Slashdot Mirror

← Back to Stories (view on slashdot.org)

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

Posted by Soulskill on from the since-they're-so-strapped dept.

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."

7 of 305 comments (clear)

  1. Bad bill... by LostCluster · · Score: 5, Interesting

    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.

    1. Re:Bad bill... by NotBornYesterday · · Score: 5, Interesting

      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.

      --
      I prefer rogues to imbeciles because they sometimes take a rest.
    2. Re:Bad bill... by phantomfive · · Score: 5, Interesting

      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.

      --
      Qxe4
  2. Re:Andrew would be upset, again. by lorenlal · · Score: 4, Interesting

    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.

  3. Re:FOSS Contributions by ircmaxell · · Score: 5, Interesting

    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?

    --
    If a man isn't willing to take some risk for his opinions, either his opinions are no good or he's no good
  4. Re:FOSS Contributions by beanball75 · · Score: 5, Interesting

    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.

  5. Re:FOSS Contributions by c++0xFF · · Score: 4, Interesting

    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.