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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."
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.
I propose a 20% tax on people who pass stupid laws!
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.
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.
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.
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.
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.
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.
If you cannot keep politics out of your moderation remove yourself from the Mod Lottery.. NOW!
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
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).
Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.
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
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.
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