigns for their contributions?

    It's growth industry: every year the amount send on political campaigns grows.

    I propose a 25% tax on political contributions per criteria met:

    • The contributor is not verified as being resident to the district of the vote (applies to out-of-area contributors)
    • The contributor is not verified as being eligible to vote at all (applies to corporations, non-citizens, PACs)
    • On that portion of the contribution above $2000 (or whatever used to be the maximum limit before the cap was lifted to permit more taxable revenue. This includes the limit on the amount a candidate can donate to his/her own campaign)

    So, untaxed is those contributions from individual voters within the voting district under the contribution cap. Good for everyone, all around!