Some folks need to get their facts straight before they go off on their Libertarian rants. This WA state tax is on GROSS RECEIPTS. Not on pure thoughts, ideas, bits, bytes, or neurons firing in your head. It is a tax on business activity conducted in the city of Seattle.
Most all businesses in Seattle (and in the state) are assessed a "business and occupation" tax. Why? Because we have no state income tax. Small businesses pay it, manufacturers pay it, retail companies pay it. I paid it when I was a self-employed web dev. Without a state income tax, we are forced to create a hodgepodge of sales, user and property taxes to fund basic public services. This is one of them.
Many software companies have avoided paying this tax because they take advantage of loopholes that allow them to conduct 98 percent of their productive business activity within city limits, and then avoid the tax entirely simply by burning and packaging their CDs somewhere else. There are also numerous exemptions targetted specifically at tech companies. I believe if you don't make a profit, you don't have to pay this tax at all. So it really does not adversely affect startups.
The city has argued, quite reasonably, that coding is part of the process of manufacturing software. Any idiot can see that. Therefore, developing software -- a core part of manufacturing a software product -- is taxable business activity. This is NOT about singling out software companies for taxation. It is about ensuring that software companies carry their fare share of the tax burden required to support services provided by the city.
Those who argue that software companies have less of an impact than polluting industries such as aerospace or pulp mills have a point. To a degree. But software companies clearly use city services and infrastructure. Their employees drive on city roads, and they make demands upon city fire and police. And these companies use the city's power, water and sewage infrastructure. Why should they pay no city biz tax, while all the rest of us do, either directly as employers or self-employed workers, or indirectly as customers of stores and restaurants etc?
IT employers love to kick and scream about not being able to find enough skilled employees, about our secondary schools not producing enough grads skilled in math and science. And they want the public to pay for all training costs, they want skilled "plug and play" workers trained in all the latest technologies, but they don't want to pay ANY taxes. Here in WA, the biz community is strangling our public education system to death as they bitch and moan and get more tax loopholes and exemptions, and put more and more of the tax burden on individual citizens. They talk out of both sides of their mouth.
If you want a top-notch city infrastructure in which to run your company, and you want skilled local and regional job applicants, you need to buck up and help carry the load with all the rest of us.
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Some folks need to get their facts straight before they go off on their Libertarian rants. This WA state tax is on GROSS RECEIPTS. Not on pure thoughts, ideas, bits, bytes, or neurons firing in your head. It is a tax on business activity conducted in the city of Seattle.
Most all businesses in Seattle (and in the state) are assessed a "business and occupation" tax. Why? Because we have no state income tax. Small businesses pay it, manufacturers pay it, retail companies pay it. I paid it when I was a self-employed web dev. Without a state income tax, we are forced to create a hodgepodge of sales, user and property taxes to fund basic public services. This is one of them.
Many software companies have avoided paying this tax because they take advantage of loopholes that allow them to conduct 98 percent of their productive business activity within city limits, and then avoid the tax entirely simply by burning and packaging their CDs somewhere else. There are also numerous exemptions targetted specifically at tech companies. I believe if you don't make a profit, you don't have to pay this tax at all. So it really does not adversely affect startups.
The city has argued, quite reasonably, that coding is part of the process of manufacturing software. Any idiot can see that. Therefore, developing software -- a core part of manufacturing a software product -- is taxable business activity. This is NOT about singling out software companies for taxation. It is about ensuring that software companies carry their fare share of the tax burden required to support services provided by the city.
Those who argue that software companies have less of an impact than polluting industries such as aerospace or pulp mills have a point. To a degree. But software companies clearly use city services and infrastructure. Their employees drive on city roads, and they make demands upon city fire and police. And these companies use the city's power, water and sewage infrastructure. Why should they pay no city biz tax, while all the rest of us do, either directly as employers or self-employed workers, or indirectly as customers of stores and restaurants etc?
IT employers love to kick and scream about not being able to find enough skilled employees, about our secondary schools not producing enough grads skilled in math and science. And they want the public to pay for all training costs, they want skilled "plug and play" workers trained in all the latest technologies, but they don't want to pay ANY taxes. Here in WA, the biz community is strangling our public education system to death as they bitch and moan and get more tax loopholes and exemptions, and put more and more of the tax burden on individual citizens. They talk out of both sides of their mouth.
If you want a top-notch city infrastructure in which to run your company, and you want skilled local and regional job applicants, you need to buck up and help carry the load with all the rest of us.