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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."
Six days from the announcement of a new tax to being required to collect it? Really? How many businesses can change their processes that quickly?
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Not sure I see a problem with that. Afterall, a reseller is a reseller is a reseller. Seems to me that it encourages creativity and innovation in those who wish to avoid the tax.
Time is what keeps everything from happening all at once.
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.
A generic "business" or "consulting" tax would mean that (for example) lawyers would charge a tax on their services. What are the odds of a law like that passing?
Suppose you were an idiot. And suppose you were a member of congress. But then I repeat myself. -- Mark Twain
if they need money they should just put a small tax on all services
Don't worry, it'll come to that. While I do agree that the slippery slope scheme doesn't work in every situation, the government has it down to an art. What's worse off is that this tax has nothing to do with anything in this system of business that is causing an undue burden on the government. They're doing it as just another money grab.
As a person gets fatter they need to take in more calories to maintain their fatness. As the government becomes fatter they need to suck off the production of the (for now) free people to maintain their overreach. In the long run, both lead to decreased quality of life and an early death.
Yeah, I don't think I've heard of anyone who actually lives in Massachusetts complaining about it. That's more of a southern republican narrative to talk about than an actual common complaint by the state's citizens. That's not to say no citizens complain, everyone hates paying taxes.
Some of us disagree with the primacy of government as organizer of 1/3 of all existance.
"Let us decide what we want government to do, and then just tax to that level."
I would insert a .gif of someone eating popcorn if Slashdot were a bit more modern.
Of course, their next impulse isn't to fix themselves -- instead they long for control over every locality so. there's no where to flee to . The "problem" is thet you still have the freedom to vote with your feet.
(-1: Post disagrees with my already-settled worldview) is not a valid mod option.
The problem is that in the U.S. is that your probably already paying close to 8% sales tax (in my home town 15% on entertainment and liquor) and we don't get things like universal healthcare. Instead we get NSA spying and TARP (welfare for the rich).
I truly don't have trouble paying taxes, however, he the U.S. sorrily lacks real statesmen that care about the country and are good stewards of our tax money. That's why so many people here demand lower taxes without any thought about the impact of things like an underfunded education system.
While I understand the thought behind a consumer tax (stupid people can't calculate sales tax so they don't consider it part of the cost). Ultimately any consumer tax paid by every person regardless of where you place the tax in the system.. So why not be honest and fair about it and simply use income tax?
The sales tax should be on the software, not on the additive consulting or installation or customization charges.
Follow the money. Government just wants your money.
(-1: Post disagrees with my already-settled worldview) is not a valid mod option.
We're just over the border, and we promise not to pull any shit like this on you.
Why? It's simple: http://freestateproject.org/
I think I know the origin of this tax bill and what it is intended for.
Acquia - http://www.acquia.com/ - is a large firm that specializes in Drupal. A lot of the work they do is around setting up, configuring and maintaining Drupal websites.
While they don't produce the majority of the code that is in Drupal, they do provide a lot of services around it to consumers and other businesses. This is really a tax on VARs and other people who implement Drupal using their services.
I am sure there are a lot of other companies that operate in a similar space. While I don't like it, I can see the potential revenues to be drawn in through such a tax.
If they need more tax money why not keep things simple and increase the income tax?
Seriously? How are you going to hide a tax hike if you keep it open and honest?
Quo usque tandem abutere, Nimbus, patientia nostra?
I think a prefer the opposite. Abolish the income tax and make a standard sales tax across the board. Plan the shift over several years in order to decrease the immediate impact of the switch.
Companies never pay taxes. They shift that burder to the customer through increased prices. Placing the taxes directly on the end user makes the tax system more transparent.
Yeah, I don't think I've heard of anyone who actually lives in Massachusetts complaining about it.
You clearly aren't on my Facebook friends list, because people who actually live in Massachusetts (especially those of us who work in the software industry) are absolutely livid about the tax increases. Regular Massachusetts residents are mostly upset about the latest gas tax hikes that will simply increase their cost of living, but yes, this software tax has made the list of things people complain about.
Yes, people who live in Massachusetts are pissed about the pointless tax hike. Maybe not enough to actually make a difference, but if you leave the Boston reality-obliviousness-field, you will find people mad about the tax hikes.
You are in a maze of twisty little relative jumps, all alike.
That results in the poor paying proportionately more taxes than anyone else since they use almost all of their money to purchase necessities.
Developers: We can use your help.
If we're going to change things that drastically, lets just tax property. The actual enumeration of a persons property could be privatized if it were done through a mandatory property insurance system, so we wouldn't have the government walking through our living room and counting sofas, and the taxpayer would get some benefit (insurance) out of the process.
Someone had to do it.
And have you paid your property taxes yet?
You know what I love to read about? Idiots who think that the solution to overspending and irresponsible and unaccountable spending is more spending. Why, we're completely wasteful and irresponsible with the ridiculous amount of wealth we gather from the population already -- but if you just double the amount you give us, we will TOTALLY start to be more conservative and reasonable with how we spend your money!
Seriously, how much fucking more money do you want from me? Americans are taxed out the ass -- they just don't realize it, because they don't sit down and look at all of the extraneous "fees" they have to pay on top of just property taxes, county income taxes, state income taxes, federal income taxes, medicare, unemployment insurance, and sales tax. My tally comes to around 40% per year. You're telling me I should not only be gleeful about handing that over, but want to hand over more? To the people spending trillions on military-industrial-complex-welfare masquerading as "nation building" in the middle east? Droning people? Incarcerating non-violent criminals? Bailing out banks and auto manufacturers? Spying on citizens? Antagonizing the rest of the world? And how much more of this do you want me to hand over? Should *I* be the one only taking 40% of my money?
Also, infrastructures aren't falling down around anyone. Maybe in a few select cities, like Detroit, sure. Guess what? Throwing more money at that corruption and gross negligence isn't going to correct the corruption or negligence.
I assume the GP was referring to abolishing the corporate income tax, not the individual income tax. The poor are already paying the corporate income tax disproportionately. It is just being hidden in the actual sticker price of the products instead of being added at the register.
Of course, the most likely outcome of eliminating that tax is that businesses would see it as a corporate windfall, and would continue selling things for the same price and enjoying their new, higher margins. If you actually want supply and demand to help hold the prices down, such a change would need to be introduced slowly, over the course of many years.
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The tax isn't on programming. It is on the sale of software and the sale of servicing software. If you do everything in house in MA then you don't pay any tax. The whole point is to tax people working in NH, CA, and TX.
And companies would have to pay for their holdings, which would increase prices on their products. There's no solution to taxation that doesn't offer emple opportunities for the taxes to be trickled down to the poor, because rich people can afford lawyers and accountants. The point of shifting to a property tax is it that it is less onerous to the service economy, and likely to be less overall accounting overhead than tracking every single business transaction.
Someone had to do it.
And have you paid your property taxes yet?
Yes, and gladly.
New Hampshire is always ranked one of the lowest states in overall tax burden: frequently the lowest, usually in the bottom three.
Massachusetts is always one of the highest, always in the top 10. (Citation)
So yes, I pay my property taxes, and they are unbearably high.
Are you saying that paying more overall is good, if it lowers property taxes?
What exactly is your point?
I'm a Nutmegger (Connecticut) and what the poster above says is technically correct. CT has surpassed MA in taxes. A bit like being the best smelling puckerhole in the outhouse though. Just to the north, as others have pointed out, lies the promised land of New Hampshire. They have no sales tax, no income tax, lower cigarette taxes by a buck or two a pack, State liquor stores with nationally recognized low prices (think duty free) and cheaper gas. Cheap gas, cigarettes and booze! And a firearms friendly state as well. A beautiful state, with wonderful features and vistas. Good roads. No frills schools with high performing students. How do they do it? Well, high property taxes because state aid to towns is low, combined with a hefty "tourist tax" - high taxes on hotel rooms. My job keeps me in CT but I'm retiring to New Hampshire. My wife wants to retire to Cape Cod. I told her that as soon as MA cedes it to NH, I will move there.
Brawndo: It's what plants crave!
Sorry, that's bullshit. The super-rich need to be taxed MORE than the rest, because they are essentially hoarding currency. If they don't want to spend it, it should cost them a ton to just sit on it. That is what is breaking our economy, and nobody NEEDS "that second billion" while paying taxes on only about $250k.
If the only way you can accept an assertion is by faith, then you are conceding that it can't be taken on its own merits
'Hell No!' _is_ proper intelligent dialog when tax increases are proposed.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
No, this is a NASTY new tax.
The huge case is when the software is cheap and it's all in the support!
Typical examples are OEM/self bought Windows and Quickbooks. The raw software is pretty cheap - but the consulting could be thousands. So suddenly they want a *sales* tax on it? I already bought my software a month ago (for example). Now I have to pay a *sales tax* on a *service*?!
Plus there are really evil clauses in accounting theory that kick in here. If these are "sales" and not "services", that's gonna have a colossal impact on the IRS Schedule C as someone else hinted at elsewhere. I think it changes if you can use Cash Based Accounting vs Accrual, and if you have Sales, you have the Inventory clauses kicking in.
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Any smart rich person that wants to remain rich will not hoard that much money. When you have millions/billions a 2% loss to inflation tends to be a lot of money. As for the second case, investments are a good thing. They keep the money cycling in the economy. I fail to see the problem there. If you are worried about people in poverty, there are forms of sale tax only taxation that address this. For example, Fair Tax addresses this by defining a poverty level income and then "prebating" the taxes. At the beginning of every month, everyone is given a check that amounts to what a person in poverty would normally pay in sales tax.
I pay my property taxes every six months and they are pretty high but in the ballpark of nearby MA cities. It's not as if MA doesn't have property taxes in addition to high income and sales taxes.
It's worth noting that the Boston 'patriots' were, by and large, smugglers and thieves. Hamilton's father got rich smuggling. And the original Tea Party were, largely, a bunch of tavern thugs paid by Sam Adams to raise a ruckus. The background was that the British government was nearly broke as a result of a long war with France of which the 'French and Indian War' in the Americas was really a sideshow. The Brits thought, for some reason, that the colonists should have to pay the costs of that war. They charged large customs duties (taxes) on imported goods including tea, sugar and other staples but Hamilton and others were bribing the customs officers quite successfully. So the British *reduced* the tax (I think by 2/3) and replaced all the customs officers so they couldn't be bribed any more. This increased the effective import costs and also eliminated the effective monopoly that Hamilton and others had on cheaper (since tax-free) imports.
I have long felt that the real lesson to learn from the Revolution was that the Declaration of Independence and the Constitution were not written for the innocent, but the guilty. The argument that "it doesn't apply to me, as I never break the law" if fallacious. In fact we are all guilty, of something.
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