10% Tax On Custom Software, $100M Tax Cut For Microsoft

reifman writes "Last week, the Washington State House of Representatives passed a bill which would impose a 10% tax on custom software while all but eliminating a $100 million yearly tax obligation that some say Microsoft is wrongfully avoiding by routing large chunks of business through an office in Nevada. 'I believe we've got an issue of justice and fairness here,' said Rep. Maralyn Chase. 'Most of the custom software purveyors are small businesses. It's a question for me of how we fairly distribute the tax burden.' 'It means that a 5 person team of entrepreneurs building a cool custom software suite, or a group of system integrators, would face a 10% tax on their services while keeping the exact same project in-house would not be taxed,' wrote Rep. Reuven Carlyle. 'It would be a massive blow to the entrepreneurial community in our state.' The bill won't become law until the House and Senate work out how best to raise another $300 million in taxes. A sales tax increase on consumers is also being considered."

Comments

Bad bill...

[LostCluster]

This is clearly is bad for the individual geek who makes their living selling simple custom programs that do only what the user wants/needs and nothing that they don't, unlike Microsoft omnibus packages. It's a case of government by large corporation over the individual if this passes.

Re:Bad bill...

[wizardforce]

"Last week, the Washington State House of Representatives passed a bill which would impose a 10% tax on custom software

Too late, it's already done. Now as for the reason why it isn't law, law yet is a puzzling one: they apparently need to find another 300 million in tax revenue and have completely inored the most obvious: closing the MS tax dodge instead of giving them a free pass that this bill just did. Or they could just I don't know cut all the extraneous crap that they shouldn't be doing to begin with but I suppose that actually solving the problem would piss off everyone dependent on the bloat.

Re:Bad bill...

[Red Flayer]

Too late, it's already done.

Yeah, it's all done, except for those pesky State Senate vote and Governor sign/veto issues.

have completely inored the most obvious: closing the MS tax dodge instead of giving them a free pass that this bill just did.

It sounds good until you realize that MS have WA by the balls. Piss them off and they move employees out of state. Boeing did it... MS could too. Sure, there's no state income tax, but that's a lot of sales tax WA won't collect.

Or they could just I don't know cut all the extraneous crap that they shouldn't be doing to begin with but I suppose that actually solving the problem would piss off everyone dependent on the bloat.

Have you seen the WA budget over the past two years? They've made DRASTIC cuts in spending. The question is if they can find another $300 MM to cut, or if they're better off find additional $300 MM in revenue. In a poor economic situation, cutting spending is a hell of a anti-stimulus for economic activity... the better course of action is to wait for economic recovery to make additional budget cuts (whether or not that would actually happen is a different story).

Re:Bad bill...

[westyvw]

Oddly enough, if they stopped using Microsoft products they could recoup a large amount of that money anyways. I have reviewed the IT expenditures of several state agencies and they are blowing money like its no tomorrow, but they have no clue how to get efficiencies because they are so star struck by the crap MS has been dishing out to them for years.

Re:Bad bill...

[tacokill]

In a poor economic situation, cutting spending is a hell of a anti-stimulus for economic activity

Depends on who is doing the cutting. If it's the government then -- you are wrong. Any decreases in government spending is wayyyyyy more than offset by an increase of spending in the private sector (due to not paying the government so much in the form of taxes)

It's not even close and this is why you consistently hear the Republicans say "tax cuts lead to a growing economy". They are 100% right and are backed up both by precedence and history.

Re:Bad bill...

[NotBornYesterday]

Maybe that should be their next step. If MS refuses to pay their fair share of taxes (after all, they enjoy the benefits of the roads, police, fire, and other services that are supported by these taxes, correct?), WA should launch an initiative to go open source. Whether they follow through or not isn't the point (although I'd love to see it happen). Getting MS back to the negotiating table to avoid being embarrassed in their own backyard would be priceless.

Re:Bad bill...

[tweek]

Well it's obvious you went to the Keynesien school of economics.

Every dollar that goverment spends is one less dollar that the individual spends. In fact, the return on government spending is LESS than individual spending (I'm trying to dig up those numbers now).

You cannot spend your way out of a recession. That money is best left in the hands of the individuals to spend as they will. Will some people resort to the hoarder mentality? Yep but it's not an absolute.

I don't know the situation in WA but it's not like they're not in the same boat as every other state in the country - reduced revenues and all.

There really needs to be, in all states, a line by line audit of where the states are spending money and where they can cut that spending or eliminate it entirely.

Reason did an amazing series with Drew Carey about "saving Cleveland". It had some awesome ideas that have been shown to be successful in other parts of the country. They admit that what works one place may not work in another but honestly when you're faced with a $300m shortfall, maybe you should try something new?

http://reason.com/blog/2010/02/25/save-the-week-reason-saves-cle

Re:Bad bill...

[Anonymous Coward]

Depends on who is doing the cutting. If it's the government then -- you are wrong. Any decreases in government spending is wayyyyyy more than offset by an increase of spending in the private sector (due to not paying the government so much in the form of taxes)

It's not even close and this is why you consistently hear the Republicans say "tax cuts lead to a growing economy". They are 100% right and are backed up both by precedence and history.

Oh my.... Is it backwards day where you live?

Re:Bad bill...

[Foofoobar]

Yeah finding a whole bunch of welders is one thing. Finding technically training individuals in a whole other state (or asking your entire workforce to move to Alabama) is something else.

Would never happen. Microsoft is dependent on Washington state as they are on Microsoft.

Re:Bad bill...

[cats-paw]

>> Piss them off and they move employees out of state.

there's always this assumption that they won't do it anyway.

Microsoft will move employees whenever they feel like it, and giving in to their extortion just makes the problem worse for all of us.

Re:Bad bill...

[cayenne8]

"Have you seen the WA budget over the past two years? They've made DRASTIC cuts in spending. The question is if they can find another $300 MM to cut, or if they're better off find additional $300 MM in revenue. In a poor economic situation, cutting spending is a hell of a anti-stimulus for economic activity... the better course of action is to wait for economic recovery to make additional budget cuts (whether or not that would actually happen is a different story)."

Hmm, and just wait for the unfunded Medicare mandates and other tax goodies come in when the Obamacare comes into play. Yep, they'll need more revenues then too.

Re:Bad bill...

[dimeglio]

Washington likely allow all large employers like Microsoft all kinds of exceptions. I'm sure actuaries and accountants working for the State have already figured out (using MS software of course) how profitable they are, on tax revenue generated by their employees, despite the 300 million cut.

A 2.6 billion state deficit is nothing.

-- I wonder if MS has special hidden algorithms in their software: if state=Washington and query="how much state tax Microsoft should pay", then answer=0. --

Re:Bad bill...

[phantomfive]

In a poor economic situation, cutting spending is a hell of a anti-stimulus for economic activity...

This is an incredibly misleading over-generalization, one which I keep seeing smart people make. If you think about it, it should be obvious that whether 'cutting spending' is good for the economy or bad is extremely dependent on what the money was being spent on, and where the money was coming from.

On the spending side, it is an extremely bad idea to cut spending on roads if some of the roads become unusable as a result (obviously). It is a rather good idea to cut spending if most of the money ends up directly in another country. This should also be obvious.

On the income side, when you spend money, it has to come from somewhere. If the government happens to have a pile of cash saved up, a recession is definitely a good time to spend it. If the government has to increase taxes to get the money, it could have a net negative effect on the economy (this also depends on where the money goes: if you raise taxes to build a new road, the resultant positives could outweigh this negative). If the government has to borrow money, it could have a negative effect, because it borrowed money from people who would have otherwise spent the money on potentially more valuable projects. If the government has to get money by printing more, well, you might as well just hit your economy with a sledgehammer.

See how it is? It's not enough to say spending is good. You have to look at the details. Geeks should be good at that.

Re:Bad bill...

[Anonymous Coward]

Why don't they just fucking tax the banks...they've sucked every other greenback from the economy being the low-life they are...they should pay back

Re:Bad bill...

[fulldecent]

Another issue is that revenue forecasts tend to be optimistic.

Re:Bad bill...

[toastar]

wow, did you fail macroeconomics?

You do realize individual states have no control over monetary policy right? So that means the only tools it has are based in fiscal policy. And your asking the state to reduce the strength of it's fiscal powers.

That be like saying oh my house is on fire. No! don't pour water on it, it will go out faster if you just let it burn.

Re:Bad bill...

[perlface]

Washington State is spending more money this year than last year - that is not a cut in spending. They have wasted $300mm on a unneeded Data Palace (Center) among other things... A 10% sales tax on custom software is a method to shift funds from the $1billion+ spend on state IT projects into the general fund - because the 10% tax will apply to state projects as well.

Re:Bad bill...

[phantomfive]

In fact, the return on government spending is LESS than individual spending (I'm trying to dig up those numbers now).

It's an incredibly difficult number to calculate, because of the lack of good experiments. You only have a recession every decade more or less, so it's hard to come up with good generalization. Maybe in a century or two we'll have it down....

But for now, I recently read one economist who managed to put the multiplier at around 0.6. He was only able to do this using data from wartime, though, which is probably not the best way to spend government money (once a bomb explodes, it's of no more use to the economy). If the money instead is spent on a new freeway, the multiplier can be much much greater than 1. So it is not simple at all, to calculate the effect of government spending accurately, you need to figure out exactly where the money is coming from, and where it is going.

Wikipedia has a rough overview of the subject.

Re:Bad bill...

[synaptik]

"No control over monetary policy?" Pshaw! Monetary policy is the cause of the problem, not the cure. Or, is the cure for heroin withdrawal to shoot up more heroin?

Prepare to be schooled in my Austrian perspective.

Re:Bad bill...

[westlake]

This is clearly is bad for the individual geek who makes their living selling simple custom programs that do only what the user wants/needs and nothing that they don't, unlike Microsoft omnibus packages. It's a case of government by large corporation over the individual if this passes.

Microsoft employs 40,000 people around Puget Sound.

It owns about 10 million square feet of office space up that way and leases five million more. Facts About Microsoft

The median family income in Redmond itself was $88,000 in 2008 and the median value of a house or condo $496,000. Redmond, Washington

"All politics is local."

The guy cutting the grass or tending the plants on the Microsoft campus is another vote for maintaining the status quo - and there are thousands and tens of thousands of others like him the geek in his basement will never be able to reach.

The only real answer is to market your product through an organization that can reap the same benefits of size, visibility and financial strength as the big boys.

Re:Bad bill...

[Red Flayer]

That money is best left in the hands of the individuals to spend as they will.

That's a bold assertion. What happens when they spend all the money on consumer goods produced in Asia?

What happens if, instead, the money was spent on infrastructure that directly benefits people in the state?

You cannot spend your way out of a recession.

On what basis do you make that assertion? Just regurgitating Austrian or Chicago precepts -- or do you really have an understanding of economics? Even the Austrians recognize that public spending in times of recession stimulates the private economy and can hasten the end of a recessionary period... the value judgment on whether this is the *optimal* course of action in the long run is a different matter.

Every dollar that goverment spends is one less dollar that the individual spends. In fact, the return on government spending is LESS than individual spending (I'm trying to dig up those numbers now).

Please do share them when you've found them. I hope they are broken down by sector. Do you have them by state, or just federal? Does the federal breakdown only include domestic spending? Are the societal benefits of the judiciary spending included?

If it were that easy to determine exactly how effective public spending is, we wouldn't be in this quagmire. I do hope you produce some data that is useful.

Re:Bad bill...

[tweek]

The states don't have to have control over monetary policy to be responsible public servants. Now it's possible (as I said, I was still trying to find the numbers) that spending by state and local governments has a greater return but it still doesn't match up to spending by the private sector.

If you equate spending with fiscal power, then yes, I am asking states to reduce. Politicians in general are like kids in a candy store when they have money.

I can speak from experience here in Georgia having a wife who works for the state. I know all the dirty tricks they pull to pilfer money that was "allocated" to one "project" and then spent elsewhere.

The fact that not all states are facing budget shortfalls* should maybe be an indicator that there are ways to provide a basic functional state goverment without increased government spending or new taxation.

* http://sunshinereview.org/index.php/State_budget_issues,_2009-2010

Re:Bad bill...

[Red Flayer]

OMG how the fuck is increasing taxes , i.e., money flowing to the government, going to increase the economy vs cutting out the middleman and just having the money flow in the economy in the first place??

Because a lot of the money flowing in the economy in the first place doesn't flow. It is hoarded, it leaves the local economy when used to purchase non-local goods, etc.

Never mind the fact that *some* public spending has a *positive* impact on the economy greater than the amount spent (public mental health services, for example).

And never mind that while the government is the "middleman" in the spending, they are not extracting profit. This is not like a creator-wholesaler-distributor transaction where the wholesaler takes some cash and runs off with it as profit. The tax money is returned to the economy, via employee wages, etc. The question is the return on that spending.

But, like, OMG, whatever...

Re:Bad bill...

[tweek]

Calculating WHERE the money comes from is not hard at all. (I'm speaking strictly about the US here)

Government is not a wealth producer.

I don't mean that in the generic, libertarian, anti-Fed sense. I mean that in the strictest sense.

Every dollar that government has came directly from the private sector.

Government produces nothing. Government provides services (quite poorly and less efficiently than the private sector, IMHO) in "exchange" for Taxes but based on the various budget shortfalls you can make two assumptions:

- Government isn't "charging" enough for those services
or
- We're getting a terrible bargain as citizens.

Also, there's some disagreement on the impact of wartime spending:

http://reason.org/news/show/why-the-stimulus-plan-wont-wor

I'll also look and see what the peer review was like on the paper quoted about negligible increase in consumption from wartime spending.

Re:Bad bill...

[ProfessionalCookie]

Not to mention we should all be wondering what exactly is "software" and what is "custom". Word Macros, HTML, Javascript, Java, PHP, C++, Assembly? Is software for 5 users still custom, 100 users? What if it's only available to certain people but lots of them? What if it's only available at an outrageous per seat price?

I'm willing to bet the law won't be written by anyone who knows anything about "Custom Software".

Re:Bad bill...

[homeslice3]

Show me proof of drastic cuts in Washington's State budget. Which programs have been eliminated? Which have been drastically cut. Name them.

And I don't mean lessening of projected increases, I mean actual cuts, where one year's budget is less than the next. And even adjust per capita.

As for DRASTIC you mean a 5-10% actual cuts this upcoming budget cycle. I think we're projected to spend 35B vs 33B in 09.

Washington like many other states doesn't have an income problem, we have a spending problem. Revenues are up per capita/inflation compared to 5,10,15, 20 years ago. We surely can run a state with the 30B+ per year can't we?

Our State Government can't seem to prioritize what's important - all the Leg seems to be doing it finding ways to piss of both small and large business's here and alienating the very citizens who pay the most of the taxes on a per person basis by finding ways to tax/extract revenue.

Show me any organization public or private, that can't find 5-10% of their budget to be cut after YEARS of increases and I'd say BS. I'm as liberal/lefty as anyone our here, but we seem to be shooting ourselves in the foot over this. Line up the priorities in a list. Line up the revenue in another. Draw a line. Simple. :)

Re:Bad bill...

[AshtangiMan]

You spelled republican wrong. Oh, and look at that, I spelled greedy politician wrong.

Re:Bad bill...

[LostCluster]

I'd define custom software as software written for a specific client, not for public release. Most deals I do when I'm on-site define anything I write for them is their copyright.

Re:Bad bill...

[Anonymous Coward]

Are nt all these states whom are in fiscal shambles run by Democrats ? And havent these same group of Ra tards the same folks who have been running these states into the ground for decades ?

Re:Bad bill...

[einhverfr]

Either way, it seems like a great reason to move my business to India...... Though probably, in my case, I would move to Indonesia....

Really, this tax proposal is a great way for the state to put it's feet together and shoot them repeatedly with a shotgun.

Re:Bad bill...

[nog_lorp]

Yes, the cure for heroin withdrawal is to shoot up more heroin. That is all.

Re:Bad bill...

[sweatyboatman]

While I agree with the general sense of your post, I do think one should be able to apply a general rule of thumb without losing their geek cred. One need not be overly familiar with the particular ins-and-outs of the state of Washington's annual budget in order to comment intelligently on the issue.

If the government has to borrow money, it could have a negative effect, because it borrowed money from people who would have otherwise spent the money on potentially more valuable projects

Except that in recessions, the guys with the loot tend to get very conservative, because they don't know just how bad things are going to be. They hesitate to make new investments and pull back on investments that they are already committed to. Thus making a bad situation worse. Governments can overcome this by issuing bonds (which conservative investors love) and pump that money back into the economy by way of salaries, benefits and (as you point out) infrastructure investments.

The opposite holds true, that in boom times when private money is flowing freely, governments should focus on reducing their debt burden so that they can cushion the blow for the next downturn.

I feel like it's safe to say that in a recession, cutting government spending is a clear negative (Scared investors wont fill the void) and should be avoided.

Re:Bad bill...

[Protongeek]

Govt takes in 3 dollars and 1 comes out. The govt does not create money other than printing it. Nor does it earn it. You may want to do some more fuzzy math before you make comments like that. Step away from the liberal BS and take a breather.

Re:Bad bill...

[ArtFart]

"It sounds good until you realize that MS have WA by the balls. Piss them off and they move employees out of state. Boeing did it... MS could too. Sure, there's no state income tax, but that's a lot of sales tax WA won't collect." Good riddance to 'em! That's also a lot less garbage and bodily wastes to dispose of, fewer cars to provide space on the roads for and pull busted bodies out of (Microsofties tend to own fancy cars and drive them like the road was all theirs), and less urban sprawl (not only Microsoft's constantly growing campus but the McMansions and condo blocks around it and elsewhere) needing police, fire, utilities, schools and all manner of other stuff..get the idea? If some other state or locality wants to invite these corporate leeches with even more of a free ride, let 'em. In a few years they're going to be wrestling with the same problems. Think life will stay simple and cheap in Montana or South Carolina with uncontrolled development? Think again.

Re:Bad bill...

[Anonymous Coward]

*coughReganomicscough*

Re:Bad bill...

[phantomfive]

I feel like it's safe to say that in a recession, cutting government spending is a clear negative

Once again, you just can't say that. In this case, they are talking about increasing taxes to avoid reducing spending. That could be a serious drag on the economy. High sales taxes have been shown to drag an economy down. Or consider the situation of Greece, where nearly half the country is employed by the government, and the government is up to its eyeballs in debt. Unless they cut spending (and probably fire a lot of people), the economy will collapse.

So you really do have to consider the details. A well crafted stimulus package can help an economy. A poorly crafted stimulus can damage an economy further.

Re:Bad bill...

[spatley]

Really, here on Slashdot you assert that a modern centralized datacenter is unneeded? You think that maintaining myriad and inconsistent IT systems is a good use of state funds. Really?

Re:Bad bill...

[aztracker1]

So those employees don't pay income taxes?

Re:Bad bill...

[Anonymous Coward]

What you call "hoarding", I call "saving" and the general lack of savings in America is a Bad Thing (tm).

Re:Bad bill...

[tyrione]

Maybe that should be their next step. If MS refuses to pay their fair share of taxes (after all, they enjoy the benefits of the roads, police, fire, and other services that are supported by these taxes, correct?), WA should launch an initiative to go open source. Whether they follow through or not isn't the point (although I'd love to see it happen). Getting MS back to the negotiating table to avoid being embarrassed in their own backyard would be priceless.

Agreed. Move it to OpenOffice for general office work, LaTeX/XeTeX for publication solutions and more.

Re:Bad bill...

[NotBornYesterday]

Not to the state, unless their personal accountant screwed up big time. No income tax in WA.

Re:Bad bill...

[NotBornYesterday]

-- I wonder if MS has special hidden algorithms in their software: if state=Washington and query="how much state tax Microsoft should pay", then answer=0. --

You see, that's the problem with closed source software; we'll never know.

Re:Bad bill...

[mabhatter654]

Unfortunately, it's the other way around... the economy is SO BAD real estate taxes are down, employees are laid off and not shopping, and companies have closed meaning they're paying no employee, worker's comp, unemployment, inspection, or property taxes. The states are simply not getting 6%-10% less revenue from existing taxes... because nobody has anything to tax!!!

The "Reganomics" Worked like this.... cut taxes at the top, companies spend money hiring people to do stuff, then you collect MORE taxes from little people at the same rates as before. A person may not pay much income tax, but there's about 20% MANDATORY wage taxes tossed in there... the more people working, the more the govt. gets. Then you have things like Luxury tax (over 39K) and sales tax so the government makes out well cutting taxes on companies just a bit. Regan's cuts actually collected MORE money than was cut because of this effect.

Right now, everybody is declaring losses and closing factories. In state govt, property tax, sales tax, and "business" fees are the big generators of cash. People take fewer vacations, sell an extra car, and factories ship close their plants take the machinery (capital items pay property tax) and basically default on property tax for the empty shell leaving the city with empty, rusty buildings.

I know right now Michigan is really hurting. Obviously auto parts makers were shuttered most of 2009, unemployment is 15% (not counting the people that fell off BEFORE 2009), and nobody is posting profits (or paying bonuses). According to our state's constitutions, our government MUST balance it's budget, so it's find the money by cutting spending or raising taxes. The worst part is that the "fixed" property taxes during the real estate boom because assessed values were rising on homes making taxes higher than some retirees had as income. Unfortunately, it also prevents the localities from raising their OWN tax rates for things like schools.... and the state takes a cut of the property taxes "for schools" so it's a double whammy. The good thing is that they're not cutting "sweetheart" tax deals very often... businesses that want to be here will figure out how to afford it, just like New York or California. I'm waiting for the end of the 30-year cycle when the tax rebates (that took my dad's jobs) run out down and companies "cut-n-run" again.

Back to the original topic, Washington needs to run the numbers for a post-Microsoft economy. Like other posters have pointed out, this new tax specifically excludes "boxed" software like Microsoft sells and taxes the small business that implement solutions or write Open Source software. It needs to be the exact opposite. Tax the hell out of Microsoft, encourage Open Source in government and schools, encourage small businesses to step out..... then when Microsoft pull up stakes a good portion of the people will stay and carve out a new business climate better for the state.

Re:Bad bill...

[Red Flayer]

Govt takes in 3 dollars and 1 comes out.,/blockquote>What black hole does the money go into that it never comes out? Seriously. How is it possible for govts to be running deficits and have no reserves if they keep $2 of every $3 they take in?

Re:Bad bill...

[Red Flayer]

What you call "hoarding", I call "saving" and the general lack of savings in America is a Bad Thing (tm).

No, hoarding and saving are not the same thing. Hoarding is keeping it in a jar or under your mattress, where it literally is out of the economy. Hoarding is a subset of saving. Saving, on the other hand, can include things like depositing your cash in a interest-bearing depository account, where it actually circulates in the economy due to the magic of banking. And given fractional reserve lending, that money may actually create multiples of itself in circulation.

Re:Bad bill...

[superdave80]

"And never mind that while the government is the "middleman" in the spending, they are not extracting profit."

Apparently you haven't seen how much money is sucked out by public employee unions...

Re:Bad bill...

[mabhatter654]

but states and cities aren't often in the position to borrow money with "revolving credit" like the Feds do.

There's two ways to get money... tax property and tax commerce. The goal of many states is to bring enough business in that will also bring people... people that will build new houses and buy shiny cars. States can reduce business taxes as a "loss leader" if it results in more commerce. You can tax profits, and you can tax buying and selling (sales tax), You'll note PEOPLE get charged a higher tax rate on their INCOME not their "profit" like companies do. If you tax PEOPLE too high, bosses won't move there because it will push out cheap employees. So it's a balance.

The South became a popular business spot because they had no mechanisms to deal with large-scale enterprises moving money around..... they're still in the "honeymoon" stage because more companies are opening than closing. They can keep borrowing against future taxes. In CA, NY, or MI the opposite is true. There's a minimum amount the government needs to deliver services to it's geographic area... Unfortunately we didn't build suburbs that are efficient to have police, fire, ambulance or public transit available so automotive costs eat up 30%+ of most people's income (tags, maintenance, gas, insurance, BEFORE car payments). There's not enough money to sustain the cities, individual schools or even the roads because the tax base has moved elsewhere and businesses are too spread out. The good thing is that we're in a state to be more like Northern Europe where population settles and things are small, but nice, but it will be really painful to get there.

Re:Bad bill...

[nschubach]

There's a simple workaround to that though. Sell it to your client, royalty free for your standard fee, then tell then you will offer it to the public on a simple website with a shopping cart for $5,000,000 per license and split the income with them.

Re:Bad bill...

[westlake]

Yeah finding a whole bunch of welders is one thing. Finding technically training individuals in a whole other state (or asking your entire workforce to move to Alabama) is something else.

The distance from Seattle to Vancouver BC is 141 miles.

Re:Bad bill...

[Protongeek]

Show me there reserves ? Last I checked they are broke. CBO estimates for every 3 the govt takes in only one comes out. Thats our beloved govt.

Re:Bad bill...

[Anonymous Coward]

What happens if, instead, the money was spent on infrastructure that directly benefits people in the state?

IF you've got them spending it on useful infrastructure spending, it's an enabler for other things. Unfortunately, I don't see ANYONE in government talking along those lines. The money getting spent right at the moment is being piffled away on banks (the cause of the current financial malaise- and in a manner that showed us they just simply ripped everyone off...) and on some pretty bad ideas overall- few good things being funded right at the moment.

Think more in terms of the "broken window" story in economics. In most cases, the government spending actually ends up being counter productive in the big picture sense of things. The heinous taxes end up costing other things down the line which reduces the amounts brought in (you didn't MAKE any jobs really doing it that way...) because people now do with less.

If we did more enabling work and less of the crap we're seeing right now, including with "healthcare reform" (We need reform, yes- just nothing of what got enacted into a bill to be signed by Obama...)- such as modernizing the grid, rolling out REAL broadband to everyone, overhauling the highway system, etc. you might have a point. While the work doesn't immediately produce jobs, it adds to the opportunities in the big-picture sense. It doesn't make jobs, but it fosters the conditions to MAKE them in other areas. Right now, we're seeing just spending to "make jobs" and doing the very thing discussed in the link I gave.

It's a dead loss.

Re:Bad bill...

[mabhatter654]

I like the numbers. I thought Michigan was worse off...

problem here is that we've been losing 2-3% money for the last 10 years and we're out of things to cut.... we don't have enough money to keep people in Prison their whole term (that might be a good thing... think about it). We've cut school spending 2-3% every year my kids have been in school. Also, 2010 budget shortfalls will kick in as the dust settles from 2009. All those business losses and bankrupt Automakers will really hit the books hard next year... worse if people don't go back to work and their houses sit empty.

$1.2Billion sounds like a lot, but my company division got sold two years ago for just a bit more than that.... and that's just 15 factories or so. There's a lot more business in this state then my little company.... it should be easier to make up that money. Of course my division lost 40%-60% of it's revenue during the peak of last year's downturn...somewhere in the neighborhood of half what the state is short. The state doesn't have the luxury of laying off 40% of it's workforce either... that would be recklessly negligent. The problem here is that we're at the tipping point. Things simply can't function without "critical mass". They're going to have to start closing down agencies and making people drive to the next city (20-30 miles) for basic services like Family aid or Secretary of State. The fire department is so short there's not enough employees to drive all the firetrucks and safely man the truck to put out a fire.... They're cutting police patrols in the country from routine to "as called" We're another bad year or two from making hard cuts. That's not entirely bad... but becomes a problem when our state has had to "bite the bullet" and any other state can borrow recklessly to steal the businesses... businesses are POOR Customers of states services, we should focus on what PEOPLE need and work is ONE OF those things, but not the ONLY thing or even the most important.

Re:Bad bill...

[Protongeek]

The question is how can you possibly believe taxation in poor economic times is good ? Have you not read our history as to what causes prosperity ? The CBO and even the most ardent liberal professors have admitted that cutting taxes during hard times and cutting govt back has allowed the EARNERS ( You and I ) to keep more of what they earn. Those that keep what they EARN tend to spend more of what they ear even in hard times. I have yet to see a rich person scale down there lifestyle in order to be politically correct with economic times. Hey this is still a free country if you believe your taxation BS please feel free to give more of your hard earned money. But as far as for myself and others go the govt will get the end of my pitch fork if they want more. If you believe in govt I truly pitty you.

Re:Bad bill...

[shentino]

That's a bold assertion. What happens when they spend all the money on consumer goods produced in Asia?

Considering that things are worse in China than they are here in the USA, maybe that's a good thing globally.

Re:Bad bill...

[Runaway1956]

Hoarding money in the US economy is such a rare phenomenon, that it might as well not exist. Perhaps you haven't been paying attention. People are spending money they don't even have, and in many cases, spending money they never will have. It's called credit. The credit crisis in the United States CAUSED the meltdown.

No one hoards in the United States. You're making this stuff up, based on some long outdated economics theory textbook.

Re:Bad bill...

[CodeBuster]

*some* public spending has a *positive* impact on the economy greater than the amount spent (public mental health services, for example)

Excuse me, but how does spending money on non-productive people help the economy? You might make a moral argument for helping them, but you didn't do that; you said that helping them is good for the economy. There are many useless people out there who take money from the government and rarely contribute much, if anything, to our collective economic well being. To put it bluntly, they are dead weight at best and dead beats at worst. The only economic argument that you might be able to make in favor of helping these people is that some of them might possibly be converted back into productive citizens with enough investment. However, even that is a BIG IF considering the history of many people who use our public mental health services. It's not my fault that some people grew up in a broken home, or drank themselves stupid or did drugs. I had no say in any of that so why should I be forced to help them?

We used to have places where these people could be supervised and contained, but then ignorant people complained that we were "taking away their freedom" and violating their right not to take their medication or live in a locked facility. Meanwhile the liberals wring their hands and talk about "collective responsibility" and the "right" to receive health care or affordable housing or whatever else it is that people want to have on someone else's dime. It's a bunch of crap and bullshit like that is killing what made the United States a great nation; hard work, personal responsibility and self-reliance.

Re:Bad bill...

[Anonymous Coward]

Nothing new here.

Clinton as Governor reduced the tax on large trucks and got ordinary automobile drivers to pay for it.

Re:Bad bill...

[DarkMagician07]

They'll find a way to screw us into paying more taxes no matter what happens. They've already started with our '$30 car tabs' that the people passed several years ago. Now, they require a new license plate every 5 years on a vehicle, plus they can raise the rate being paid for tabs based on the weight of the vehicle. They're already talking about upping sales tax, which will likely pass. Next they will be looking at a state income tax once more. It's been pushed several times over the past 20 years, and each time they push it, it gets closer to passing. Now that there's a true fiscal need due to one of the highest budget deficits in state history, the state legislature is going to have to find a way to make up that difference. The only way is to raise taxes.

The down side is that many small businesses, which there are thousands of in WA, will likely burden the majority of these taxes. Companies like Microsoft will likely keep their tax breaks to stay here, while the rest of small businesses pay the exorbitant B&O taxes that are levied. Paying $75 in taxes on an $80 job (and yes, this did happen in one town here in WA just recently) means that no-one could survive while running a small business unless they charged prices that the economy can't sustain.

Re:Bad bill...

[mabhatter654]

This hasn't been "wartime spending" that's part of the problem. Very little of the money is going into the economy, mostly soldiers basic wages....and as a huge percentage are National Guard, being pulled from higher paying jobs are a good portion of the folks losing their houses, and making companies harder to run. The majority is going to maintain what's getting broken and we're basically "depreciating" the military. The big checks are going to local rebuilding projects (with multinational teams) and "private" security like Blackwater all that take the profits overseas to tax havens like Dubai and keep them there.

The last wars we had involved serious drafting and rationing or curtailing domestic business resources. As the "business" president Bush didn't want to do any of that... it's telling the capitalists what to do! Even the war money was "off budget" borrowing just like the bailout everybody cries about now to keep the real cost under the radar.

Re:Bad bill...

[shutdown -p now]

And Microsoft already has development facilities and people there - MCDC.

Re:Bad bill...

[Machtyn]

Small businesses are easier to move than large businesses. Oregon and Idaho aren't that far away.

Re:Bad bill...

[AK Marc]

Once again, you just can't say that. In this case, they are talking about increasing taxes to avoid reducing spending.

The problem is that deficit spending is best in a recession. However, that means you need to run a surplus when the economy is good. And the government doesn't like keeping the spending down to make that happen. If you could trust the government to do the right thing, constant taxes and variable spending would probably be best, with constant spending and variable taxes being second (if only that variable taxes lead to economic uncertainty for people and companies, which will dampen the effect desired). Instead, we had the idea that keeping spending and taxes at one rate and playing with just the interest rate would magically cure all ills.

Re:Bad bill...

[AK Marc]

I don't mean that in the generic, libertarian, anti-Fed sense. I mean that in the strictest sense.

But you sound like you are libertarian anti-fed. You complain that they produce nothing.

Every dollar that government has came directly from the private sector.

So? For most companies, every dollar they spend came directly from the private sector. It seems like a distracting non sequitur. So the source of the funds doesn't seem to have any bearing on the discussion at hand.

The government provides services. They usually do so "better" than the private sector. The lowest overhead of any mutual fund in the US is Social Security. This includes when you compare it to low-risk cash funds that invest in the same things SS invests in. They are cheaper and more efficient than the private sector.

Re:Bad bill...

[DigiShaman]

Correct, hoarding only happens if you tie it up in precious medal and cash stored in your basement. However, if it's all electronic, that money gets re-invested some how some way. In fact the layers of abstraction often becomes so complex that it's next to impossible to truly track down who or what organization is using your money. Point is, money is far to valuable to institutions for it to be setting around "horded" doing nothing. It gets re-invested.

Re:Bad bill...

[DigiShaman]

That's a bold assertion. What happens when they spend all the money on consumer goods produced in Asia?

Is it any of your damned business? Or do you not value personal freedom to do what you wish with your own hard earned money?

Worst case scenario: America spends all its money overseas and we in turn become poor. Good news: Now we are a cheaper market for manufacturing and the cycle of global economic equilibrium reasserts itself.

Re:Bad bill...

[tweek]

Sorry for not posting sooner. Sick child in the house.

That's a bold assertion. What happens when they spend all the money on consumer goods produced in Asia?

Irrelevant. Those goods may be produced in Asia but they are sold by people with jobs here - advertisers, retail staff and so forth. I'm not up for getting into a massive discussion about it but take a look at http://cafehayek.com/myths-and-fallacies and some of the articles there. You should have more respect for his opinion than mine. To answer the second question, I'm not an economist but he is.

I find it interesting that you mention "Even the Austrians..." because I was just reading about that today. I really need to use some sort of web clipping addon.

Anyway, I would have to say I align myself pretty strongly with Hayek but my personal philosophy is whatever provides the greatest amount of individual economic freedom.

And I'm still looking for a good "unbiased" source of information on government spending. I hesitate to link to a third-party news source (especially News Busters) quoting Milton Friedman from a book, however this link has a subsection that is of interest:

http://newsbusters.org/node/27813/print

My google-fu isn't strong enough at this late hour but I also found an interesting statement:

"When the economy is doing fine, he estimates, $1 of government spending yields 40 cents in extra production and related jobs." - http://www.dailyfinance.com/story/does-the-return-on-government-spending-triple-in-a-depression/19200069/

In a such a short article, there's not much meat but I'm interested in seeing any corroboration and/or rebutal to the theories at the end.

Taken in light of the Friedman statements and the basic reality of where government gets its money would seem to suggest that there IS a very small window where government COULD stimulate the economy.

However that window is smaller, IMHO, than trying to hit a two-meter thermal exhaust port. On one side (spending too early) it's wasteful and takes money from the private sector. On the other side, you end up with massive inflation.

I think the safer course of action with those odds is to leave the money with the people who know how to spend it best in their situation, the people who earned it.

Re:Bad bill...

[AK Marc]

The credit crisis in the United States CAUSED the meltdown.

It wasn't credit, it was investments. The investments were in credit, so "they" blamed low income blacks, who didn't default at rates that were proportionally worse than anyone else, but blaming the Jews was already taken, so calling it "sub-prime" and quoting government regulations on minority lending did a good job of hiding the truth from the public.

Lenders lied to investment institutions regarding the risk of the investment. That fraud increased the desirability of those notes above the real value. When it was discovered that they were worth less because of that fraud, the imaginary value of those securities dropped. And that's it. No more, no less. The foreclosure rates changed slightly because of the recession (as they do every recession) and across the board for all, rich and poor, white and minority, but not beyond what the acceptable ranges are. If the foreclosure didn't increase, no one would have discovered the fraud, but the foreclosure didn't cause any crisis, just the fraud caused by lying bankers selling investments for more than their real value.

Re:Bad bill...

[westlake]

If MS refuses to pay their fair share of taxes (after all, they enjoy the benefits of the roads, police, fire, and other services that are supported by these taxes, correct?

How many of those services are paid out of local property taxes?

Microsoft owns or leases 15 million square feet of office space in the Puget Sound region. It employs 40,000 people - and pays them well enough so that the median value of a single family home in Redmond is $500,000.

Re:Bad bill...

[anagama]

I highly doubt taxes in Canada would be lower than here even if the state legislature had the balls it takes to be fair about tax policy.

Re:Bad bill...

[dave87656]

but they have no clue how to get efficiencies because they are so star struck by the crap MS has been dishing out to them for years.

It's not just states, but large corporations as well. These guys are convinced that can only create a spreadsheet in Excel and a document in Word.

Re:Bad bill...

[Anonymous Coward]

Well, you'd like to tell me to get off your lawn, but it is my lawn now. However, I do agree that too much is crammed into Redmond/Bellevue and the new condos look like shit.

Re:Bad bill...

[nog_lorp]

Yes! It disgusts me how much of our tax money is spent bombing third world countries, when our own infrastructure has rapidly fallen far behind the rest of the first world.

Why do we have some of the shittiest (long distance) public transportation in the world? I ride Amtrak and watch cars on the freeway zip by. It enrages me to know that there is only ONE high speed railway in the United States. What the fuck, Congress. What the fuck. Make national high speed rail happen already.

Why do we have AWFUL broadband coverage when it is crystal clear that fast, high bandwidth internet connectivity is a prerequisite to taking part in the global economy? This is an obvious public good, and the economic stimulus of providing it to all Americans is one of the greatest benefits the government could secure through spending my tax money. In Finland, everyone is entitled to 1Mpbs. In Japan they have fiber coming out their asses. What the fuck, Congress. Get your shit together and provide the tools people need to take part in normal first world living.

Re:Bad bill...

[Anonymous Coward]

Unfortunately, we have a situation were the USA as a whole is paying huge amounts to defense contractors to move many forms of metal (bullets, bombs, and equipment) into third world countries (Iraq, Afghanistan). Assuming we achieve our purported goal (stopping the terr'ists), we will have prevented ~3,000 individuals from being killed every 225 years (ignoring non-9/11 in-country deaths from Islamic terrorism, numbering so small as to be negligible).

Maybe we should have forgone those two wars and spent that money on maintaining hospitals!

Re:Bad bill...

[nog_lorp]

-- I was raised on the command line, bitch
This should be a pre-req to learning GUIs!
Once you learn to hit "alt-f7" you've earned a graphical interface!

Re:Bad bill...

[NotBornYesterday]

I'm sure that there is tax income derived directly or indirectly from MS. However, I specifically mentioned that they are trying to avoid paying their fair share. Compare them to any other software manufacturer, and it becomes apparent that they are again using their massive leverage to cheat the system by paying less in taxes compared to other companies bound by the same laws. The same laws until the government writes a loophole for them, anyway.

I understand that a corporation is obliged to maximize its profits for its investors, and that includes finding ways to pay less in taxes and other expenses. But you would think that they would see the value in supporting the community in which they and their workers live and do business.

Re:Bad bill...

[drsquare]

Every dollar that goverment spends is one less dollar that the individual spends. In fact, the return on government spending is LESS than individual spending (I'm trying to dig up those numbers now).

You cannot spend your way out of a recession. That money is best left in the hands of the individuals to spend as they will. Will some people resort to the hoarder mentality? Yep but it's not an absolute.

Ok, a few points here:
1. A dollar that the government spends is more likely to be spent domestically than a consumer dollar spent on imports.
2. Yeah you'd better dig that up.
3. Government deficit spending is funded by borrowing and quantitative easing, i.e. money that would not otherwise have been spent by individuals.
4. The Keynes school of economics is why we're not in a second depression.
5. The hoarder mentality is why Japan has been so stagnant. When people aren't confident of keeping their jobs, people won't spend unless necessary, which is why government has to spend.
6. Cutting government spending accentuates a recession, anyone with even the remotest understanding of economics understands this.

Re:Bad bill...

[Red Flayer]

You didn't answer my question (sorry for the HTML screwup, maybe it made my question unreadable).

CBO estimates for every 3 the govt takes in only one comes out

[citation needed]

If there are no reserves (which we know to be true), what black hole are the other two dollars disappearing into? Are they getting extracted via profit for public contractors (some of it is). Are they being spent on wages and salary for government employees (if, so that has stimulatory impact)?

Re:Bad bill...

[Red Flayer]

Hoarding money in the US economy is such a rare phenomenon, that it might as well not exist.

Hoarding money and hoarding wealth are two different things. There is plenty of wealth being hoarded in the US... real estate, precious metals, fine art. Some of them are "hoarding" because they want to see values come back to a high level, but the effect is the same. This has an impact on the economy.

People are spending money they don't even have, and in many cases, spending money they never will have. It's called credit. The credit crisis in the United States CAUSED the meltdown.

Please check current figures for your citations, and understand that not everyone does exactly the average. While there are still people taking advantage of credit, that situation has changed drastically over the past year. Meanwhile, plenty of people are hoarding wealth.

Furthermore, easily available credit was a cause of the meltdown. It's debatable if it was even the primary cause.

Re:Bad bill...

[Red Flayer]

The only economic argument that you might be able to make in favor of helping these people is that some of them might possibly be converted back into productive citizens with enough investment.

Not so. Most of these people spend every penny they get. If they purchase from productive people, that aids the productive people because it increases the market for whatever they put into the economy.

However, even that is a BIG IF considering the history of many people who use our public mental health services.

Perhaps you should actually look at some of the research that's out there before spewing ignorant crap.

It's not my fault that some people grew up in a broken home, or drank themselves stupid or did drugs. I had no say in any of that so why should I be forced to help them?

Because it's costing you even more money to NOT help help them. You'll save more money on law enforcement and prisons than you will spend on mental health care.

Re:Bad bill...

[Red Flayer]

I agree with a lot of your points (not all the specifics for spending, like highways -- that cash would be better spent on mass transit, IMO).

But I think it's mistaken to say that none of the relief funds are being spent on worthwhile projects. Federal aid to states, and state aid to municipalities is the most effective form of federal spending for economic stimulus. This is what we got under the stimulus bill last year, what is being spent now, and what has shown to be most effective.

Unfortunately, the current "jobs" bills in the works don't take the same tack. And I'm with you 100% on the fact that a lot of the funds are being misspent, and it's only going to get worse with the different bills being considered now.

I'm familiar with the broken window fallacy. But I think it's a mistake to think it applies everywhere -- surely some of the public spending going on seems to apply, but definitely not all of it. It seems to be a fallback argument for a lot of people -- not saying you're one of them -- and it gets used in places where it doesn't apply, especially by people who have a limited understanding of economics.

Re:Bad bill...

[Red Flayer]

Is it any of your damned business? Or do you not value personal freedom to do what you wish with your own hard earned money?

False dichotomy. And, useless for debate. We do not live in a black-and-white world, no matter how much you'd like it to be that way.

Worst case scenario: America spends all its money overseas and we in turn become poor. Good news: Now we are a cheaper market for manufacturing and the cycle of global economic equilibrium reasserts itself.

Ah, I see you have limited understanding of feedback mechanisms and interdependency in macroeconomics. Either that, or you're willing to have needless suffering on international scales because of the desire to maintain some kind of ideological purity. Good to know. I can avoid getting into a lengthy discussion with someone who: either knows some words but not the in-depth knowledge and understanding necessary to have informed debate; or has a moral/ethical stance that makes any kind of rational discussion on the subject useless.

Re:Bad bill...

[Red Flayer]

Irrelevant. Those goods may be produced in Asia but they are sold by people with jobs here - advertisers, retail staff and so forth. I'm not up for getting into a massive discussion about it but take a look at http://cafehayek.com/myths-and-fallacies and some of the articles there. You should have more respect for his opinion than mine. To answer the second question, I'm not an economist but he is.

I've read a lot of Hayek. I disagree with him on a few topics (but if I were on the same level as him, I'd have my own following :)). As for it being irrelevant, that's not quite so. It just means that while we're not losing 100% of the cash being spent on foreign goods, we are still losing some of the positive impact that cash could have in our economy.

Emphasis mine:

"When the economy is doing fine, he estimates, $1 of government spending yields 40 cents in extra production and related jobs." - http://www.dailyfinance.com/story/does-the-return-on-government-spending-triple-in-a-depression/19200069/

Did you read that article? DeLong states that in a "normal" economy, return on government spending is about 1.4 (40% over and above the amount invested). But during a depression, return is 2.5 (150% over and above what is spent). Important to note that DeLong is a Keynesian... if you're looking for a non-Keynesian point of view, he's a bad source :)

I think the safer course of action with those odds is to leave the money with the people who know how to spend it best in their situation, the people who earned it.

History tells us that's a poor option. Devastating cycles of recessions and depressions in the 18th, 19th, and early 20th centuries would tend to agree...

Re:Bad bill...

[Anonymous Coward]

Yes the other 2 per the CBO have said that they do go to administrative and maintenance costs for the govt. As you state that it is recirculated back into the economy. Although your statement seems sound it is flawed. The reason for this is the private sector creates jobs as well as the wealth in this country. This is the driving force of the economy not the govt being the driving force of our economy. For individuals to be taxed more and more it takes away the incentive to produce. It will as we've seen throughout out economic history stifle investment in various markets which results in job retraction versus expansion. The CBO has stated ( as well as liberal economic professors and journalists ) that when taxes are lowered the Govt takes in more revenue but when taxes are raised they bring in less revenue. Now some will argue thats not true Example, Bill Clinton left us with a surplus after his second term. While this is true it was accomplished with a Republican dominated House and Senate that reduced Social programs and Defense spending. Also lowering taxes which resulted in more revenue. Even though the govt does create its jobs its based on revenue taken in or deficit spending. The govt cannot produce anything other than taking from someone else to give to someone else. If you take the fundamentals out of the economy one of the most important Greed then what you end up with is mediocrity for all. The pilgrims when the first landed actually tried collectivism / Socialism and it failed miserably.

Re:Bad bill...

[Red Flayer]

The CBO has stated ( as well as liberal economic professors and journalists ) that when taxes are lowered the Govt takes in more revenue but when taxes are raised they bring in less revenue.

You might want to research that issue more fully, since you're mistaken -- it's more complex than that.

I have the feeling that you're not really educated on the topic... maybe I'm mistaken.

Re:Bad bill...

[badkarmadayaccount]

Mod parent up.

Re:Bad bill...

[Anonymous Coward]

When the government spends money, it doesn't disappear; money is not a consumable. It takes money from person A and gives to person B (in exchange for services rendered, products or whatever). So Person A has a little less, but Person B has a (more or less) equal amount more. Net purchasing power of the general public remains unchanged.

A different tax proposal

[ZuchinniOne]

I propose a 20% tax on people who pass stupid laws!

Re:A different tax proposal

[lorenlal]

Does that include the 15% guilt tax on the people who vote for them?

Re:A different tax proposal

[westyvw]

Thats a good idea! And while they waste time writing and debating it in special session, the costs to get that bill moved through will cause the net value to be nothing.

Re:A different tax proposal

[bb5ch39t]

I'm still wondering about "increasing the sales tax on consumers". You can buy consumers in WA? Isn't that against the law? Or did they mean to say: "increasing the sales tax paid by consumers." ?

Re:A different tax proposal

[Blakey Rat]

Hey I know, Washington!

Maybe you could stop running giant ad campaigns (bus, billboard, web...) telling me to get my swine flu shot. How much did that ad campaign cost? And while we're at it, why don't you stop making new lotto games and spending tons of money advertising them as well? And how much do we spend putting giant "click it or ticket" billboards along every highway? I think it's safe to assume people know that there's a seatbelt law at this point.

Christ.

Re:A different tax proposal

[cayenne8]

I suppose they could consider implementing a modest property tax like most states do? I mean, don't property owners gain the most from public services?

Re:A different tax proposal

[Blakey Rat]

Modest? It's already high enough. Changing the property tax to a "modest" one would lower it.

Re:A different tax proposal

[cayenne8]

"Modest? It's already high enough. Changing the property tax to a "modest" one would lower it."

Oh...I thought I read on another post that they didn't have a property tax up there in that state.

My bad..I didn't research if they did or didn't.

Re:A different tax proposal

[shentino]

Considering that you have to be a corporate shill to get nominated by either party I'm not quite sure.

Maybe if I could vote negatively that would change.

That way, if both sides sucked bad enough mr independent would win by default.

Re:A different tax proposal

[shentino]

We don't have a *state* property tax.

There's still often a municipal property tax levied by the city.

Re:A different tax proposal

[Dragonslicer]

Pretty sure you're thinking of state income tax. In states with no income tax, property taxes tend to be significantly higher to make up for it. New Hampshire is the well-known example in New England.

Re:A different tax proposal

[anagama]

WA already does a property tax on businesses -- including PERSONAL property. Every year I have to pay a "property tax" to the city for the value of all the desks, pens, paperclips, reams of paper, and so forth. Thankfully, we are allowed to estimate the value of the smaller things, like pens and paper.

Re:A different tax proposal

[lorenlal]

Or, you and your frustrated friends can support a third party.

As long as everyone says *the other* party instead of *another* party, it's not really going to change.

Re:A different tax proposal

[calmofthestorm]

300 years of American history have shown us that our first-past-the-post system isn't going to support multiple parties. The two parties are essentially coalitions, except put together by Party management rather than our interests.

It's kind of sad how blurry the line between the two parties and the Government is. And by blurry, I mean what line.

Re:A different tax proposal

[nog_lorp]

The median percent of home value in property tax in WA is 0.81%, which puts it right around the median for all states (~25 states have lower median percent property tax).

(according to
http://articles.moneycentral.msn.com/Taxes/Advice/PropertyTaxesWhereDoesYourStateRank.aspx)

Re:A different tax proposal

[Anonymous Coward]

Add to that "Litter and it will hurt" :P
Being a foreigner here I have to say I found this rather amusing.

Re:A different tax proposal

[Anonymous Coward]

Lotto games bring in more money than they cost to run, albeit mostly money from the poor/less-educated demographics. Try again.

FOSS Contributions

[c 0xFF]

At first I thought ... "that doesn't affect me, I run Linux" ...

But what about paying a developer to work on a FOSS application? Would that be taxed? It is custom software, after all.

Re:FOSS Contributions

[Tubal-Cain]

And define "custom" in this context.

Re:FOSS Contributions

[Anonymous Coward]

But what about paying a developer to work on a FOSS application? Would that be taxed? It is custom software, after all.

Yep, you'd pay 10% tax on the 0 dollars you earn selling your LAMP mp3 solution.

Re:FOSS Contributions

[Anonymous Coward]

Nope, you'd pay 10% tax on fair market value for that software and end up having to pay for free software.

Re:FOSS Contributions

[ircmaxell]

Actually, that's the ticket. If by custom, they mean written against a customers specifications, then it's pretty shitty. If by custom, they mean for one and only one client, then it should be pretty easy to get around. Imagine this. Company A hires you to build a custom piece of software. Once you're done, you just need to make it available for purchase to other companies. Then it's strictly not "custom" anymore, since more than one company can use it. So it all boils down to their definition of custom...

This is nothing more than a prime example of lobbyists in action. How else could you explain that the first "community" to do this contains one of the largest "non-custom" computer engineering firms in the country? I wonder what the state congressmen (or whatever they are called up there) got in return for this sweet deal... Money? Drugs? Sex? Free Computers?

Re:FOSS Contributions

[beanball75]

At first I thought ... "that doesn't affect me..."

This is a very common attitude that is degrading our lives in all areas in my opinion. To me, it's like playing chess and looking just one move ahead.

Re:FOSS Contributions

[Neil Blender]

It's a sales tax, sizzle chest.

Re:FOSS Contributions

[Anonymous Coward]

I wonder what the state congressmen (or whatever they are called up there) got in return for this sweet deal... Money? Drugs? Sex? Free Computers?

Windows Vista removed.

Re:FOSS Contributions

[Scootin159]

10% x $0 = $0

Re:FOSS Contributions

[JoeRandomHacker]

At first I thought ... "that doesn't affect me, I run Linux" ...

But what about paying a developer to work on a FOSS application? Would that be taxed? It is custom software, after all.

It sounds like that is exactly what they want to do: treat the delivery of the final product as a sale and apply sales tax to it. Open source or not wouldn't matter.

Re:FOSS Contributions

[c 0xFF]

I was looking over the proposed law and found some interesting information on this.

First, I'm not a lawyer or politician. Be ye forewarned.

Page 87 makes it seem that this isn't a new tax, but a removal of an exemption. From the document:

(7)(a) The term also includes the sale of or charge made for custom software and the customization of prewritten computer software to a consumer, regardless of the method of delivery to the consumer. (b) The term also includes the charge made to consumers for the right to access and use custom software and customized prewritten computer software, where possession of the software is maintained by the seller or a third party.

In other words, the following are taxable:

1) The sale of "custom software"
2) The amount paid to customize software that's already written
3) Licensing fees to access custom software

Back to the original question in this thread, it seems that FOSS could fall under 2) in my list -- developers are often paid to add specific features (thereby customizing the software) by individual or companies. As nothing is charged for the sale and licensing of FOSS (generally), 1 and 3 woudn't apply.

I will say, however, that "custom software" is not defined in said document.

Re:FOSS Contributions

[Chris Burke]

I wonder what the state congressmen (or whatever they are called up there) got in return for this sweet deal... Money? Drugs? Sex? Free Computers?

They were promised unlimited free porn for life, and eagerly agreed. Then MS sent them a download link for Internet Explorer.

Re:FOSS Contributions

[ircmaxell]

Well, by the wording there, I read that as "One-Off" software. Where the produced software is sold to exactly one party. So then FOSS would be exempt, because while the software is made for one party, it's given to everyone (well, for customizations that are released upstream/for the general public)... I'm not saying it's bullet proof, but that's how I read it (and IANAL)...

Re:FOSS Contributions

[Upsilonish]

Company A hires you to build a custom piece of software. Once you're done, you just need to make it available for purchase to other companies.

I should think that not doing this would be part of the contract in most cases.

Re:FOSS Contributions

[Miseph]

It's not unheard of for sales tax to be applied to the "fair market value" rather than the actual sale price of an item. If I buy a car from my parents for $0, I still get to pay sales tax on it when I go to transfer the title... the RMV worker will just look it up in KBB and tell me to cough it up.

Never underestimate the lengths the state will go to collecting taxes that shouldn't exist in the first place.

Re:FOSS Contributions

[jim_v2000]

What's 10% of free?

Re:FOSS Contributions

[c 0xFF]

You (and others) have missed the point slightly.

FOSS is (generally, although not universally) free as in beer. Therefore, there is no sales tax. If someone sells you a CD with Linux on it, the sale would still be taxed under normal laws.

However, developing this software is not free. Many times, a company will want a customized feature added to a product that they already use, but don't want to develop in-house. They then pay a chunk of money to the project to have this feature developed ahead of other features.

The same thing happens in closed-source software. And this is what the law taxes, if I read it right.

There is one difference, however. In the closed-source world, there is often an agreement that these special features will not be available to the competition; a special branch is created just for that customer. For free software, the feature is available to all.

And maybe that makes all the difference.

Re:FOSS Contributions

[Anonymous Coward]

What's 10% of free?

About 15 pixels?

Re:FOSS Contributions

[h4rr4r]

Remind not to move to that state. In PA there would be no tax on that.

Re:FOSS Contributions

[jellomizer]

Normally you hire custom software developers to write software that solves a particular itch. If you can fine someone who will wast their time writing free software that will only solve your problem go ahead, but software developers need to eat too. So will probably find it difficult to find someone who wants to write a program that solves your particular issue.

In FOSS Software there is still a payment. Ego and Popularity amongst peers. If you write FOSS to solve a unique problem your software will not be popular or get any care. So you will work long and hard and get nothing except for the satisfaction that a company is making a lot of money off your code that you gave away for free (it is like rubbing salt into a wound).

Sure there are a bunch of FOSS programs that do solve these problems but they are usually written by the person who needs the itch to be scratch and wants to share it to the community. But if you don't want to code it yourself good luck on getting some one else to do it for free.

Re:FOSS Contributions

[Anonymous Coward]

what software isn't custom? Or what is custom? Is it custom if I only make it for one customer, but not if I make it for a market segment? Would we all just sell software to more than one person to make it not custom? Otherwise, wouldn't all software be custom?

Re:FOSS Contributions

[russotto]

It sounds like that is exactly what they want to do: treat the delivery of the final product as a sale and apply sales tax to it. Open source or not wouldn't matter.

Which wouldn't be horrendously unreasonable. But that's not what they're doing. Washington state sales tax is 6.5%. It appears this _already_ applies to services. This is a special "punish the little guy for the sins of Microsoft" 10% tax, probably in addition to the 6.5% sales tax.

http://dor.wa.gov/content/findtaxesandrates/retailsalestax/

Re:FOSS Contributions

[Anonymous Coward]

Once you're done, you just need to make it available for purchase to other companies. Then it's strictly not "custom" anymore, since more than one company can use it.

Then you'd have to charge sales tax, so why bother?

Re:FOSS Contributions

[Rene S. Hollan]

Fine. I won't write software. I will write books. In a nice OCRable font. About a nice piece of fiction of how to translate the narrative into executable code.

Re:FOSS Contributions

[samantha]

I feel so much better. They already had a law to force me to bend over with or without lube applied. But they deferred it. So they only removed the deferral they didn't make a *new* decision to rape me. What a relief!

Re:FOSS Contributions

[einhverfr]

Ok, so I was reading the wrong version of the bill.

But here:

Back to the original question in this thread, it seems that FOSS could fall under 2) in my list -- developers are often paid to add specific features (thereby customizing the software) by individual or companies. As nothing is charged for the sale and licensing of FOSS (generally), 1 and 3 woudn't apply.

This seems to me like a legal tarpit. Consider the following scenarios:

1) A customer pays me to implement an improvement to a FOSS package. I ask the community how they want the improvement done and implement it according to consensus between the customer and community. In now way am I "customizing" pre-writing software "to a customer." I am extending it in a sponsored fashion. This seems to fall outside the applicable definitions but I could be wrong. Page 119's exemption of software provided free of charge seems to exempt this sort of service.

2) Now, suppose a customer pays me to do the same thing but they have a small custom requirement. Now, do I have to charge sales tax only on the portion which is specific for the customer? Or is the whole thing taxable? Wouldn't it be better for me to do everything except this part and then assist the in-house staff with specifications?

Now, the other part of this bill (which contains a number of truly aweful provisions including extending B&O Tax to other businesses not located in the state but who merely sell goods or services in the state: Is this Constitutional?) that is worrisome here is the fact that it mandates a study of the tax code when resources permit to determine how businesses are structuring their transactions to minimize tax burdens. Thus I am sure that if FOSS is exempt there will be mechanisms to close that loophole.

Oh well, I guess I might be moving to Indonesia.....

Re:FOSS Contributions

[Anonymous Coward]

This is a very common attitude that is degrading our lives in all areas in my opinion. To me, it's like playing chess and looking just one move ahead.

Calm down, he meant it's like changing lanes and looking just one car ahead.

Re:FOSS Contributions

[Dragonslicer]

Are you sure that's a sales tax? Many states have separate taxes for motor vehicle titles and registration, in addition to regular sales tax.

Re:FOSS Contributions

[Tubal-Cain]

Fine. I won't write software. I will write books. In a nice OCRable font. About a nice piece of fiction of how to translate the narrative into executable code.

Eh. Just sell it as an ebook.

Microsoft's tax cut and a sales tax

[compucomp2]

The sales tax is a very regressive tax. Why should ordinary people of Washington take the hit disproportionately so that Microsoft can be let off the hook for what is basically equivalent to offshoring?

Re:Microsoft's tax cut and a sales tax

[Anonymous Coward]

That's a simple one; you're just not thinking like a government....

There's one of Microsoft and they can fight/screw the system; there's millions of regular guys who can't do a damn thing about it...

Easy math really, just leave morals at the door...

Re:Microsoft's tax cut and a sales tax

[Anonymous Coward]

How exactly does not-progressive get to mean regressive?

Re:Microsoft's tax cut and a sales tax

[LordKazan]

sales taxes are not just not-progressive - they're regressive.

Rich and poor people need to buy a lot of the same basic things that are taxed - that tax eats up a larger percent of a poor persons income. that is the definition of a regressive tax.

Re:Microsoft's tax cut and a sales tax

[toastar]

A Sales Tax is pretty much regressive by definition.

Well as long as the Elasticity of demand is less then 1. And i don't think rich people pay more for software then poor people

Re:Microsoft's tax cut and a sales tax

[Anonymous Coward]

Nobody likes a poor thief.

Re:Microsoft's tax cut and a sales tax

[jim_v2000]

What does the sales tax have to do with Microsoft? OH I see, you're just riding the negative wave and steering it toward a company that you don't like.

Re:Microsoft's tax cut and a sales tax

[Anonymous Coward]

My Economics professors would say the sales tax is regressive, but I don't agree. In the examples he showed, the lower income family spent a higher percentage of their income than the higher income families. All you'd have to do to make it non-regressive is to cut spending when income is decreased. If your family is making $50,000 a year, and you spend 25% of that on taxable items, you'd spend less money on tax as a percentage of your income than a family that makes $250,000, and spend 50% of it on taxable items.

And I don't even know why they use the tax paid in $ as a percentage of total income as a regressiveness indicator. If you spend $3,000, the tax you pay on it is the same regardless of your income. If you spend 90% of your income on taxable items, it's obvious that the price of the sales tax is going to consume a higher percentage of your income than someone who only spends 20%.

Re:Microsoft's tax cut and a sales tax

[KahabutDieDrake]

This my friends, is what is known as BAD MATH. Mind, I don't disagree that sales tax is regressive. However, sales tax eats a percentage of your purchase. Poor people go shopping and buy staples and beans and rice and some chicken, and buy 2 weeks of groceries for 60$. Meanwhile, that woman in the lexis with the 2,000$ suit on? She spent 110$ on a bottle of wine, some designer cheese and some pasta imported directly from italy, all for a meal she will eat ONLY tonight.

You can assume that sales tax is more of a burden on the poor, if you also assume the poor and the rich have similar spending habits. But they don't. When I was living up in washington, I spent 100$ a week at the grocery store. Meanwhile, my poor ass friends were spending 100$ a month. Pretty sure I paid more taxes than any two of them combined, given my income, that wasn't unreasonable.

Also, by your definition, aren't all taxes regressive? No matter what percentage you take from me, if you take the same from anyone else, one of us is going to feel it more. Are you suggesting that it would be better if poor people didn't have to pay as much percent in taxes? Say if you make less than 25k a year you pay 1/2 taxes? Does that mean you support making the top 10% pay double? Because it's the same thing.

Re:Microsoft's tax cut and a sales tax

[tsotha]

For the same reason governments have a hard time dealing with offshoring - companies will leave if you make things too uncomfortable. Microsoft provides far more benefit to the state of Washington and its people than Washington provides to Microsoft. In the end this is just a recognition of that fact.

You can bleed companies (like GM) with large fixed facilities, but it's pretty easy to move software development. If not to Oregon or California, then to India or the Philippines.

Re:Microsoft's tax cut and a sales tax

[cayenne8]

"Rich and poor people need to buy a lot of the same basic things that are taxed - that tax eats up a larger percent of a poor persons income. that is the definition of a regressive tax."

Simple, exempt the basics of life from sales tax...food, shelter, medicine...and there you go, anything other than basics is luxury and open season for taxation.

Re:Microsoft's tax cut and a sales tax

[Yaa 101]

Because senators and representatives have stock them selfs, often with these behemoths.

A lot of these problems go away when you forbid these people to have stock while being representative for the state or US government.

Re:Microsoft's tax cut and a sales tax

[dwiget001]

Besides, most real food items are exempt from state sales taxes *in most states*.

Foods that are prepared in stores that you take out, etc. are usually not exempt. But, rice, onions, pack pack of chicken thighs, etc. are usually not taxed.

Your points are good, but they also do not take the above into account. :)

Re:Microsoft's tax cut and a sales tax

[Red Flayer]

You can assume that sales tax is more of a burden on the poor, if you also assume the poor and the rich have similar spending habits. But they don't. When I was living up in washington, I spent 100$ a week at the grocery store. Meanwhile, my poor ass friends were spending 100$ a month. Pretty sure I paid more taxes than any two of them combined, given my income, that wasn't unreasonable.

You don't have to assume any such thing. If you want, you can actually check the data. It's available. The truth of the matter is that poor people spend a higher proportion of their income on taxable goods than wealthy people do. Keep in mind that "necessities" are exempt from sales tax in all, or almost all, states... this includes food.

Keep in mind that it's probalbe that you paid more in tax than your poor friends did... but as a percentage of your income? Not as likely... I think you're unclear on what a regressive tax is. It means that as a proportion of income, people with lower income pay more than those with higher income. So if you make $100,000 a year and pay out $1000 in sales tax (1 %), but they make $25,000 a year and pay out $300 (1.2%) in sales tax, it's an example of the regressive nature of sales tax. The math gets even worse for the poor when you compare disposable income, rather than total income.

Say if you make less than 25k a year you pay 1/2 taxes? Does that mean you support making the top 10% pay double? Because it's the same thing.

Yes, you just gave an example of how a progressive tax schedule could be implemented. And while I'm not the person you responded to, I do believe that a progressive tax is ideal.

Re:Microsoft's tax cut and a sales tax

[westlake]

The sales tax is a very regressive tax. Why should ordinary people of Washington take the hit disproportionately so that Microsoft can be let off the hook for what is basically equivalent to offshoring?

The Washington state sales tax is 6.5%, only a tad higher than the national average. Washington does have both state and local property taxes - and Microsoft owns ten million square feet of office space and leases five million more.

Re:Microsoft's tax cut and a sales tax

[MartinSchou]

sales taxes are not just not-progressive - they're regressive.

I bet Glenn Beck loves sales tax then, because he really hates anything remotely connected to progressive.

Re:Microsoft's tax cut and a sales tax

[xavierpayne]

Mod parent up. It's not flamebait it's reality. The rich or even just the "more affluent" buy their playstation 3, blu rays, ATVs, BMWs, etc... all subject to sales tax. Since the purchases are huge the taxes they contribute will be huge. While the less affluent will buy toyotas, wiis, dvds, etc... although subject to the same sales tax they are much cheaper purchases. So these folks will (individually) pay less in taxes over the course of a consumer year. Then take the even less affluent, folks that have no video games, no wii, and perhaps a handful of VHS tapes they got from freecycle... they are technically subject to the same sales tax but put pay a lot less over the course of a consumer year because they make far fewer taxable purchases. Sales tax sucks but it's a totally fair system. Whether you are a corporation or an individual the more money you have and throw around the more you have to pay into the system. But the % is flat across the board and there are no exceptions... well except non-profits. :-)

Re:Microsoft's tax cut and a sales tax

[samantha]

All taxes are legalized thievery. Quibbling over who the victims are and how much each victim is transgressed against is what allow these things to continue. Such quibbling sanctions the fundamental wrong.

Re:Microsoft's tax cut and a sales tax

[Uberbah]

Then you'll merely be sticking it to the middle class, instead of the poor and the middle class. Another problem with relying on a sales tax as opposed to an income tax is that the former plummets when the economy goes into a recession, since the poor and the middle class run out of money first.

Re:Microsoft's tax cut and a sales tax

[soundguy]

The Washington state sales tax is 6.5%, only a tad higher than the national average. .

This is only factual in the strictest sense. The STATE's portion of the sales tax is only 6.5% but each county and municipality levies additional percentages, so ultimately the tax on sales WITHIN the state tends to be 8.6 to 9.0 % depending on where you are standing. I believe overall we have the second highest sales taxes in the nation, just behind New York. We also pay some of the highest taxes on liquor (only sold in state controlled stores), tobacco, and gasoline in the nation.

Also consider that King County (and others) levies a Business & Occupations tax for the "privilege" of doing business here, plus we have a corporate income tax (no personal income tax though) and extremely high property taxes. Additionally, the smoking ban effectively killed live music in Seattle, if you're a business, you can be fined hundreds of dollars for putting recyclables in the garbage (seriously), there's no alcohol allowed in strip clubs, we have the worst traffic in the entire country, and it rains about 260 days a year. In general, Washington is a shitty place to live and work.

Re:Microsoft's tax cut and a sales tax

[anagama]

In fact, sales tax has almost nothing to do with this entire issue. It's a Business and Occupation tax is at the core.

Re:Microsoft's tax cut and a sales tax

[anagama]

As if a tax cut matters for offshoring. What next, mandate that all MS workers should be paid no more than $1/hr, and forbid that they quit in reaction, as recognition of the fact that the going rate in Indonesia is about that?

Re:Microsoft's tax cut and a sales tax

[anagama]

Don't forget the state B&O tax.

Andrew would be upset, again.

[Anachragnome]

Andrew Stack would be upset, again.

This is exactly the shit that drove the man to his wits end, leaving the IRS with an airplane in their offices.

Time to write my representative, AGAIN. (Crazy week in WA., what with our rogue AG and all...)

Re:Andrew would be upset, again.

[Sponge Bath]

Andrew Stack would be upset at having to pay any taxes. He was also a loony. The selective 10% on custom software is a supremely stupid thing, but invoking the name of an anti-government crackpot isn't helpful.

Re:Andrew would be upset, again.

[Anonymous Coward]

Andrew Stack is a conservative domestic terrorist. Who the fuck cares what he thinks? Are you honestly suggesting that passing this bill would cause more terrorism incidents?

Re:Andrew would be upset, again.

[lorenlal]

Just so you know, the state of Michigan tried a 3% tax on gross receipts on physicians... It got shot down in the state senate after the house passed it. They're trying it again in by hiding it in a new budget bill.

I bring this up because it's in the same idea of trying to find new tax sources, that affect a small population to make it not unpopular... And it helps if that particular group is perceived to be "well off." It's poor policy to make one profession bear the burden of the masses (IMHO). It's a great way to try to drive business out of an area. It's also a great way to pass the burden onto the consumer without and claim that taxes have been raised.

Re:Andrew would be upset, again.

[Anonymous Coward]

Rouge AG? I'm not sure but it sounds our Attorney General is the only sane person in western WA. Good to know his efforts to stop the federal government from screwing it's citizens will be payed for by the state government screwing them.

This post payed for in-part by your Washington tax dollars.

Re:Andrew would be upset, again.

[Jeng]

I thought it was him trying to not pay any taxes that led Andrew Stack to target people who have no influence on his taxes.

I agree that there are some extremely messed up taxes for some aspects of software development, but that is not why he flew his plane into an IRS office.

He got sold on the idea that he didn't have to pay ANY taxes, ANY, Zip, zero, zilch, none.

Re:Andrew would be upset, again.

[Anonymous Coward]

do you honestly think that openly agreeing a terrorist who flew an airplane into a building makes you look sane?

Mohammed Atta's group had a carefully-executed plan and as a result were the first people to ever fly airplanes into buildings before to the buildings collapsed (there, I stated it in such a way that everyone, including people who think the bombs the CIA planted in the basement was what took down the buildings, can agree with). Andrew Stack was an idiot with no ability to think things through, which is why he could never plan for taxes either.

Re:Andrew would be upset, again.

[nomadic]

Andrew Stack would be upset, again.

So the sociopathic murderer wouldn't like this? So you're saying it's a good thing?

Re:Andrew would be upset, again.

[phantomfive]

If you're going to write to your representative, you might want to mention that the average government worker makes 45% more than their equivalent in the private sector (30% more if you only include salary). I don't know the precise situation in Washington, but in most states with deficits, if the workers pay was cut to the same as they would in the private sector, the deficit would be more than closed.

Whether we want to cut the pay of public employees or not is a value judgement, and it is really up to us (or our representatives) to decide if we are willing to continue paying them with higher taxes, but it is important to be aware of what is happening.

Re:Andrew would be upset, again.

[wizardforce]

Don't defend what that man did. There are more effective ways of protesting this nonsense without resorting to property damage and death. After all, do you really think that anyone with the legislative power to change things for the better thought to themselves "ya know, he's got a point, maybe we should change the tax laws." It'll be remembered as an act of terrorism nothing more.

Re:Andrew would be upset, again.

[nomadic]

If you're going to write to your representative, you might want to mention that the average government worker makes 45% more than their equivalent in the private sector (30% more if you only include salary). I don't know the precise situation in Washington, but in most states with deficits, if the workers pay was cut to the same as they would in the private sector, the deficit would be more than closed.

My representative likes me to provide cites when I make pronouncements like that.

Re:Andrew would be upset, again.

[Anonymous Coward]

Andrew Stack is a conservative domestic terrorist. Who the fuck cares what he thinks? Are you honestly suggesting that passing this bill would cause more terrorism incidents?

I never used to think this way but I'm beginning to think so. As are many, many others who are totally fed up with the bullshit. (I was going to say "hope so" but I'm sure that would lead to no good end!

Re:Andrew would be upset, again.

[Archangel Michael]

This is why tax policy should be re-evaluated. We should not be taxing things we want people to do, we should be taxing the things we don't want people doing.

If we, as a society, value something, taxing it is the most assured way of destroying it. Let us legalize drugs, prostitution and every other "victimless crime" we have now, and tax it.

I have never understood the idea of taxing things people need like income.

Re:Andrew would be upset, again.

[wizardforce]

Obviously if the man said 2+2=4 he must automatically be wrong... The man was crazy but the idea that our government and tax law as a whole have also gone batshit isn't that crazy.

Re:Andrew would be upset, again.

[nomadic]

I have never understood the idea of taxing things people need like income.

Because that way you can pay for other things people need, like roads, hospital, military protection, police, fire, etc. There honestly isn't really anything taxable other than income that can cover these things.

Re:Andrew would be upset, again.

[tweek]

For the same reason some of us were saying "Maybe we should find out why Al Quaeda attacked us on 9/11" as opposed to yelling about "They hate our freedoms" and "You just want to blame America". If you never get at the root cause of a problem, you'll never truly solve it.

Bin Laden had some valid reasons for hating the US that has nothing to do with our "way of life" and more with our farcical nation building policy. That doesn't mean he was right or that it was entirely our fault. However, unless we understand ALL the factors, we'll be in the same boat again.

Similarly while I, in no uncertain terms, despise what Andrew Stack did, his REASONS for doing it were valid at some level. Does it take a broken person to finally resort to his actions? Yes, but what he said about the sheer fucked-upness of our current tax "code" has merit. He was unstable but is it possible that having to deal with the shit that he did with our government pushed him over a tipping point? Absolutely.

Andrew Stack wasn't some Ted Kazynski/David Koresh whack-job. He was an unstable person who got fucked by his own government. He's not to be lauded or praised for what he did but there's a lesson to be learned in how our current system is broken.

Re:Andrew would be upset, again.

[Anonymous Coward]

Rouge AG?

Now, now, don't judge him by the color of his skin...

But this IS an American site, please use English. Using fancy French words like "rouge" isn't going to buy you any points here.

Re:Andrew would be upset, again.

[c 0xFF]

If we, as a society, value something, taxing it is the most assured way of destroying it.

Except that taxes don't deter people like that.

The cost of cigarettes is dominated by taxes, for example, and yet people still smoke. The addiction makes then overcome the higher prices.

Nor does it work with income taxes: just because making money is taxed doesn't mean people don't want to work and have jobs.

Re:Andrew would be upset, again.

[commodore64_love]

>>>(Crazy week in WA., what with our rogue AG and all...)

I was wondering what you meant so I did a quick Bing search. "Washington Attorney General Rob McKenna plans to join a multi-state lawsuit challenging the constitutionality of the recently signed health care law."

I don't see this as rogue. He and other State Attorneys/Governors are merely asking the U.S. Court to enforce the Constitutional Law (specifically parts 9 and 10 of the Bill of Rights). They swore an oath to uphold that law, and now they are following through with it.

Good for them.

As for the topic - I already commented below that rather than raises taxes 300 million dollars, politicians should CUT 300 million dollars. Abracadabra - balanced budget. I also think they should go after Microsoft to pay their backtaxes, but at the same time I figure MS would just move to another state if they pushed too hard.

Re:Andrew would be upset, again.

[Archangel Michael]

Yes.

Road Taxes paid by Taxes on Fuel. Not enough roads, raise taxes on fuel, doubles to reduce cars on the roads, and pays for increased roads. Smog increases, then raise taxes on smog producing fuel.

Military can be paid for with taxes on corporations (state created entities), and cross boarder transaction taxes.

Fire and Police are local, and should be paid for by local taxes like property taxes, since they are used to protect property.

The problem as I see it today, we have no balance in taxing and spending. We have big tax/spend (D) and little tax/big spend (R). Nobody is really offering the REAL solution which is to spend what we tax and tax what we spend. Letting the people vote with their wallets on what is a priority with them.

Of course that doesn't sit well with the busybodies and dogodders who love to spend other peoples money and stick their noses in everyone else's business. Yes, I'm talking about both (D) and (R).

Re:Andrew would be upset, again.

[GlassHeart]

Since when was Wiki allowed to run for public office?

Re:Andrew would be upset, again.

[westyvw]

False. Most unions base a state workers wage (plus benefits) at a percentage of the private sector equivalent. For example, most interns at Microsoft make more then a 3 or 4 year IT worker at a state job.

Perhaps your argument should be more like this: if there is a 20% reduction in jobs in the private sector, then a similar reduction in public services (positions) must follow.

Re:Andrew would be upset, again.

[JesseMcDonald]

We should not be taxing things we want people to do, we should be taxing the things we don't want people doing.

If you tax things you want people to do then you act contrary to your own interests. On the other hand, if you seek revenue through taxes on things you don't want people doing then you become dependent on the "unwanted" behavior, which curtails any incentive to actually persuade them to stop—which is also contrary to your own interests.

The correct approach is to give up the reliance on coercion. Anything worth doing can be done voluntarily.

Re:Andrew would be upset, again.

[BarryJacobsen]

Because that way you can pay for other things people need, like roads, hospital, military protection, police, fire, etc. There honestly isn't really anything taxable other than income that can cover these things.

Either you're joking, or you have a serious lack of imagination. Hospitals, military protection, police, fire are all localized services and could easily be included in property tax (hence you live in an area with lots of hospitals or a higher need for said services then you pay more than if you live in podunk town with 1 fire engine and one police officer). Roads could easily be incorporated into your driver's license or license plate fee.

Re:Andrew would be upset, again.

[Anonymous Coward]

Here you go! http://www.orthodoxytoday.org/blog/2010/02/09/government-workers-make-45-percent-more-than-private-sector-employees/

Re:Andrew would be upset, again.

[Alzdran]

That's quite a statement to make with no support... and not true, even if your claim is that the money doesn't move after being income (you could tax savings in that case). In fact, income taxes could be completely removed and taxed payroll side - that just would limit the ability to incorporate deductions.

No, income is taxed because it is considered fair to take more from those who have more, in a greater-than-linear manner, for the good of society. People need income, true, but there is a thresholding effect (beyond a certain threshold, you don't really -need- additional spending power to survive). Not taxing everything above that threshold is generally seen as good as it encourages people to work to better their position, and allows spending to be above that minimal subsistence level so that we can have economic growth.

Taxing other things is often seen as less fairly distributed. GP is suggesting that taxation as regulation/policy should be used heavily, presumably beyond the purported cost of the taxed behaviors, to finance as much as possible. There are significant practical problems with this (black markets and the definition of the discouraged behaviors), but they each have their analog in the income tax system (pay under the table, exemption & deductions).

Re:Andrew would be upset, again.

[phantomfive]

Here you go. If you want to get around the paywall, try the first link from this search. It isn't a surprising statistic though if you've ever worked with the government, although I'm sure the pay inequality isn't spread equally. As an example, my brother and I both worked in construction for a summer, me building houses, and him building a prison for the government, and his pay was 2.5 times what mine was. Stories like this are all over if you work in California.

I guess people don't really like this topic (since the original post was modded down), but I think it's one that's going to gain more prominence in the next few years, along with public pensions, as they get more and more expensive. It should be clear to everyone by now that the government is either going to have to cut spending or increase taxes, most likely a combination of both. I see paying employees a sane wage as a reasonable step towards a more balanced budget, but if the rest of the voters disagree with me, that's ok. Regardless, we're going to have to do something as on our present trajectory we're headed towards disaster.

Re:Andrew would be upset, again.

[Anonymous Coward]

As a former gov't IT worker who left for private industry, I can tell you that statement is just plain wrong. Gov't workers in general, and especially those in technical/professional fields, make far less than their private counterparts. Within 5 years of leaving the gov't, I already make double what my former colleagues left behind make today. Rather than getting even cost of living increases, my former colleagues actually got a salary cut last year.

Re:Andrew would be upset, again.

[h4rr4r]

Why do we care what a tax cheat did?

Re:Andrew would be upset, again.

[cayenne8]

"We have big tax/spend (D) and little tax/big spend (R). "

From what I see it is: big tax/big spend (D) and little tax/big spend (R).

They both spend like drunken sailors on leave on whore island...

Re:Andrew would be upset, again.

[Anonymous Coward]

I have never understood the idea of taxing things people need like income.

Because some people have too much income, much more than they need.

Let's tax them like we used to in good old days (45-60s) when the tax rate for the extreme rich was around 90% and the US economy grew fantastically:
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=213

Nowadays the same tax rate is around 35% and the economy is stagnating. Oh, the trickle-down economics is working fantastically!!

Re:Andrew would be upset, again.

[Anachragnome]

Jeez.

The one time I TRY to troll a thread, I get modded interesting.

Re:Andrew would be upset, again.

[MartinSchou]

While your ideas are interesting, you seem to forget to think about the long term consequences. Example:

Fire and Police are local, and should be paid for by local taxes like property taxes, since they are used to protect property.

Low income municipality, 50,000 inhabitants, 30% unemployment, people living in worn down apartment buildings.

High income municipality, 10,000 inhabitants, 5% (chosen) unemployment, people living in expensive self-owned houses.

It is entirely possible that the high income municipality has a tax base that is twice or three times as big as the low income municipality. That means that under your idea, they could have three times as many cops and firemen as the low income area. Fair enough - but do they really need 15 times as many cops and fire fighters per inhabitant as the low income one? Which one is more likely to have violent crime? Which one is more likely to have fires? Which one is more likely to have fires that affect multiple families?

Same with the proposed road taxes. Let's only use fuel and vehicle (ownership) tax to build and maintain roads. And if the low income workers happen to live far away from their jobs, they now have to pay a lot more to get minimum wage. The local stores will have to pay more for their goods. And then you still end up with badly maintained roads in the low income areas, which in turn leads to increased costs of working and living, as transport to and from those areas become more and more expensive, as the roads get in worse and worse shape.

If you build society in such a way, that you do not in one way or another distribute wealth around to those who need it, your society will end up suffering. Maybe not in a way that you yourself get to see up front, but think about this - what will happen to the US economy, if the long commutes you already have become infeasible? It's not impossible to imagine a situation, where you'd have to pay 50% of your post tax income just to get to and from work. Moving is expensive.

Re:Andrew would be upset, again.

[Anonymous Coward]

I think you meant: My representative likes me to provide relevant citations when I make pronouncements like that. "Cites" is not a noun.

Re:Andrew would be upset, again.

[Man On Pink Corner]

Because some people have too much income, much more than they need.

About 90% of the people on the planet would place you in that category, Mr. "Trust-Fund Communist With His Own 3000-MHz Computer."

Let's tax them like we used to in good old days (45-60s) when the tax rate for the extreme rich was around 90% and the US economy grew fantastically:
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=213

Yeah, because correlation implies causation.

Or maybe, just maybe, when you bomb the living bejesus out of the rest of the world's production capacity, the one major power left untouched will "grow fantastically." We could try that again, like we did in the good old days (41-45).

Re:Andrew would be upset, again.

[Seraphim1982]

False. Most unions base a state workers wage (plus benefits) at a percentage of the private sector equivalent.

In my experience "private sector equivalent" actually means "what the state would pay a private contractor to do the same work for the state" not "what a state employee would make doing the same work in the private sector". The difference can be pretty huge.

I can specifically remember one job I had about 10 years ago where I was working at a state university as a private contractor. The rate for this work was $38/hr. A state worker doing the same job would have made $32/hr. The rate for basically the same job at the nearby private university was $18/hr.

Re:Andrew would be upset, again.

[Anonymous Coward]

we should be taxing the things we don't want people doing.

I disagree. The government, in my opinion, should not be using taxation to control behavior.

So long as a behavior is legal and doesn't harm others the taxes on it shouldn't exceed what it costs(I.E. use taxes on tobacco should be used for cancer research, but don't raise taxes to keep people from smoking).

Re:Andrew would be upset, again.

[Anonymous Coward]

Because some people have too much income, much more than they need.

Fuck you, comrade. Nobody gets to decide how much money I "need".

Re:Andrew would be upset, again.

[zippthorne]

Not enough roads, raise taxes on fuel, doubles to reduce cars on the roads

Cars aren't what wears down roads. Trucks are. Trucks carrying goods.

Re:Andrew would be upset, again.

[Anonymous Coward]

If you're going to write to your representative, you might want to mention that the average government worker makes 45% more than their equivalent in the private sector (30% more if you only include salary). I don't know the precise situation in Washington, but in most states with deficits, if the workers pay was cut to the same as they would in the private sector, the deficit would be more than closed.

My representative likes me to provide cites when I make pronouncements like that.

Hell, I'd be interested too. I was under the impression the average public servant just barely made the private sector equivalent salary + intangibles, and going on just salary, private _always_ leads.

Re:Andrew would be upset, again.

[nomadic]

Your cite does not show that government employees make 45% more than their equivalents, but simply that government workers make more than private sector workers. I have no doubt that a janitor makes less than a college-educated bureaucrat, or a fast food worker makes less than a firefighter. You all have to really read things more closely. A government lawyer makes less than a private sector lawyer, a government doctor makes less than a private sector doctor, a government programmer makes less than a private sector programmer, etc.

Re:Andrew would be upset, again.

[Anonymous Coward]

Andrew Stack is a conservative domestic terrorist.

http://en.wikipedia.org/wiki/2010_Austin_plane_crash#Suicide_note

The communist creed: From each according to his ability, to each according to his need.

The capitalist creed: From each according to his gullibility, to each according to his greed.

Seems like he favoured communism over capitalism from his suicide note. Hardly conservative. That fact that he expressed anti-government and anti-tax views could be because he didn't like the government because it wasn't left enough for him. More likely he didn't have a coherent political view and was just crazy.

Seems like you're trying to win people over to your side who are too stupid to fact check. Of course, that's giving you the benefit of the doubt that you're not one of the people who was too stupid to fact check.

Re:Andrew would be upset, again.

[anagama]

I read that as "big" modifying both "tax" and "spend" for Dems. Your analogy rocks though.

WTF?

[idontgno]

This is like taxing grocers and restaurants while giving incentives to out-of-state food processors and big-box ultramarkets to bring in more processed pseudo-food.

What, exactly, is the message the legislators are trying to send here? "Tax local, buy global?"

Re:WTF?

[ISoldat53]

You understand this is the state of Costco, Amazon, MS and Boeing. Big box is what we do.

or they could you know...spend less money?

[Anonymous Coward]

first cut should always be to government offices furniture budgets, then look at the "perks" elected officials get and cut those

Re:or they could you know...spend less money?

[ctrahey]

first cut should always be to government offices furniture budgets, then look at the "perks" elected officials get and cut those

That's like saying that we can aide our energy problems by using less energy. Yeah, right.

Re:or they could you know...spend less money?

[jameskojiro]

They should force Congress on a diet of Ramen Noodles and Mac 'n Cheese. They should put ever damn one of those jackasses in cubibcles instead of offices, put them up in two to three members per room dorm type housing, install a timeclock in the senate and house chambers where they have to clock in with their finger prints in order to get paid and only be paid per hour they are actually in session.

This should save A lot of money.

Re:or they could you know...spend less money?

[westyvw]

But instead, the special session in WA right now is costing us extra. Nice huh?

Re:or they could you know...spend less money?

[drsquare]

Who is this 'they' who would make politicians reduce their own standards of living?

Tax custom software ? logic ?

[unity100]

arent you already taxing the income that is generated as a result of that software ? and applying any kind of sales tax to the software, if there is a sales tax in the state ?

Re:Tax custom software ? logic ?

[Anonymous Coward]

is there a sales tax? Yes, 9+% statewide, almost 10% in king county. Fuck these assholes. Why dont they take a pay cut to decrease the budget gap, quit taking limosines to work everyday. Oh wait youre scared to take the bus with 'normal' people? Maybe you shouldnt pass laws like this then, douches.

Re:Tax custom software ? logic ?

[Anonymous Coward]

You do not charge sales tax on your labor or on intangible products.

If you ship software electronically, there should be no tax. If you burn it on a CD and mail it, then tax should be charged.

Re:Tax custom software ? logic ?

[Aquitaine]

Sales tax doesn't usually apply to custom software, where 'custom software' means you can't just buy it on a shelf or download it. My company sells custom software that runs youth sports leagues.

We pay income tax on all our revenue, of course, but we don't have to collect sales tax so long as it's a 'service' -- meaning no 'click here to download our software.' So custom software is not currently taxed in most states.

Washington state also doesn't have an income tax at all.

Depending on your current state and existing tax burden, I could see paying a fair tax for something like this, but not ten percent. Custom software is already pretty expensive (possibly one of the reasons it's not currently taxed) and because it doesn't have fixed price, it's tough to track for tax purposes -- I could say 'well, our software costs a hundred bucks, but my consulting fees to set it up and maintain it for you are $10,000 a year' since that's a professional fee/service. Sort of how attorneys work - you're paying for their expertise, not really for a 'product.'

Re:Tax custom software ? logic ?

[AuMatar]

10% is about the sales tax around here in WA- maybe a little less in some high tax LIDS. I don't agree with targetting specific industries like this, but if they made it an across the board 10% tax on sales of non-sales tax generating services I'd be more ok with it. This state badly needs an income tax though. Just income taxing the MS leadership would significantly close our budget gap.

Re:Tax custom software ? logic ?

[Aquitaine]

It's extremely difficult to tax non-sale services, for the reasons I mentioned. Very few states even try. Reason being that it's not a 'sale' if you have a professional perform a service for you, which is usually what custom software is.

What you're talking about is closer to a VAT.

Re:Tax custom software ? logic ?

[glennrrr]

How would making Bill Gates move his official residence to Texas close your budget gap?

Re:Tax custom software ? logic ?

[tweek]

There is no such thing as a "fair tax". The actual FairTax is about the closest I've seen in a while.

People need to put the screws to government. Citizens of a state need to decide exactly what public services they want the government to provide. States need to stop doing stupid shit like building arenas and halls of fame and golf courses and bowing to the the "we'll leave if you don't subsidize our sports franchise" bullshit.

Yes, state revenues will contract but so will the needs of the state. No personal income tax + low corporate taxes + limited government = prosperity.

Re:Tax custom software ? logic ?

[Aquitaine]

Well, a bit off-topic, but yes, I agree, which is why my business is relocating from NYC, where we pay:

- one of the highest state + city income tax rates in the nation
- 4% unincorporated business tax
- Metropolitan Commuter transportation mobility tax (something they invented this year to fund the MTA)

To Austin, TX, where we'll pay:

- No state income tax (corporate or personal)
- No UBT
- No spend-happy gov't
- 80% national avg cost of living rather than NYC (don't even want to know what percentage that is)

I'm not a tea party guy or anything but whenever I talk about this stuff, people look at me like I'm crazy. More money for my business means I can have more employees and charge my clients less. Everybody always assumes that the first thing we do when taxes are lower is pocket the difference. Yeah, right.

Re:Tax custom software ? logic ?

[tweek]

I'm glad Texas got it right so far. Most people forget the second half of the equation in cutting/eliminating taxes which is to restrict government spending. I'm interested to see, long term, how this fairs for Texas and Austin particularly. So far it seems to be going swimmingly. Right now the economic freedom there is amazing.

Re:Tax custom software ? logic ?

[cats-paw]

>> Sort of how attorneys work

maybe we should tax the hell out of attorney's fees, to discourage there use...

Re:Tax custom software ? logic ?

[h4rr4r]

But then you have to live in TX. Seems like it may not be worth it.

Re:Tax custom software ? logic ?

[Anonymous Coward]

Adding a state income tax wouldn't really affect Bill, his income is peanuts. He earned less than $1M in 2006, which at 11% (the highest state income tax I could find, for Oregon which doesn't charge any sales tax), that would only net the government $110K.

$110K is a lot of money for an individual, sure, but compared to his net worth, that's barely a blip, at 0.00022%. And if WA did institute a state income tax, it would certainly be one of the lower ones, given the high sales tax it already charges. Even if he was really unhappy about the tax, it would cost him many times that to move from his $150M home.

Now, mid- to upper- management at Microsoft, who haven't amassed billions of dollars, they might revolt and cause the company to move. Bill would probably telecommute. He's spending most of his time working at his foundation, anyway.

Re:Tax custom software ? logic ?

[tyrione]

Well, a bit off-topic, but yes, I agree, which is why my business is relocating from NYC, where we pay:

- one of the highest state + city income tax rates in the nation - 4% unincorporated business tax - Metropolitan Commuter transportation mobility tax (something they invented this year to fund the MTA)

To Austin, TX, where we'll pay:

- No state income tax (corporate or personal) - No UBT - No spend-happy gov't - 80% national avg cost of living rather than NYC (don't even want to know what percentage that is)

I'm not a tea party guy or anything but whenever I talk about this stuff, people look at me like I'm crazy. More money for my business means I can have more employees and charge my clients less. Everybody always assumes that the first thing we do when taxes are lower is pocket the difference. Yeah, right.

That list won't last for long. Texas currently subsidizes that ability by taking in nearly twice as much Federal Dollars as they give back in taxes. When that loop-hole is balanced to a 1:1 ratio you'll suddenly realize your decisions to relocate was a very costly one.

Re:Tax custom software ? logic ?

[Aquitaine]

Bullshit:

http://www.taxfoundation.org/taxdata/show/22685.html

Texas is 39th, with 94 cents in Federal spending for every dollar they pay in taxes.

I've been living in New York since 1998, which is 42nd and has 79 cents on the dollar returned to us.

Oh noes! Market freedom! They must be evil!

You pay the same Federal taxes if you live in Texas as you do if you live in New York or New Jersey. You just pay fewer State taxes (particularly in NY, with one of the highest Sales tax rates and one of the highest income tax rates).

Even if you were right, wouldn't it be nice if some businesses could survive without the Federal teat? I have zero Federal contracts and don't want any, so 'government services' don't really affect me beyond the basics, most of which the State provides.

lol wut

[Jeian]

I have no idea what the Legislature means by "custom software" (and didn't see a definition in the article) but I'm guessing that it would be software written for a specific niche or client - in which case, Microsoft would really be the *least* likely to fall under that definition. Word, Excel, etc. are hardly "custom applications."

And if they are, well, that means just about all the software ever written would be "custom software."

Re:lol wut

[Jeng]

Isn't all software custom once you get into the configuration?

Re:lol wut

[TheRaven64]

That's the point. It's effectively a tax break for off-the-shelf software makers (10% of the industry overall, but some very big individual players). Fortunately, it's only the State of Washington giving a tax break to a large domestic industry, rather than a US-wide measure. All it will do is shift any remaining innovation out of the state.

we cant work for our selves anyway

[Anonymous Coward]

You obviously have not heard of the "The law, known as Section 1706 of the 1986 Tax Reform Act", this makes it extremely difficult for programmers to work as self-employed individuals. So, for the average individual geek, you can't actually make a living as a professional programmer, this is just another attack on out profession to make us minions of corporations.

Uhmm...

[ZDRuX]

Can someone define "custom software" first?! Isn't any arrangement of 1s and 0s made to someone's specifications considered "custom"?! Maybe I'm just dull and naive.

Or do they mean software that is pumped out by the thousands, like MS Windows.

Re:Uhmm...

[ShadyG]

My guess is that "custom software" is software for which sales tax is not being paid. That way you always have to pay some additional tax above that for the income you earn when you sell software.

Re:Uhmm...

[NewbieProgrammerMan]

Or do they mean software that is pumped out by the thousands, like MS Windows.

I'm guessing....no. MS has a metric fuckton of lobbyists leaning on the lawmakers, most little custom software shops don't.

"Custom software" is any software that the state of Washington can be troubled to find out that I'm developing for somebody. Good luck tracking that, WA! Let me know how it turns out.

typical of Washington State

[Anonymous Coward]

Washington State, and its Democrat Party, are completely in Microsoft's pocket. Ever since Boeing indicated that it is leaving the state, the state is of, by, and for Microsoft.

Microsoft wants a tax break, Microsoft gets it.

Microsoft wants the University of Washington to stop this "open source software" nonsense and use proper Microsoft software, UW fires its OSS developers and switches to Microsoft.

Microsoft wants competing software developers taxed, they get taxed.

Re:typical of Washington State

[Anonymous Coward]

Yeah and Apple, Google and the other Fortune 500 companies try their hardest to pay as much taxes as they can. Get real...

Re:typical of Washington State

[NewbieProgrammerMan]

I don't think that was the original AC's point, honestly. The point is that big companies with lots of spending power, "leaving your state" power, and lobbyists frequently get what they want, no matter which business or state they're in.

How about some honesty in taxation?

[mosb1000]

Or, they could be honest and raise the money though an old-fashioned income tax, or sales tax. But I'm sure they'd rather hide the tax burden from the people who are ultimately paying it. Gotta love the government.

Re:How about some honesty in taxation?

[dsavi]

Maybe this is why a large part of the American population hate taxes (But love to complain about them)- Because their government screws up every time they make a new one.

Re:How about some honesty in taxation?

[steveha]

Or, they could be honest and raise the money though an old-fashioned income tax, or sales tax.

Washington state doesn't have a state income tax. As a side-effect of this, every other thing you can imagine is taxed as highly as the state government thinks they can manage. (Except car licensing... that used to be hundreds of dollars per year, but an initiative slashed that to a flat $30 per year. But that was years ago... I just re-licensed a car and paid about $120 so I guess it is ratcheting back up to where it was.)

In Washington, a state income tax is very nearly a "political third rail" issue. You can't get elected governor here without piously promising that an income tax would be your absolute last emergency resort. Our current governor and the one before here both started talking about a state income tax shortly after being elected, though.

This month, our state legislature seriously debated a proposal to enact a state income tax, only on "the rich", and with a sales-tax reduction as a bribe to make the rest of the voters happy. This was not a popular idea; I think most people view this as the camel's nose entering the tent. (Certainly that's how I view it... once we have the income tax, every year the definition of who is "rich" will be revised downward.) That idea is dead for now.

As for sales tax:

The sales tax is already 9.5% in the Seattle area; of that, 6.5% goes to the state. (Numbers from here.) I suspect that nobody quite dares yet to hit the threshold of 10% sales tax or higher. Double digits? That might get some headlines.

But surprise surprise, the state legislature is seriously debating a proposal to add 0.2% to the state sales tax rate, at least temporarily. This would bring sales tax new me to 9.7%.

But I'm sure they'd rather hide the tax burden from the people who are ultimately paying it. Gotta love the government.

They'd certainly rather find creative ways to hike taxes than ever to cut spending. It's a down economy, everyone is hurting, tax revenues have fallen, but they can't possibly cut spending. I wonder how long this can last.

steveha

Re:How about some honesty in taxation?

[Anonymous Coward]

Yeah, as a washington state work and a resident, I can tell you this wouldn't be politically feasible. Certainly that would be the most obvious way to solve this, but you can't imagine the pitch of the tax hating whiners out there.

The End is Near

[xdor]

I for one salute our freely elected overlords!

Move

[ScientiaPotentiaEst]

Fortunately my little corporation isn't in Washington. I know first hand that there are many states more conducive to small business. Unless there is some specific reason for remaining there, it isn't be too hard to move. 10% is no small increase, so it's definitely worth looking into a change of locale.

I don't suppose anyone in the WA government considered reducing expenditures enough to make up the difference. Too radical a concept I guess.

Re:Move

[westlake]

Fortunately my little corporation isn't in Washington. I know first hand that there are many states more conducive to small business.

Fun facts about Wshington state:

Estimated at 8.9% of income, Washington's state/local tax burden percentage ranks 35th highest nationally, below the national average of 9.7%. Washington taxpayers pay $4,334 per capita in state and local taxes.

Washington ranks 9th in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: Idaho (18th), Oregon (14th) and California (48th).

Washington levies no state personal income taxes, joining Alaska, Florida, Nevada, South Dakota, Texas and Wyoming as the only other states not to do so.

Washington's corporate tax structure contains no corporate income tax. Nevada, Texas and Wyoming are the only other states that do not levy corporate income taxes. However, Washington levies the nation's oldest gross receipts tax, the Business and Occupations (B&O) Tax, first instituted in 1933. Washington, Texas, Ohio, Michigan and Delaware are the only states to levy economy-wide gross receipts taxes.

Washington levies a 6.5% general sales or use tax on consumers, slightly above the national median of 6%. In 2006, state and local governments combined collected $1,868 per capita in general sales taxes, which ranks the highest in the nation. Washington's gasoline tax stands at 37.5 cents per gallon, which ranks 3rd highest nationally. Washington's cigarette tax stands at $2.025 per pack of twenty and ranks 8th highest nationally. The sales tax was adopted in 1933, the gasoline tax in 1921 and the cigarette tax in 1935.

Washington is one of the 37 states that collect property taxes at both the state and local levels. As in most states, local governments collect the majority of property taxes. Washington's localities collected $835.25 per capita in property taxes in fiscal year 2006, which is the latest year the Census Bureau published state-by-state property tax collections. At the state level, Washington collects more property taxes than most states do. In FY 2006, Washington collected $257.73 per capita, bringing its combined state/local property taxes to $1,092.98 per capita, which ranks 25th highest nationally.

Washington taxpayers receive less federal funding per dollar of federal taxes paid than the average state. Per dollar of Federal tax collected in 2005, Washington citizens received approximately $0.88 in the way of federal spending. This ranks the state 38th highest nationally and represents a decline from 1995, when Washington received $0.97 per dollar of taxes in federal spending (ranked 31st nationally). Neighboring states and the federal spending received per dollar of federal taxes collected were: Idaho ($1.21) and Oregon ($0.93). The Facts on Washington's Tax Climate

Re:Move

[ScientiaPotentiaEst]

Thank you for posting the illustrative data (something I should have done). It quantifies nicely how many other states are more conducive to business (and again, in my experience, especially for small business).

It seems that the posted data will soon be out of date. Sadly, WA will slip further in rank for small companies caught in this new tax scheme.

Re:Move

[Goat of Death]

Did you actually read what he wrote? Washington is 9th in the State Business Tax Climate Index, as in 9th BEST, not 9th worst. And that's with the B&O tax. And the states around Washington are worse.

Re:Move

[Anonymous Coward]

New Hampshire also has no personal income tax. And the WA B&O tax is pretty crappy, because it applies without regard to expenses. It's a tax on revenue. God help the poor souls with small profit margins. If you have a 10% profit margin then the B&O tax is 10%-20% off the top of your profits.

Re:Move

[ScientiaPotentiaEst]

Yes, I did read it. 9 states are better than Washington according to that data.

Re:Move

[ScientiaPotentiaEst]

Of course, I meant eight states.

how best to raise another $300 million

[commodore64_love]

Cut 300 million dollars worth of government workers.

Done.

Those who remain would therefore have to work 8 hours a day, instead of wasting 4 hours each day surfing the net (as they did in my government office).

Re:how best to raise another $300 million

[Locke2005]

You're obviously surfing the net instead of working right now! Pot, kettle, stop calling each other "black"!

Re:how best to raise another $300 million

[commodore64_love]

Precisely. I should be laid off. You could cut 75% of government workers and not notice any reduction in work output.

Soak the Rich Big Businesses, Screw the Little Guy

[jameskojiro]

Any regulation that is invariably put in place to "Soak the Rich Big Businesses" will inevitably turn around and screw the medium to small business. Why is this?

Example:

Microsoft is big enough to hire as many tax lawyers and other attorneys as needed to deal with any sort of regulation that the federal government tries to impose ont hem.

Meanwhile Bob T. McProgrammer is writing a piece of custom software and he gets screwed because he had no idea he had to fill out forms 1342-GOV and 1040-SCREW-U Schedule G when he sold it to someone. The IRS arrives and takes everything that Bob T Programmer ever made and he ends up disillusioned and has to work for Microsoft for 1/2 as much money he was making as an independant programmer.

The MS Lawyers squeal with glee as more regulations from D.C. will keep them employed at MS for years and decades to come and they saved money not having to buy up Bob T. McProgrammer's company and instead can hire him for a song and tell him to write the same sort of software....

This just in...

[bugs2squash]

Washington state representative suffers from BSOD, requires reboot.

Re:This just in...

[Anonymous Coward]

Reboot? Nah, lets toss them out and install new ones that don't have as many programming glitches...

Re:This just in...

[Anonymous Coward]

Reboot? Nah - how about we replace the affected units with models that have more stable code?

Marx?

[Anonymous Coward]

I know his "theories" we're misappropriated and used to justify some pretty horrific things but didn't Karl Marx have something to say about Capitalism eating it's own babies and such? It seems to be lately all-out class-warfare with corporates in their own smug corner right along with government. Isn't government and business hand-in-hand called fascism?

I dunno if I believe my own spin...

[The End Of Days]

This is clearly good for the large number of people who are gainfully employed by Microsoft, and those who invest in Microsoft, the total of which likely vastly outnumbers the individuals who sell simple custom one-off programming services in Washington state. It's a case of the good of the many outweighing the good of the few.

Re:I dunno if I believe my own spin...

[Antiocheian]

a case of the good of the many outweighing the good of the few

The problem is that rewarding quantity undermines healthy competition.

Re:I dunno if I believe my own spin...

[Maxo-Texas]

And this will be even more true next year as many in the custom software field leave the state and/or stop doing business there.

Re:I dunno if I believe my own spin...

[The End Of Days]

That only works if you consider every programmer who isn't employed by Microsoft to be in competition with Microsoft.

A more effective rebuttal would be to take the position that it is the job of the government to help the little guys against the big guys. Whether doing so with taxes is healthy is an entirely different debate.

What's good for Microsoft is good for WA...?

[Count Sessine]

It means that a 5 person team of entrepreneurs building a cool custom software suite, or a group of system integrators, would face a 10% tax on their services

Maybe they could move their sales office to Nevada too?

I need an explanation....

[joocemann]

WTF is 'Custom Software'??? What are the definitive characteristics of Custom Software and non-Custom Software?

This is totally bogus, and a blatant demonstration of the ability of business to pervert political processes.

Software is software. I don't know why or how they even feel validated in taxing software at all, aside from a sales tax, let alone specifically discriminating certain software and alleviating tax burden on other software.

It looks like some people need a talking to.

Re:I need an explanation....

[sed quid in infernos]

Custom software is the software that isn't being taxed now, as opposed to all the software that is currently taxed in Washington State. It is the status quo that requires a definition of "custom software." If this new bill becomes law, it won't matter whether software is custom, because all software will be subject to the tax. This new bill ends "discriminating certain software and alleviating tax burden on other software."

That doesn't necessarily make it a good change. But at least complain about the right thing.

Re:I need an explanation....

[joocemann]

Wow. Shame on me for not RTFA.

Thanks for clearing that up.

Re:I need an explanation....

[tyrione]

Repost to the top so all the sycophants can stop ranting about how this is a screw to software. It was a loop-hole that allowed many a start up to not pay their fair share. Microsoft still owes a billion plus and the part of the bill washing their hands free from this should be stripped from the bill. A fair law means all corporations pay a tax and the big ones don't get a freebie.

It's nothing like offshoring.

[pavon]

Microsoft still has it's employees in Washington, pays them income, and is taxed on that income. It is also taxed on the property it owns in the state. They are paying their fair share of the taxes needed to maintain the public services in the area. Washington is being a bunch of greedy fucks, trying to get the entire world to pay sales tax on products created in the state. In other words they have have created what amounts to a state export tariff, which is unconstitutional.

Re:It's nothing like offshoring.

[anagama]

No income tax in WA. Secondly, the tax MS is avoiding is not a sales tax. It is a Business and Occupation tax. The B&O tax in WA is based on the business' revenue. MS may have sold the software elsewhere, but that revenue still comes to it here. So for example, if a company sold things such as books to out of state customers, WA would collect no sales tax on that transaction. It would however, collect a B&O tax on the revenue for the business which sold the books (not "profit" BTW, the B&O tax is based on gross revenue). If that same book seller sold a book to a WA resident, the state would collect sales tax in addition to the same B&O tax on that object.

In this case, MS is selling a different kind of media (software instead of books). Aside from being rich enough to buy itself enough of the legislature to get its way -- why exactly should it be exempted from the taxes everyone else has to pay?

The sponsor of the bill

[Vinegar Joe]

Is Senator Margarita Prentice. According to her bio, she is a member of:

"American Civil Liberties Union; Amnesty International; Democratic National Committee; First Vice President, Washington State Nurses Association, 1968-1972; Labor Officer, Washington State Nurses Association, 1974-1978; Sierra Club; Renton Historical Society; Audubon Society; Humane Society of United States."

http://www.senatedemocrats.wa.gov/senators/Prentice/biography.htm

Re:The sponsor of the bill

[xmorg]

Aren't these all the people who are supposed to be standing up for rights, minorities, and the little guy? this is deplorable!

Re:The sponsor of the bill

[bill_mcgonigle]

Aren't these all the people who are supposed to be standing up for rights, minorities, and the little guy? this is deplorable!

Right hemisphere, wrong quadrant. These are largely in the "you should give all your money to the State _and_ be free to have sex with a tree" camp.

Re:The sponsor of the bill

[juan2074]

If you read statements she has made (in The Seattle Times, The Seattle Post-Intelligencer, The Stranger, Crosscut, etc.), Sen. Prentice comes across as a moron (IQ below 69).

Microsoft is doing what anyone would do

[Anonymous Coward]

it is every American's duty to minimize their taxes using every legal avenue available. Corporations are entitled to do the same.

The problem isn't with Microsoft; it's with the laws that allow what Microsoft is doing.

Why not tax what costs the most in infrastructure?

[Marrow]

Custom software has to be one of the cleanest, safest, crime-free, low impact industries in the state. You have industries with MASSIVE infrastructure burdens like: Trucking, Logging, Mining/Cement generation, farming. Industries that require inspectors or police protection or heavy truck support, water projects, and electrical projects. These industries cost the state big money to support. Or look for industries that create expensive side-effects like pollution.

Just try to zero the bubble: the industries that take the most out of the state in terms of infrastructure costs and natural resources should have to pay taxes so that their cost to the state becomes zero. But the low-impact industries, ones that cost the state little or no money to support, should not have to have special taxes directed at them.

Just drop "custom"

[Anonymous Coward]

All you have to is to burn the binaries to a CD to put a 10.000$ sicker on it. There you go... non-custom software.

Tax axiom 0: no such thing as corporate tax.

[otis wildflower]

All taxes levied against corporations are passed onto either customers or employees. FACT.

So, this 10% is actually a tax on programmers' customers, or against the employees' salaries/benefits or even employment.. 10 programmer group hit with 10% tax, either raise your prices 10% to compensate (pass along) or fire 1 employee and spread their load across the remaining 9.

Guess what? In a recessionary environment, the former (raise prices) isn't gonna fly, so time to cut staff.

Re:Tax axiom 0: no such thing as corporate tax.

[ValuJet]

if that 10th programmer wasn't pulling his weight, then why was he still employed?

Re:Tax axiom 0: no such thing as corporate tax.

[Trepidity]

Sorry, that isn't a fact. All taxies levied against corporations come out of: customers, employees, or profits. What the proportion is depends on various kinds of price elasticity. Your statement only works if levels of profit are somehow fixed and unmovable, which is clearly not the case.

Re:Tax axiom 0: no such thing as corporate tax.

[otis wildflower]

Perhaps, but then again, in an industry with static pricing, the only thing you have left to maintain profit margins is to "improve productivity", aka fire people. And, if any CEO reduces margin when he had the opportunity to either fire people or raise prices, he's just signed his own resignation.

Unless we are to start establishing mandatory profit margin caps per industry, perhaps via some sort of government profit oversight board? With that, you'll find capital goes to those businesses the government deems worthy of investment (high margins) and flees businesses that don't. OR, the government caps profit margins (say, 5% for all businesses) and watch capital flee _any_ risk investment (such as, say, startups or 'creative'-based enterprises).

That will end well.

Re:The only fair corporate tax rate is 0%.

[Wyatt Earp]

Corporations have the same rights as citizens, so they should pay the same tax rate at the Federal and state levels.

I'm sure...

[Anonymous Coward]

...all you /. fanbois here will bash MS for doing this...but, millions of other companies are doing the same thing through Nevada or Vermont...

If Washington doesn't like it, change the tax code to tax "foreign corporations" differently.

Then, MS can pack up, move elsewhere, and the state will lose far, far, more than they don't gain by these taxes.

Re:The only fair corporate tax rate is 0%.

[RightSaidFred99]

Lie. Corporations do not have the same rights as citizens. Also, the money is taxed anyway - at some point a person gets it. The money a person doesn't get goes into making jobs, doing research, expanding the corporation, etc...

Whining about "corporate taxes" is just something dumb hippies do.

FYI - A nitpick/why Stack didn't kill more people

[BenEnglishAtHome]

Minor correction: the IRS didn't really wind up with "...an airplane in their offices."

I haven't been in the building but I have received a report from one of the members of the disaster recovery team onsite. Per that report, Stack came within 10 feet of killing 20 to 50 people, perhaps many more.

His plane center-punched a main support column on the exterior of the building, taking it out and causing most of his plane and fuel to spew out at about 90 degrees from the impact. That's why there was such a wide area (there was fuel and fire almost the entire width of the building on the side he struck) that immediately showed damage and fire. The plane and extra fuel aboard, for the most part, didn't penetrate the building.

If he had been 10 feet to the left or right, nearly the entire plane would have plowed into the interior office space. The death toll would have been huge.

No, they are not saying that at all.

[SmallFurryCreature]

What they are saying is: "We know who pays our re-election campaigns to get the voter with an attention span of a 3 seconds and who will vote for us anyway as long as we shout TAX-CUTS right before the election."

Re:Why not tax what costs the most in infrastructu

[Mashiki]

You might not realize this but everything you've listed is already taxed into the ground. Why do you think commodity prices keep going up, hint, it's not just because of fuel.

So when a programmer flies his plane into the IRS

[tekrat]

The talking heads on the news just think he's a loon.

MAYBE it's the wackos trying to screw the little guy in favor of giant, lawyer-heavy, lobby-weilding, under-table dealing faceless mega-corps. And then the wackos that passed the crippling legislation that screws people and forces them to do something drastic, then pass more legislation to make sure they know where everyone's plane is.

I see a new Yakov Smirnoff internet meme... "In oppressive America, XXXXXXX screws you!"

Not bad math.

[pavon]

When you make income there are two things you can do with it - spend it or save it. Rich people spend a much smaller percentage of their income, as they save and invest more. Therefore, a smaller percentage of their income is taxed by a general sales tax than a poor people. That is the definition of a regressive tax - one where poor people have to pay a greater proportion of their income than rich.

That said, you can design sales taxes to make them either proportional or progressive, if you tax different items at different rates. Washington already exempts items such as groceries from sales tax, so unless the proposed sales tax hike changes that, I wouldn't assume that it must be regressive.

non-uniform taxation distorts the market

[peter303]

People then spend too much time figuring out how to be the tax and not on how to write Great Software.

Re:non-uniform taxation distorts the market

[Trepidity]

This is actually an attempt to make it more uniform, isn't it? Currently, if you write software and start selling it, you must collect sales tax. But if it's custom software, it's common to account for it as part of a service, not a sale of software, so sales tax isn't collected. This bill would essentially add sales tax to all software sales, including those that are done as custom-software deals rather than retail sales.

Andrew Stack was a terrorist.

[Anonymous Coward]

Fuck Andrew Stack.
Fuck anyone who would support him or his aims.

repairs

[zogger]

Is repairing infected OS and apps using third party tools at the computer fixit shop a matter of customization? Scenario: The PC owner comes in with the borked machine, it has a state of software level. The tech uses his antivirus and search and destroy stuff and skillz, and customizes the software on the customer's drive, to get it back to a functional level. Perhaps they also add a couple new features, like FF and OO.

With that said, the malware/botnet authors and maintainers could be charged with tax evasion in addition to any other crimes, by customizing software. heh.

What about the service?

[Anonymous Coward]

Can you sell your time creating the software as a service instead of selling the software?

Re:So when a programmer flies his plane into the I

[couchslug]

"The talking heads on the news just think he's a loon."

Being a loon and a hero are not mutually exclusive. There being no hope for peaceful change, those with nothing to lose can act...and lose nothing.

People cooperate socially and obey laws expecting a fair return. Remove their stake in society and they have no reason to care about preserving it.

All software is custom.

[Anonymous Coward]

End of discussion.

Either we are talking about a additional tax for computer programming services under W-9 for individuals. This may not be unconstitutional but would certainly drive people out of state.

Or we are talking a sales tax on software architecting services provided by companies to other companies only; this drives costs up and jobs offshore or out of state. Repair services wouldn't be effected but other things might be.

Microsoft is not immune to this whatsoever; they offer consulting services all over the state.

If this passes it'd be the first I've heard of job-title specific taxation and honestly I'm almost completely sure that is unconstitutional and illegal.

Reading the actual bill, I'm confused

[einhverfr]

It seems to place a 10% tax on the transfer of ownership or licensing of custom software. I looked through the bill and couldn't determine if FOSS development was included or not, since typically no ownership is licensed for a fee, and merely a service is offered.

My reading if the bill is that FOSS development is still exempt, but I may be missing something since the bill is a bit over 100 pages.

Basically if you pay me to do development you pay me to do the development in-house and release to the public free of charge. This isn't a sale of custom software as it is typically considered. I am sure our elected idiots in Olympia will find some way to close this exception though.

Re:The only fair corporate tax rate is 0%.

[Anonymous Coward]

Individuals have Natural Rights - that is negative rights (i.e. life, liberty, property, parents' rights, etc). There is no such thing as a positive right (i.e. the right to enslave someone to make you a free sandwich). Natural Rights are self-enforcing - centralized power monopolies you call governments don't enforce rights, they only violate them. Agreements between individuals (i.e. corporations) don't have rights except those voluntarily delegated by their members.

(Signed: Alex Libman's sock-puppet.)

Missing the "CORRUPTION" tag

[erroneus]

This is among the more ridiculous taxes I have ever heard of. If it completely unjustifiable. It is an assault on small entrepreneurs and against the American Dream itself. A tax on "custom software"? How is custom defined? Is Linux "Custom Software" since it is quite often built by requests of others? Who else but Microsoft could have been awarded this law?

On the other hand, Microsoft regularly has programming teams that make changes to their programs for other big businesses and they get paid a lot of money for it. Will they then have to pay this tax?

Found a third of the shortfall!

[DigitalCrackPipe]

Anyone else spot the obvious source of part of that shortfall?
...all but eliminating a $100 million yearly tax obligation...

...work out how best to raise another $300 million in taxes.

income tax

[pydev]

Washinton State's problem is that they don't have an income tax. If they had one, then Microsoft activity in the state would naturally pay its fair share, as part of the income tax of its employees.

Re:income tax

[shutdown -p now]

I suspect that if WA did have corporate income tax, Microsoft wouldn't even be there in the first place.

Tax Microsoft bugs

[gig]

Microsoft's bugs have cost society plenty. Even at a penny per big they can raise 300 million easy.

Ross Hunter SUCKS

[Anonymous Coward]

Vote this doucher out. Perfect example of the lefty elitists he represents.

This posting is misleading

[Anonymous Coward]

This posting is misleading. The custom software 10% is a sales tax on services, which is one direction the state was looking to go. The other was to extend the Business and Operating Tax (a 4% tax that businesses pay on sales) to entities that do business in our state. While it is true that Microsoft has a free ride, it would be risky to clamp down on them as they might just move away. 10% is approximately the sales tax in King County. In Thurston County (where the State capital is located) the sales tax is 8.7%.

It sounds to me like the poster is worried about his business declining and so he found a scapegoat to make his anger slashdot worthy.

Better solution

[commodore64_love]

Cut 300 million dollars worth of government workers.

Done.

Re:So when a programmer flies his plane into the I

[BeanThere]

People cooperate socially and obey laws expecting a fair return.

What it boils down to is essentially, to what degree is your government *serving* you, or to what degree is your government just *plundering* you. Some may disagree but personally I think we crossed the line into plundering a long time ago. And then really, what are our options? Rulers have plundered the ruled since time immemorial; sometimes people do something about it, mostly they don't.