Slashdot Mirror
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."
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"
the state estimates the tax may bring in a quarter billion dollars in 2014
These estimates are always way off. And even *IF* it did bring in that much money, the money would simply be wasted on all sorts of uneccessary bullshit and the state will be no better off than they were before.
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.
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.
Err...Yes, data centers use eletricity. And they pay for it, just like everyone else does. And that includes taxes on said energy. As for parking lots and air...well the land is taxed so there's your parking lot, and air...umm...well we do charge companies taxes for pollution and tax incentives to cut pollution, but nobody actually 'pays' for air.
Not very clear how Roads and Healthcare play into an internet/software tax, but these are also paid for, by things like gas taxes and however you choose to pay for healthcare currently.
Why is there always someone like YOU in every crowd who feels that everyone else should pay for things? If gas taxes are not covering the costs of road repair for example...we should be taxing more for it. You dont just invent stuff to tax to pay for other things, unless you're an idiot. Thease places give back in the same way as every other company gives back, through taxes and employment. As usual, the idiots in goverment (and idiots like you who vote for them from the looks of it) are just going to drive companies to other places, negating any tax benifits they would have gained, AND losing what they're already getting.
Herp derp.
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.