Massachusetts Enacts 6.25% Sales Tax On "Prewritten" Software Consulting

First time accepted submitter marshallr writes "Technical Information Release TIR 13-10 becomes effective in Massachusetts on July 31st, 2013. It requires software consultants to collect a 6.25% sales tax from their clients if they perform 'computer system design services and the modification, integration, enhancement, installation or configuration of standardized software.' TIR 13-10 was published to mass.gov on July 25th, 2013 to provide the public a few working days to review the release and make comments."

Comments

States really need revenue

[Anonymous Coward]

If you've followed the Detroit saga, you'll know that many states have made deferred pension deals with their unions that are now coming due as the Boomers retire.

Some states, such as Michigan have deferred liabilities of 241% of their annual revenue. Massachusetts is in the top 10 "bad" list (100%).(source of this is Moody's BTW, and this has been reported in The Economist)

What this means is that retiree benefits will take up an ever expanding part of state expenditures, crowding out education, police, fire, parks, and other benefits that modern citizens have come to expect.

So states are hungry for any revenue, Maryland for example, has set up a rain tax to tax people for the amount of rain that falls on their property (Maryland is in the top 10 "bad" list right next to Massachusetts), so the idea that they'd tax something in a completely arbitrary and crazy way will become the Normal.

You're about to see a wave of municipal bankruptcies all across this country, and local taxes are about to go through the roof.

Enjoy.

Re:States really need revenue

[PeeAitchPee]

Maryland for example, has set up a rain tax to tax people for the amount of rain that falls on their property

It's worse than that. As a Marylander (not for long because of this type of nonsense), I can also tell you that the rain tax, like most other taxes rammed through in the last five years or so, does NOT have to go towards saving the Chesapeake Bay (the justification used to pass it). The revenue goes into the state's general fund, where it is pissed away by the politicians to do things like give state loans to sports bars. This is a huge reason why states like CA, MD, and MA are destroying their tax bases as people and businesses flee by the millions to more tax-friendly states.

Re:States really need revenue

[dkleinsc]

States are spending more than ever.

No they aren't

It's interesting to see folks talking about "OMG, the government is spending so much!!!!" when in fact it's been dropping like a rock since about 2009-ish. What actually happened was pretty simple to understand: In the fall of 2008 the economy took a nose-dive, shrinking the GDP and causing a lot more people to qualify for SNAP and unemployment insurance and SS disability and TANF and Medicaid and a few other programs. The cost of those programs predictably skyrocketed despite no new laws passing. Since then, as fewer and fewer people have qualified, the costs have been shrinking. Meanwhile, all the budgetary belt-tightening that had happened elsewhere in the budget is still in effect, so in fact government spending is shrinking fairly rapidly.

Also, tax revenue is the lowest it's been since 1941, so complaints about taxes being unusually high are also wrong.

Re:Wow

[Chris Mattern]

It's not a new tax. 6.25% is the general sales tax in Massachusetts. This is just a ruling clarifying, "Yes, it applies to you guys too."

Re:Wow

[skids]

Note that this effects a bunch of freelancers that are used to providing an untaxed service, and so have no idea how to go about collecting sales taxes and sending the proceeds to the government, since all they did was collect check, report it as SE income, and pay the social security tax on it on a personal income tax form.