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State Technology Taxes Face Stiff Resistance

Posted by samzenpus on from the sending-an-angry-email dept.

SonicSpike writes "As the nation moves from a tangible goods-based economy to a service-based economy, a few states are trying to keep revenues robust by taxing technological services such as software upgrades and cloud computing. But a backlash from the high-tech industry has quashed most efforts. As a result, the U.S. has a patchwork quilt of state taxes on technological services. Some states that have tried to impose such taxes have failed spectacularly, and most have not tried at all. According to the Tax Foundation, a nonpartisan think tank that studies taxes, only 10 states (Connecticut, New Mexico, Hawaii, South Dakota, Mississippi, Missouri, Nebraska, Tennessee, Texas and West Virginia) and the District of Columbia tax all writing or updating of software. Only New Mexico, Hawaii and South Dakota levy their general sales taxes on all software services. States with sales taxes do, however, levy those taxes on software that is sold on CDs or other hard storage materials. About half the states also tax 'canned' (non-altered) software that can be downloaded, according to the Tax Foundation. Elia Peterson, an analyst with the foundation, said in a recent paper that states are reluctant to tax computer services in large part because it 'is an especially mobile industry and could easily move to a lower tax state.'"

5 of 167 comments (clear)

  1. Nonpartisan? by Sponge+Bath · · Score: 4, Informative

    The Tax Foundation is nonpartisan in the sense they are against taxes and regulation and are run by representatives from Koch Industries, Exxon, former Bush-Cheney campaign advisers and Republican politicians. That kind of nonpartisan "think tank".

    1. Re:Nonpartisan? by Sponge+Bath · · Score: 3, Informative

      Did you get the info from your MSM pimp?

      From Wikipedia:

      Former directors: Wayne Gable (Koch Industries), Joseph Luby (Exxon), Pam Olson (Bush-Cheney campaign), current director Bill Archer (former Texas Republican congressman)

      "criticized by other think tanks, such as the Center on Budget and Policy Priorities (CBPP)[31] and Citizens for Tax Justice (CTJ),[32] citing repeated "methodological errors" and "reliance on early projections without hard data."

      "Krugman has also accused the Tax Foundation of "deliberate fraud" in connection with a report it issued concerning the American Jobs Act.[47]"

  2. In Canada by msobkow · · Score: 3, Informative

    In Canada, all goods and services are subject to the GST (Goods and Services Tax.) In many provinces, they're subject to HST (Harmonized Service Tax), which basically takes the rules of GST and adds on a provincial percentage.

    It hasn't caused our software industry to implode because the taxes are applied across the board throughout the country.

    Unlike the US, you can't just lobby your way to a tax exemption here. The goobermint is gonna get their share come hell or high water.

    --
    I do not fail; I succeed at finding out what does not work.
    1. Re:In Canada by Anonymous Coward · · Score: 0, Informative

      Not in New York at least. We get taxed via amazon and it's bullshit.

  3. Adam Smith vs. Service Economy by EngineeringStudent · · Score: 3, Informative

    Read "Wealth of Nations" by Adam Smith and take microeconomics 101.

    Service economy is a transitionary state where you have no creation of value, and the money hasn't yet been drained, and poverty. People pass around the same dollar bills, but only a tiny minority actually create value. Given the natural system perturbations that must come - that is an unsustainable model. It is the glass vase on the top of the wobbly table. It must crash.