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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."
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.
How exactly does not-progressive get to mean regressive?
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.'
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.
Yeah, it's all done, except for those pesky State Senate vote and Governor sign/veto issues.
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.
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).
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
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
"The average reporter we talk to is 27 years old......They literally know nothing." - Ben Rhodes
Here you go! http://www.orthodoxytoday.org/blog/2010/02/09/government-workers-make-45-percent-more-than-private-sector-employees/
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.
Qxe4
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 $300 (1.2%) in sales tax, it's an example of the regressive nature of sales tax. The math gets even worse for the poor when you compare disposable income, rather than total income.
Yes, you just gave an example of how a progressive tax schedule could be implemented. And while I'm not the person you responded to, I do believe that a progressive tax is ideal.
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
Because a lot of the money flowing in the economy in the first place doesn't flow. It is hoarded, it leaves the local economy when used to purchase non-local goods, etc.
Never mind the fact that *some* public spending has a *positive* impact on the economy greater than the amount spent (public mental health services, for example).
And never mind that while the government is the "middleman" in the spending, they are not extracting profit. This is not like a creator-wholesaler-distributor transaction where the wholesaler takes some cash and runs off with it as profit. The tax money is returned to the economy, via employee wages, etc. The question is the return on that spending.
But, like, OMG, whatever...
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
This is actually an attempt to make it more uniform, isn't it? Currently, if you write software and start selling it, you must collect sales tax. But if it's custom software, it's common to account for it as part of a service, not a sale of software, so sales tax isn't collected. This bill would essentially add sales tax to all software sales, including those that are done as custom-software deals rather than retail sales.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
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
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.
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.