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Massachusetts May Try To Tax the Cloud
CowboyRobot writes "A proposed tax in Massachusetts may affect software services and Web design and hosting. If approved, the state estimates the tax may bring in a quarter billion dollars in 2014 by expanding its tax on 'canned software' to include some elements of cloud computing. The tax would cover custom-designed software and services based in the cloud. "Custom" software includes the design of Web sites, so the cost to local businesses of a new Web site would increase by 4.5% on contracts to design the site, write Java, PHP or other custom code. The cost of site hosting and bandwidth would also be taxed."
It's Mass, FFS. They'd try to tax air if they thought they could get away with it.
R.I.P.
I am a bit confused since "custom" software may be developed outside of the boundaries of Massachusetts and its utilization, while using a network in the state would already be covered. Network Connectivity is already has taxes associated with it. Businesses clearly pay taxes in the state as well as do consumers. Software companies who write software working in the state pay taxes as well.
This looks more like an starting effort to obtain a franchise or privilege tax for using the Internet not a sales tax of any kind.
Harrison's Postulate - "For every action there is an equal and opposite criticism"
"Tax-achusetts May Try To Tax the Cloud"
There... fixed that for you!
If approved, the state estimates the tax may bring in a quarter billion dollars in 2014
- right, because taxing something creates more of it rather than reduces its amount.
FTFA
Most of the tax would be levied against integrators, developers and other companies producing custom software. It's not clear exactly what services would be covered by the tax, but if hosting, bandwidth, storage, security and other services are taxed, presumably the tax would affect any service based away from the premises.
Here is what will happen: Massachusetts will lose some of the integrator business, which will be provided from somewhere else. It's not clear what exactly they are proposing to tax of-course, they have no idea what they are talking about, but they sure as hell want to tax something there and that means raising costs and reducing business activity, whatever they do, they should expect less business, not more. I would be surprised if they managed to collect any taxes from this, they may end up with less tax dollars overall if/once they implement this idea.
You can't handle the truth.
It appears that Massachussets has a new policy of expelling SaaS and web service business from Mass to other states. Brilliant! Squeeze the tax base, it squishes away to somewhere else.
What Massachusetts is doing here is to bring its tax code more in line with de-facto international standard. Something that will happen anyway over time.
And no, there are no discernible deleterious effects of VAT, and it doesn't affect international competitiveness much (China,India, Mexico, Canada and the EU all levy VAT). So it may be delayed for awhile, but given the current state of federal finances probably not for more than a few years or so.
Because many cloud services are available in more than one state, or have physical facilities in more than one state, questions about which state has jurisdiction and what tax might apply become complicated very quickly, according to KPMG.
Yeah, and how are they going to handle things developed and hosted offshore?
This is just politician grandstanding that will be impossible enforce.
And 4.5% of what exactly - price of the development service? Please, I can have a solution developed for free but with a provision that a (non-taxed) maintenance contract is purchased.
Goofy taxes like this will be so easy to get around - especially for the multinationals.
if anything, Reggy the local retailer will be the ones paying this.
Then I am in favor of it. Keep the business and $$ inhouse.
Unlike most of you, it would seem, I did RTFS, along with the links from it to more stories: it seems that Massachussetts is just one state/location that is doing this sort of thing, along with NY, TX, UT, and Chicago.
Bottom line: they tax software, software-as-a-service (SaaS, a new acronym to me), internet access, hosting, etc; this is just another item to add to the list, in their eyes. At first, I was going to say, "Another reason to use Free Software," but then the enormity of the truth crushed me back into depression: another thing I can't un-see (or un-learn, more like it).
Taxes and services give the ruling class more power. An increased minimum wage would allow lower taxes and fewer services, thus reducing the ruling class' power.
Go green: turn off your refrigerator.
Will you be happy when you are utterly unable to purchase anything which the government does not approve of? Fascist.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
Massachusetts will squander any additional tax revenues and be back the next year asking for more taxes. The state has an unlimited capacity spend (waste) tax dollars; the Big Dig construction project was supposed to cost 2 billion but came in at 14 billion and is so defective that it killed a driver a few years ago...
...just didn't have enough reasons to movie to Texas already...
Lawrence Person (lawrencepersonh@gmailh.com (remove all "h"s to mail)
http://www.lawrenceperson.com/
Relative value - good website is worth one cleaning or twenty?
Relative distance - do I have to drive to upstate NY to clean your house?
Relative tolerance - what if I won't clean houses/mow/etc?
There are two types of people in the world: Those who crave closure
Why stop at $22 an hour? Why not make it $100 an hour?
The truth is that all men having power ought to be mistrusted. James Madison
The fewer services the government provides, the less people are dependent on it, the less power the government has.
Go green: turn off your refrigerator.
Higher unemployment? How does that help anyone?
Citation needed. Employment and minimum wage is not a straight-forward linear releationship and this is subject to a lot of discussion (I know this is Wikipedia, but you should at least find references to the arguments).
In isolation, an employer is of course correct in that being required to increase the wages would mean they couldn't afford to hire as many, but with a minimum wage being enforced across the market it is entirely possible that increasing it will lead to more people being able to afford the products and services they themselves provide, thus providing a feedback loop to encourage growth.
You are under the impression that providing low wages reduces costs. It's not that simple.
When people work part time or for low wages, they consistently use more services provided by the state, from food stamps to medical care. This is because they can't afford them otherwise. We (including you) pay for this via taxation. When the trend is to hire two part timers instead of one full timer, as does McDonalds and Wal-Mart, or to host an entire layer of low paid employees, this heavily loads the system and taxation increases accordingly (and in my observations, it never goes down again, either.)
But, since the money for these services goes through extra hands (layers of bureaucrats), more of it is skimmed off prior to the actual purchase of service; resulting in a loss of efficiency as compared to the worker being able to pay for it on their own.
There is no free lunch. When you disadvantage people, they're going to turn to other methods that work. You pay for those methods. We all do. Your low wages increase my taxes. I don't look upon that with any particular favor, I have to say.
I've fallen off your lawn, and I can't get up.
How many people do you know whose labor isn't worth $22 per hour? Most children, most illiterate adults, many lazy people. Should those people be paid more than they're worth? Will they be?
With a $22/hour minimum wage unemployment will skyrocket. The unemployed, some of whom previously produced something, now produce nothing and become a burden on society. With GDP down, everyone becomes poorer. The newly unemployed, looking for a way to fill their hours, turn to destructive mischief, left-wing politics, and despair.
Incidentally, from a historical standpoint unions have favored minimum wage as it enriches unions and increases their political power. Blacks suffer disproportionately under minimum wage laws, and minimum wage laws are responsible for the astonishingly high unemployment among black youth.
If you hate blacks and the poor, love unions and turmoil, high minimum wage is for you.
Contribute to civilization: ari.aynrand.org/donate
The more businesses will slip through your fingers. Seriously, somebody esplain this to me: Gasoline? It's gotten too expensive. Food? It's gotten too expensive. Healthcare? It's gotten too expensive. Housing? It's gotten too expensive. So why the f*ck isn't government too expensive?
Massachusetts' expertise at finding new things to tax is only surpassed by its ability to spend like drunken sailors. Case in point, the Central Artery/Tunnel Project in Boston, also known as Big Dig. The project, begun in the 1990s and completed in 2004, was the most expensive highway project in the U.S. When construction began, the Big Dig's cost was estimated at $5.8 billion. Eventual cost overruns were so high that the chairman of the Massachusetts Turnpike Authority, James Kerasiotes, was fired in 2000.The total expenses eventually passed $15 billion. Interest brought this cost to $21.93 billion. So, almost a 400% cost overrun. Oh, and BTW, the tunnels have been falling apart lately. One person was already killed by falling ceiling panels, and remediation work has been flourishing.
Taxachusetts.
Massachusettes has decided to run out any software companies or hosting companies from its state. It no longer wants those sorts of business inside its borders.
some karma... and kinda lukewarm about it.
Why stop at $22 an hour? Why not make it $100 an hour?
That's a brilliant idea. And if people are wondering where that $100/hour will come from, we can just get the government to print more money!
Because at some point it would get more profitable to keep your money out of the country. Indeed, for multinational companies, probably even 3% would be sufficient for that.
Note that thanks to the internet, it would not be a problem to transfer money from one account on the Cayman Islands to another one there.
The Tao of math: The numbers you can count are not the real numbers.
It will just encourage businesses to use a cloud located elsewhere.
The Tao of math: The numbers you can count are not the real numbers.
Thank you for the hint. Investigations against you because of tax evasion have been started.
Sincerely, your tax office. :-)
The Tao of math: The numbers you can count are not the real numbers.
You are correct to question that they would just simply run the business on fewer employees. Minimum wage jobs are mostly in the service business. In the service business, unlike in IT for example, you can't simple fire 1/3 of your staff and make the other 2/3 work twice as hard. In an hourly job, most people are able to do X amount of work. If you fire some of the people, then the remaining people can't magically do X * 1.5 the amount of work. The amount of output remains more or less the same. If this amount of output is not enough to meet the output necessary to make the business profitable, then the business will simply shut down. So it won't just be minimum wage earners affected by an increase in minimum wage. Whole businesses would simply stop doing business because it is no longer profitable to supply the service they supply. Until a new technology or cheaper supplies appears or the customer base agrees to pay more, the service will simply cease to exist.
If you are not allowed to question your government then the government has answered your question.
Massachusetts is a leftist socialized paradise, that and corporate cronyism is like stink on shit, you are not getting rid of it.
Now pay up sucka and remember to vote Obama.
Have a little tap from the cluestick: socialism and any form of capitalism are mutually exclusive. This is true regardless of whether you are a left or right winger.
To have a right to do a thing is not at all the same as to be right in doing it
That might be the simplest tax system, but it'd end up being the most complicated welfare system, and thus unmanageable. For one, how do you accurately assess 'needs'?
I don't read AC A human right
Massachusetts' expertise at finding new things to tax is only surpassed by its ability to spend like drunken sailors. Case in point, the Central Artery/Tunnel Project in Boston, also known as Big Dig. The project, begun in the 1990s and completed in 2004, was the most expensive highway project in the U.S.
When construction began, the Big Dig's cost was estimated at $5.8 billion. Eventual cost overruns were so high that the chairman of the Massachusetts Turnpike Authority, James Kerasiotes, was fired in 2000.The total expenses eventually passed $15 billion. Interest brought this cost to $21.93 billion. So, almost a 400% cost overrun. Oh, and BTW, the tunnels have been falling apart lately. One person was already killed by falling ceiling panels, and remediation work has been flourishing.
===
Where I live, if I call a plumber, I pay his bill, and federal and provincial taxes. Ditto for painter, electrician, I have to pay sales taxes.
So what is the difference if the programmer works to build a website. Do you pay his invoice without paying sales taxes?
Mass is discovering that they omitted this revenue stream. Thats all.
Leslie Satenstein Montreal Quebec Canada
Sales tax is payable on goods, not services. Building a website is a service. You don't pay sales tax when you procure the services of a doctor or lawyer; why would web coders be any different?
20 January 2017: the End of an Error.
Sales tax is payable on goods, not services. Building a website is a service. You don't pay sales tax when you procure the services of a doctor or lawyer; why would web coders be any different?
Services will be taxed. Services add value and are therefore taxable in most countries. Why should that stop states from getting due revenu.
Doctors and dentists are in the medical field, and in almost every known area, there are no taxes for their services. There may be taxes on prescriptions, and most certainly, all non prescribed medications.
A programmer who builds a website is producing a product. One pays for the product via services, but it is nevertheless a product and should be taxed.
You will see the 50 states looking for tax dollars and having them go after services and internet sales.
Leslie Satenstein Montreal Quebec Canada