10% Tax On Custom Software, $100M Tax Cut For Microsoft 305
reifman writes "Last week, the Washington State House of Representatives passed a bill which would impose a 10% tax on custom software while all but eliminating a $100 million yearly tax obligation that some say Microsoft is wrongfully avoiding by routing large chunks of business through an office in Nevada. 'I believe we've got an issue of justice and fairness here,' said Rep. Maralyn Chase. 'Most of the custom software purveyors are small businesses. It's a question for me of how we fairly distribute the tax burden.' 'It means that a 5 person team of entrepreneurs building a cool custom software suite, or a group of system integrators, would face a 10% tax on their services while keeping the exact same project in-house would not be taxed,' wrote Rep. Reuven Carlyle. 'It would be a massive blow to the entrepreneurial community in our state.' The bill won't become law until the House and Senate work out how best to raise another $300 million in taxes. A sales tax increase on consumers is also being considered."
A different tax proposal (Score:4, Insightful)
I propose a 20% tax on people who pass stupid laws!
Microsoft's tax cut and a sales tax (Score:2, Insightful)
WTF? (Score:3, Insightful)
This is like taxing grocers and restaurants while giving incentives to out-of-state food processors and big-box ultramarkets to bring in more processed pseudo-food.
What, exactly, is the message the legislators are trying to send here? "Tax local, buy global?"
or they could you know...spend less money? (Score:2, Insightful)
first cut should always be to government offices furniture budgets, then look at the "perks" elected officials get and cut those
Tax custom software ? logic ? (Score:3, Insightful)
arent you already taxing the income that is generated as a result of that software ? and applying any kind of sales tax to the software, if there is a sales tax in the state ?
Re:A different tax proposal (Score:3, Insightful)
Does that include the 15% guilt tax on the people who vote for them?
Re:Andrew would be upset, again. (Score:5, Insightful)
Andrew Stack would be upset at having to pay any taxes. He was also a loony. The selective 10% on custom software is a supremely stupid thing, but invoking the name of an anti-government crackpot isn't helpful.
How about some honesty in taxation? (Score:3, Insightful)
Re:Andrew would be upset, again. (Score:1, Insightful)
Andrew Stack is a conservative domestic terrorist. Who the fuck cares what he thinks? Are you honestly suggesting that passing this bill would cause more terrorism incidents?
Soak the Rich Big Businesses, Screw the Little Guy (Score:2, Insightful)
Any regulation that is invariably put in place to "Soak the Rich Big Businesses" will inevitably turn around and screw the medium to small business. Why is this?
Example:
Microsoft is big enough to hire as many tax lawyers and other attorneys as needed to deal with any sort of regulation that the federal government tries to impose ont hem.
Meanwhile Bob T. McProgrammer is writing a piece of custom software and he gets screwed because he had no idea he had to fill out forms 1342-GOV and 1040-SCREW-U Schedule G when he sold it to someone. The IRS arrives and takes everything that Bob T Programmer ever made and he ends up disillusioned and has to work for Microsoft for 1/2 as much money he was making as an independant programmer.
The MS Lawyers squeal with glee as more regulations from D.C. will keep them employed at MS for years and decades to come and they saved money not having to buy up Bob T. McProgrammer's company and instead can hire him for a song and tell him to write the same sort of software....
Re:Bad bill... (Score:5, Insightful)
Too late, it's already done. Now as for the reason why it isn't law, law yet is a puzzling one: they apparently need to find another 300 million in tax revenue and have completely inored the most obvious: closing the MS tax dodge instead of giving them a free pass that this bill just did. Or they could just I don't know cut all the extraneous crap that they shouldn't be doing to begin with but I suppose that actually solving the problem would piss off everyone dependent on the bloat.
Re:or they could you know...spend less money? (Score:3, Insightful)
They should force Congress on a diet of Ramen Noodles and Mac 'n Cheese. They should put ever damn one of those jackasses in cubibcles instead of offices, put them up in two to three members per room dorm type housing, install a timeclock in the senate and house chambers where they have to clock in with their finger prints in order to get paid and only be paid per hour they are actually in session.
This should save A lot of money.
Re:Andrew would be upset, again. (Score:3, Insightful)
Obviously if the man said 2+2=4 he must automatically be wrong... The man was crazy but the idea that our government and tax law as a whole have also gone batshit isn't that crazy.
It's nothing like offshoring. (Score:1, Insightful)
Microsoft still has it's employees in Washington, pays them income, and is taxed on that income. It is also taxed on the property it owns in the state. They are paying their fair share of the taxes needed to maintain the public services in the area. Washington is being a bunch of greedy fucks, trying to get the entire world to pay sales tax on products created in the state. In other words they have have created what amounts to a state export tariff, which is unconstitutional.
Why not tax what costs the most in infrastructure? (Score:3, Insightful)
Custom software has to be one of the cleanest, safest, crime-free, low impact industries in the state. You have industries with MASSIVE infrastructure burdens like: Trucking, Logging, Mining/Cement generation, farming. Industries that require inspectors or police protection or heavy truck support, water projects, and electrical projects. These industries cost the state big money to support. Or look for industries that create expensive side-effects like pollution.
Just try to zero the bubble: the industries that take the most out of the state in terms of infrastructure costs and natural resources should have to pay taxes so that their cost to the state becomes zero. But the low-impact industries, ones that cost the state little or no money to support, should not have to have special taxes directed at them.
Re:Bad bill... (Score:5, Insightful)
Oddly enough, if they stopped using Microsoft products they could recoup a large amount of that money anyways. I have reviewed the IT expenditures of several state agencies and they are blowing money like its no tomorrow, but they have no clue how to get efficiencies because they are so star struck by the crap MS has been dishing out to them for years.
Re:WTF? (Score:3, Insightful)
Re:Andrew would be upset, again. (Score:4, Insightful)
Yes.
Road Taxes paid by Taxes on Fuel. Not enough roads, raise taxes on fuel, doubles to reduce cars on the roads, and pays for increased roads. Smog increases, then raise taxes on smog producing fuel.
Military can be paid for with taxes on corporations (state created entities), and cross boarder transaction taxes.
Fire and Police are local, and should be paid for by local taxes like property taxes, since they are used to protect property.
The problem as I see it today, we have no balance in taxing and spending. We have big tax/spend (D) and little tax/big spend (R). Nobody is really offering the REAL solution which is to spend what we tax and tax what we spend. Letting the people vote with their wallets on what is a priority with them.
Of course that doesn't sit well with the busybodies and dogodders who love to spend other peoples money and stick their noses in everyone else's business. Yes, I'm talking about both (D) and (R).
Re:Bad bill... (Score:4, Insightful)
Well it's obvious you went to the Keynesien school of economics.
Every dollar that goverment spends is one less dollar that the individual spends. In fact, the return on government spending is LESS than individual spending (I'm trying to dig up those numbers now).
You cannot spend your way out of a recession. That money is best left in the hands of the individuals to spend as they will. Will some people resort to the hoarder mentality? Yep but it's not an absolute.
I don't know the situation in WA but it's not like they're not in the same boat as every other state in the country - reduced revenues and all.
There really needs to be, in all states, a line by line audit of where the states are spending money and where they can cut that spending or eliminate it entirely.
Reason did an amazing series with Drew Carey about "saving Cleveland". It had some awesome ideas that have been shown to be successful in other parts of the country. They admit that what works one place may not work in another but honestly when you're faced with a $300m shortfall, maybe you should try something new?
http://reason.com/blog/2010/02/25/save-the-week-reason-saves-cle [reason.com]
Re:A different tax proposal (Score:4, Insightful)
Hey I know, Washington!
Maybe you could stop running giant ad campaigns (bus, billboard, web...) telling me to get my swine flu shot. How much did that ad campaign cost? And while we're at it, why don't you stop making new lotto games and spending tons of money advertising them as well? And how much do we spend putting giant "click it or ticket" billboards along every highway? I think it's safe to assume people know that there's a seatbelt law at this point.
Christ.
Re:Bad bill... (Score:3, Insightful)
wow, did you fail macroeconomics?
You do realize individual states have no control over monetary policy right? So that means the only tools it has are based in fiscal policy. And your asking the state to reduce the strength of it's fiscal powers.
That be like saying oh my house is on fire. No! don't pour water on it, it will go out faster if you just let it burn.
Re:A different tax proposal (Score:3, Insightful)
Modest? It's already high enough. Changing the property tax to a "modest" one would lower it.
repairs (Score:3, Insightful)
Is repairing infected OS and apps using third party tools at the computer fixit shop a matter of customization? Scenario: The PC owner comes in with the borked machine, it has a state of software level. The tech uses his antivirus and search and destroy stuff and skillz, and customizes the software on the customer's drive, to get it back to a functional level. Perhaps they also add a couple new features, like FF and OO.
With that said, the malware/botnet authors and maintainers could be charged with tax evasion in addition to any other crimes, by customizing software. heh.
Re:Bad bill... (Score:5, Insightful)
I'm willing to bet the law won't be written by anyone who knows anything about "Custom Software".
Re:Bad bill... (Score:4, Insightful)
What you call "hoarding", I call "saving" and the general lack of savings in America is a Bad Thing (tm).
Re:The sponsor of the bill (Score:4, Insightful)
Aren't these all the people who are supposed to be standing up for rights, minorities, and the little guy? this is deplorable!
Right hemisphere, wrong quadrant. These are largely in the "you should give all your money to the State _and_ be free to have sex with a tree" camp.
Re:Bad bill... (Score:5, Insightful)
-- I wonder if MS has special hidden algorithms in their software: if state=Washington and query="how much state tax Microsoft should pay", then answer=0. --
You see, that's the problem with closed source software; we'll never know.
Re:Bad bill... (Score:3, Insightful)
There's a simple workaround to that though. Sell it to your client, royalty free for your standard fee, then tell then you will offer it to the public on a simple website with a shopping cart for $5,000,000 per license and split the income with them.