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10% Tax On Custom Software, $100M Tax Cut For Microsoft

Soulskill posted more than 4 years ago | from the since-they're-so-strapped dept.

Government 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."

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Bad bill... (5, Interesting)

LostCluster (625375) | more than 4 years ago | (#31630804)

This is clearly is bad for the individual geek who makes their living selling simple custom programs that do only what the user wants/needs and nothing that they don't, unlike Microsoft omnibus packages. It's a case of government by large corporation over the individual if this passes.

Re:Bad bill... (4, Insightful)

wizardforce (1005805) | more than 4 years ago | (#31631078)

"Last week, the Washington State House of Representatives passed a bill which would impose a 10% tax on custom software

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:Bad bill... (5, Informative)

Red Flayer (890720) | more than 4 years ago | (#31631258)

Too late, it's already done.

Yeah, it's all done, except for those pesky State Senate vote and Governor sign/veto issues.

have completely inored the most obvious: closing the MS tax dodge instead of giving them a free pass that this bill just did.

It sounds good until you realize that MS have WA by the balls. Piss them off and they move employees out of state. Boeing did it... MS could too. Sure, there's no state income tax, but that's a lot of sales tax WA won't collect.

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.

Have you seen the WA budget over the past two years? They've made DRASTIC cuts in spending. The question is if they can find another $300 MM to cut, or if they're better off find additional $300 MM in revenue. In a poor economic situation, cutting spending is a hell of a anti-stimulus for economic activity... the better course of action is to wait for economic recovery to make additional budget cuts (whether or not that would actually happen is a different story).

Re:Bad bill... (4, Insightful)

westyvw (653833) | more than 4 years ago | (#31631462)

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:Bad bill... (0)

tacokill (531275) | more than 4 years ago | (#31631516)

In a poor economic situation, cutting spending is a hell of a anti-stimulus for economic activity

Depends on who is doing the cutting. If it's the government then -- you are wrong. Any decreases in government spending is wayyyyyy more than offset by an increase of spending in the private sector (due to not paying the government so much in the form of taxes)

It's not even close and this is why you consistently hear the Republicans say "tax cuts lead to a growing economy". They are 100% right and are backed up both by precedence and history.

I dunno if I believe my own spin... (0, Flamebait)

The End Of Days (1243248) | more than 4 years ago | (#31631086)

This is clearly good for the large number of people who are gainfully employed by Microsoft, and those who invest in Microsoft, the total of which likely vastly outnumbers the individuals who sell simple custom one-off programming services in Washington state. It's a case of the good of the many outweighing the good of the few.

Re:I dunno if I believe my own spin... (1)

Antiocheian (859870) | more than 4 years ago | (#31631340)

a case of the good of the many outweighing the good of the few

The problem is that rewarding quantity undermines healthy competition.

Re:I dunno if I believe my own spin... (1)

The End Of Days (1243248) | more than 4 years ago | (#31631424)

That only works if you consider every programmer who isn't employed by Microsoft to be in competition with Microsoft.

A more effective rebuttal would be to take the position that it is the job of the government to help the little guys against the big guys. Whether doing so with taxes is healthy is an entirely different debate.

Re:I dunno if I believe my own spin... (1)

Maxo-Texas (864189) | more than 4 years ago | (#31631412)

And this will be even more true next year as many in the custom software field leave the state and/or stop doing business there.

Re:I dunno if I believe my own spin... (-1, Troll)

The End Of Days (1243248) | more than 4 years ago | (#31631500)

Flamebait, really? you anti-Microsoftites can't handle an argument based on facts that your zealotry can't dismantle?

I know you're a bunch of bitches by nature, since whining on the internet makes up the majority of your behavior, but do you have to go and prove it?

There's your flamebait. Mod me down all you like.

A different tax proposal (4, Insightful)

ZuchinniOne (1617763) | more than 4 years ago | (#31630824)

I propose a 20% tax on people who pass stupid laws!

Re:A different tax proposal (2, Insightful)

lorenlal (164133) | more than 4 years ago | (#31630882)

Does that include the 15% guilt tax on the people who vote for them?

Re:A different tax proposal (1)

westyvw (653833) | more than 4 years ago | (#31631474)

Thats a good idea! And while they waste time writing and debating it in special session, the costs to get that bill moved through will cause the net value to be nothing.

Re:A different tax proposal (1)

bb5ch39t (786551) | more than 4 years ago | (#31631550)

I'm still wondering about "increasing the sales tax on consumers". You can buy consumers in WA? Isn't that against the law? Or did they mean to say: "increasing the sales tax paid by consumers." ?

FOSS Contributions (3, Interesting)

c++0xFF (1758032) | more than 4 years ago | (#31630840)

At first I thought ... "that doesn't affect me, I run Linux" ...

But what about paying a developer to work on a FOSS application? Would that be taxed? It is custom software, after all.

Re:FOSS Contributions (1)

Tubal-Cain (1289912) | more than 4 years ago | (#31630876)

And define "custom" in this context.

Re:FOSS Contributions (5, Interesting)

ircmaxell (1117387) | more than 4 years ago | (#31631018)

Actually, that's the ticket. If by custom, they mean written against a customers specifications, then it's pretty shitty. If by custom, they mean for one and only one client, then it should be pretty easy to get around. Imagine this. Company A hires you to build a custom piece of software. Once you're done, you just need to make it available for purchase to other companies. Then it's strictly not "custom" anymore, since more than one company can use it. So it all boils down to their definition of custom...

This is nothing more than a prime example of lobbyists in action. How else could you explain that the first "community" to do this contains one of the largest "non-custom" computer engineering firms in the country? I wonder what the state congressmen (or whatever they are called up there) got in return for this sweet deal... Money? Drugs? Sex? Free Computers?

Re:FOSS Contributions (1, Funny)

Anonymous Coward | more than 4 years ago | (#31631122)

I wonder what the state congressmen (or whatever they are called up there) got in return for this sweet deal... Money? Drugs? Sex? Free Computers?

Windows Vista removed.

Re:FOSS Contributions (4, Interesting)

c++0xFF (1758032) | more than 4 years ago | (#31631284)

I was looking over the proposed law [wa.gov] and found some interesting information on this.

First, I'm not a lawyer or politician. Be ye forewarned.

Page 87 makes it seem that this isn't a new tax, but a removal of an exemption. From the document:

(7)(a) The term also includes the sale of or charge made for custom software and the customization of prewritten computer software to a consumer, regardless of the method of delivery to the consumer. (b) The term also includes the charge made to consumers for the right to access and use custom software and customized prewritten computer software, where possession of the software is maintained by the seller or a third party.

In other words, the following are taxable:

1) The sale of "custom software"
2) The amount paid to customize software that's already written
3) Licensing fees to access custom software

Back to the original question in this thread, it seems that FOSS could fall under 2) in my list -- developers are often paid to add specific features (thereby customizing the software) by individual or companies. As nothing is charged for the sale and licensing of FOSS (generally), 1 and 3 woudn't apply.

I will say, however, that "custom software" is not defined in said document.

Re:FOSS Contributions (1)

ircmaxell (1117387) | more than 4 years ago | (#31631376)

Well, by the wording there, I read that as "One-Off" software. Where the produced software is sold to exactly one party. So then FOSS would be exempt, because while the software is made for one party, it's given to everyone (well, for customizations that are released upstream/for the general public)... I'm not saying it's bullet proof, but that's how I read it (and IANAL)...

Re:FOSS Contributions (2, Funny)

Chris Burke (6130) | more than 4 years ago | (#31631342)

I wonder what the state congressmen (or whatever they are called up there) got in return for this sweet deal... Money? Drugs? Sex? Free Computers?

They were promised unlimited free porn for life, and eagerly agreed. Then MS sent them a download link for Internet Explorer.

Re:FOSS Contributions (1)

Upsilonish (1250840) | more than 4 years ago | (#31631410)

Company A hires you to build a custom piece of software. Once you're done, you just need to make it available for purchase to other companies.

I should think that not doing this would be part of the contract in most cases.

Re:FOSS Contributions (0)

Anonymous Coward | more than 4 years ago | (#31630932)

But what about paying a developer to work on a FOSS application? Would that be taxed? It is custom software, after all.

Yep, you'd pay 10% tax on the 0 dollars you earn selling your LAMP mp3 solution.

Re:FOSS Contributions (0)

Anonymous Coward | more than 4 years ago | (#31630958)

Nope, you'd pay 10% tax on fair market value for that software and end up having to pay for free software.

Re:FOSS Contributions (3, Funny)

Neil Blender (555885) | more than 4 years ago | (#31631044)

It's a sales tax, sizzle chest.

Re:FOSS Contributions (1)

Miseph (979059) | more than 4 years ago | (#31631464)

It's not unheard of for sales tax to be applied to the "fair market value" rather than the actual sale price of an item. If I buy a car from my parents for $0, I still get to pay sales tax on it when I go to transfer the title... the RMV worker will just look it up in KBB and tell me to cough it up.

Never underestimate the lengths the state will go to collecting taxes that shouldn't exist in the first place.

Re:FOSS Contributions (5, Interesting)

beanball75 (126064) | more than 4 years ago | (#31631030)

At first I thought ... "that doesn't affect me..."

This is a very common attitude that is degrading our lives in all areas in my opinion. To me, it's like playing chess and looking just one move ahead.

Re:FOSS Contributions (1)

Scootin159 (557129) | more than 4 years ago | (#31631250)

10% x $0 = $0

Re:FOSS Contributions (1)

JoeRandomHacker (983775) | more than 4 years ago | (#31631282)

At first I thought ... "that doesn't affect me, I run Linux" ...

But what about paying a developer to work on a FOSS application? Would that be taxed? It is custom software, after all.

It sounds like that is exactly what they want to do: treat the delivery of the final product as a sale and apply sales tax to it. Open source or not wouldn't matter.

Re:FOSS Contributions (1)

jim_v2000 (818799) | more than 4 years ago | (#31631498)

What's 10% of free?

Microsoft's tax cut and a sales tax (2, Insightful)

compucomp2 (1776668) | more than 4 years ago | (#31630850)

The sales tax is a very regressive tax. Why should ordinary people of Washington take the hit disproportionately so that Microsoft can be let off the hook for what is basically equivalent to offshoring?

Re:Microsoft's tax cut and a sales tax (0)

Anonymous Coward | more than 4 years ago | (#31630976)

That's a simple one; you're just not thinking like a government....

There's one of Microsoft and they can fight/screw the system; there's millions of regular guys who can't do a damn thing about it...

Easy math really, just leave morals at the door...

Re:Microsoft's tax cut and a sales tax (1, Informative)

Anonymous Coward | more than 4 years ago | (#31631054)

How exactly does not-progressive get to mean regressive?

Re:Microsoft's tax cut and a sales tax (3, Interesting)

LordKazan (558383) | more than 4 years ago | (#31631304)

sales taxes are not just not-progressive - they're regressive.

Rich and poor people need to buy a lot of the same basic things that are taxed - that tax eats up a larger percent of a poor persons income. that is the definition of a regressive tax.

Re:Microsoft's tax cut and a sales tax (1)

toastar (573882) | more than 4 years ago | (#31631438)

A Sales Tax is pretty much regressive by definition.

Well as long as the Elasticity of demand is less then 1. And i don't think rich people pay more for software then poor people

It's nothing like offshoring. (1, Insightful)

pavon (30274) | more than 4 years ago | (#31631290)

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.

Re:Microsoft's tax cut and a sales tax (0)

Anonymous Coward | more than 4 years ago | (#31631470)

Nobody likes a poor thief.

Re:Microsoft's tax cut and a sales tax (1)

jim_v2000 (818799) | more than 4 years ago | (#31631522)

What does the sales tax have to do with Microsoft? OH I see, you're just riding the negative wave and steering it toward a company that you don't like.

Andrew would be upset, again. (1, Interesting)

Anachragnome (1008495) | more than 4 years ago | (#31630852)

Andrew Stack would be upset, again.

This is exactly the shit that drove the man to his wits end, leaving the IRS with an airplane in their offices.

Time to write my representative, AGAIN. (Crazy week in WA., what with our rogue AG and all...)

Re:Andrew would be upset, again. (5, Insightful)

Sponge Bath (413667) | more than 4 years ago | (#31630930)

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.

Re:Andrew would be upset, again. (4, Interesting)

lorenlal (164133) | more than 4 years ago | (#31631012)

Just so you know, the state of Michigan tried a 3% tax on gross receipts on physicians... It got shot down in the state senate after the house passed it. They're trying it again in by hiding it in a new budget bill.

I bring this up because it's in the same idea of trying to find new tax sources, that affect a small population to make it not unpopular... And it helps if that particular group is perceived to be "well off." It's poor policy to make one profession bear the burden of the masses (IMHO). It's a great way to try to drive business out of an area. It's also a great way to pass the burden onto the consumer without and claim that taxes have been raised.

Re:Andrew would be upset, again. (2, Interesting)

Archangel Michael (180766) | more than 4 years ago | (#31631222)

This is why tax policy should be re-evaluated. We should not be taxing things we want people to do, we should be taxing the things we don't want people doing.

If we, as a society, value something, taxing it is the most assured way of destroying it. Let us legalize drugs, prostitution and every other "victimless crime" we have now, and tax it.

I have never understood the idea of taxing things people need like income.

Re:Andrew would be upset, again. (3, Interesting)

nomadic (141991) | more than 4 years ago | (#31631300)

I have never understood the idea of taxing things people need like income.

Because that way you can pay for other things people need, like roads, hospital, military protection, police, fire, etc. There honestly isn't really anything taxable other than income that can cover these things.

Re:Andrew would be upset, again. (3, Insightful)

Archangel Michael (180766) | more than 4 years ago | (#31631534)

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:Andrew would be upset, again. (1)

c++0xFF (1758032) | more than 4 years ago | (#31631492)

If we, as a society, value something, taxing it is the most assured way of destroying it.

Except that taxes don't deter people like that.

The cost of cigarettes is dominated by taxes, for example, and yet people still smoke. The addiction makes then overcome the higher prices.

Nor does it work with income taxes: just because making money is taxed doesn't mean people don't want to work and have jobs.

Re:Andrew would be upset, again. (1, Insightful)

Anonymous Coward | more than 4 years ago | (#31630980)

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?

Re:Andrew would be upset, again. (0)

Anonymous Coward | more than 4 years ago | (#31631218)

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?

I never used to think this way but I'm beginning to think so. As are many, many others who are totally fed up with the bullshit. (I was going to say "hope so" but I'm sure that would lead to no good end!

Re:Andrew would be upset, again. (2, Insightful)

wizardforce (1005805) | more than 4 years ago | (#31631236)

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.

Re:Andrew would be upset, again. (1)

tweek (18111) | more than 4 years ago | (#31631394)

For the same reason some of us were saying "Maybe we should find out why Al Quaeda attacked us on 9/11" as opposed to yelling about "They hate our freedoms" and "You just want to blame America". If you never get at the root cause of a problem, you'll never truly solve it.

Bin Laden had some valid reasons for hating the US that has nothing to do with our "way of life" and more with our farcical nation building policy. That doesn't mean he was right or that it was entirely our fault. However, unless we understand ALL the factors, we'll be in the same boat again.

Similarly while I, in no uncertain terms, despise what Andrew Stack did, his REASONS for doing it were valid at some level. Does it take a broken person to finally resort to his actions? Yes, but what he said about the sheer fucked-upness of our current tax "code" has merit. He was unstable but is it possible that having to deal with the shit that he did with our government pushed him over a tipping point? Absolutely.

Andrew Stack wasn't some Ted Kazynski/David Koresh whack-job. He was an unstable person who got fucked by his own government. He's not to be lauded or praised for what he did but there's a lesson to be learned in how our current system is broken.

Re:Andrew would be upset, again. (0)

Anonymous Coward | more than 4 years ago | (#31631022)

Rouge AG? I'm not sure but it sounds our Attorney General is the only sane person in western WA. Good to know his efforts to stop the federal government from screwing it's citizens will be payed for by the state government screwing them.

This post payed for in-part by your Washington tax dollars.

Re:Andrew would be upset, again. (0)

Anonymous Coward | more than 4 years ago | (#31631448)

Rouge AG?

Now, now, don't judge him by the color of his skin...

But this IS an American site, please use English. Using fancy French words like "rouge" isn't going to buy you any points here.

Re:Andrew would be upset, again. (1)

Jeng (926980) | more than 4 years ago | (#31631032)

I thought it was him trying to not pay any taxes that led Andrew Stack to target people who have no influence on his taxes.

I agree that there are some extremely messed up taxes for some aspects of software development, but that is not why he flew his plane into an IRS office.

He got sold on the idea that he didn't have to pay ANY taxes, ANY, Zip, zero, zilch, none.

Re:Andrew would be upset, again. (0)

Anonymous Coward | more than 4 years ago | (#31631066)

do you honestly think that openly agreeing a terrorist who flew an airplane into a building makes you look sane?

Mohammed Atta's group had a carefully-executed plan and as a result were the first people to ever fly airplanes into buildings before to the buildings collapsed (there, I stated it in such a way that everyone, including people who think the bombs the CIA planted in the basement was what took down the buildings, can agree with). Andrew Stack was an idiot with no ability to think things through, which is why he could never plan for taxes either.

Re:Andrew would be upset, again. (1, Troll)

nomadic (141991) | more than 4 years ago | (#31631080)

Andrew Stack would be upset, again.

So the sociopathic murderer wouldn't like this? So you're saying it's a good thing?

Re:Andrew would be upset, again. (0)

phantomfive (622387) | more than 4 years ago | (#31631126)

If you're going to write to your representative, you might want to mention that the average government worker makes 45% more than their equivalent in the private sector (30% more if you only include salary). I don't know the precise situation in Washington, but in most states with deficits, if the workers pay was cut to the same as they would in the private sector, the deficit would be more than closed.

Whether we want to cut the pay of public employees or not is a value judgement, and it is really up to us (or our representatives) to decide if we are willing to continue paying them with higher taxes, but it is important to be aware of what is happening.

Re:Andrew would be upset, again. (3, Informative)

nomadic (141991) | more than 4 years ago | (#31631216)

If you're going to write to your representative, you might want to mention that the average government worker makes 45% more than their equivalent in the private sector (30% more if you only include salary). I don't know the precise situation in Washington, but in most states with deficits, if the workers pay was cut to the same as they would in the private sector, the deficit would be more than closed.

My representative likes me to provide cites when I make pronouncements like that.

Re:Andrew would be upset, again. (1)

GlassHeart (579618) | more than 4 years ago | (#31631540)

Since when was Wiki allowed to run for public office?

Re:Andrew would be upset, again. (1)

wizardforce (1005805) | more than 4 years ago | (#31631198)

Don't defend what that man did. There are more effective ways of protesting this nonsense without resorting to property damage and death. After all, do you really think that anyone with the legislative power to change things for the better thought to themselves "ya know, he's got a point, maybe we should change the tax laws." It'll be remembered as an act of terrorism nothing more.

Re:Andrew would be upset, again. (1)

commodore64_love (1445365) | more than 4 years ago | (#31631518)

>>>(Crazy week in WA., what with our rogue AG and all...)

I was wondering what you meant so I did a quick Bing search. "Washington Attorney General Rob McKenna plans to join a multi-state lawsuit challenging the constitutionality of the recently signed health care law."

I don't see this as rogue. He and other State Attorneys/Governors are merely asking the U.S. Court to enforce the Constitutional Law (specifically parts 9 and 10 of the Bill of Rights). They swore an oath to uphold that law, and now they are following through with it.

Good for them.

As for the topic - I already commented below that rather than raises taxes 300 million dollars, politicians should CUT 300 million dollars. Abracadabra - balanced budget. I also think they should go after Microsoft to pay their backtaxes, but at the same time I figure MS would just move to another state if they pushed too hard.

WTF? (2, Insightful)

idontgno (624372) | more than 4 years ago | (#31630856)

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?"

Re:WTF? (2, Insightful)

ISoldat53 (977164) | more than 4 years ago | (#31631526)

You understand this is the state of Costco, Amazon, MS and Boeing. Big box is what we do.

or they could you know...spend less money? (2, Insightful)

Anonymous Coward | more than 4 years ago | (#31630858)

first cut should always be to government offices furniture budgets, then look at the "perks" elected officials get and cut those

Re:or they could you know...spend less money? (1)

ctrahey (1474065) | more than 4 years ago | (#31630902)

first cut should always be to government offices furniture budgets, then look at the "perks" elected officials get and cut those

That's like saying that we can aide our energy problems by using less energy. Yeah, right.

Re:or they could you know...spend less money? (2, Insightful)

jameskojiro (705701) | more than 4 years ago | (#31631120)

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.

Tax custom software ? logic ? (2, Insightful)

unity100 (970058) | more than 4 years ago | (#31630860)

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:Tax custom software ? logic ? (0)

Anonymous Coward | more than 4 years ago | (#31631004)

is there a sales tax? Yes, 9+% statewide, almost 10% in king county. Fuck these assholes. Why dont they take a pay cut to decrease the budget gap, quit taking limosines to work everyday. Oh wait youre scared to take the bus with 'normal' people? Maybe you shouldnt pass laws like this then, douches.

Re:Tax custom software ? logic ? (5, Informative)

Aquitaine (102097) | more than 4 years ago | (#31631180)

Sales tax doesn't usually apply to custom software, where 'custom software' means you can't just buy it on a shelf or download it. My company sells custom software that runs youth sports leagues.

We pay income tax on all our revenue, of course, but we don't have to collect sales tax so long as it's a 'service' -- meaning no 'click here to download our software.' So custom software is not currently taxed in most states.

Washington state also doesn't have an income tax at all.

Depending on your current state and existing tax burden, I could see paying a fair tax for something like this, but not ten percent. Custom software is already pretty expensive (possibly one of the reasons it's not currently taxed) and because it doesn't have fixed price, it's tough to track for tax purposes -- I could say 'well, our software costs a hundred bucks, but my consulting fees to set it up and maintain it for you are $10,000 a year' since that's a professional fee/service. Sort of how attorneys work - you're paying for their expertise, not really for a 'product.'

Re:Tax custom software ? logic ? (1)

AuMatar (183847) | more than 4 years ago | (#31631298)

10% is about the sales tax around here in WA- maybe a little less in some high tax LIDS. I don't agree with targetting specific industries like this, but if they made it an across the board 10% tax on sales of non-sales tax generating services I'd be more ok with it. This state badly needs an income tax though. Just income taxing the MS leadership would significantly close our budget gap.

Re:Tax custom software ? logic ? (1)

Aquitaine (102097) | more than 4 years ago | (#31631378)

It's extremely difficult to tax non-sale services, for the reasons I mentioned. Very few states even try. Reason being that it's not a 'sale' if you have a professional perform a service for you, which is usually what custom software is.

What you're talking about is closer to a VAT.

Re:Tax custom software ? logic ? (1)

glennrrr (592457) | more than 4 years ago | (#31631404)

How would making Bill Gates move his official residence to Texas close your budget gap?

Re:Tax custom software ? logic ? (1)

tweek (18111) | more than 4 years ago | (#31631508)

There is no such thing as a "fair tax". The actual FairTax is about the closest I've seen in a while.

People need to put the screws to government. Citizens of a state need to decide exactly what public services they want the government to provide. States need to stop doing stupid shit like building arenas and halls of fame and golf courses and bowing to the the "we'll leave if you don't subsidize our sports franchise" bullshit.

Yes, state revenues will contract but so will the needs of the state. No personal income tax + low corporate taxes + limited government = prosperity.

Re:Tax custom software ? logic ? (0)

Anonymous Coward | more than 4 years ago | (#31631090)

You do not charge sales tax on your labor or on intangible products.

If you ship software electronically, there should be no tax. If you burn it on a CD and mail it, then tax should be charged.

lol wut (1)

Jeian (409916) | more than 4 years ago | (#31630878)

I have no idea what the Legislature means by "custom software" (and didn't see a definition in the article) but I'm guessing that it would be software written for a specific niche or client - in which case, Microsoft would really be the *least* likely to fall under that definition. Word, Excel, etc. are hardly "custom applications."

And if they are, well, that means just about all the software ever written would be "custom software."

Re:lol wut (1)

Jeng (926980) | more than 4 years ago | (#31631202)

Isn't all software custom once you get into the configuration?

Re:lol wut (1)

TheRaven64 (641858) | more than 4 years ago | (#31631246)

That's the point. It's effectively a tax break for off-the-shelf software makers (10% of the industry overall, but some very big individual players). Fortunately, it's only the State of Washington giving a tax break to a large domestic industry, rather than a US-wide measure. All it will do is shift any remaining innovation out of the state.

we cant work for our selves anyway (1, Informative)

Anonymous Coward | more than 4 years ago | (#31630892)

You obviously have not heard of the "The law, known as Section 1706 of the 1986 Tax Reform Act", this makes it extremely difficult for programmers to work as self-employed individuals. So, for the average individual geek, you can't actually make a living as a professional programmer, this is just another attack on out profession to make us minions of corporations.

Uhmm... (1)

ZDRuX (1010435) | more than 4 years ago | (#31630906)

Can someone define "custom software" first?! Isn't any arrangement of 1s and 0s made to someone's specifications considered "custom"?! Maybe I'm just dull and naive.

Or do they mean software that is pumped out by the thousands, like MS Windows.

typical of Washington State (0)

Anonymous Coward | more than 4 years ago | (#31630938)

Washington State, and its Democrat Party, are completely in Microsoft's pocket. Ever since Boeing indicated that it is leaving the state, the state is of, by, and for Microsoft.

Microsoft wants a tax break, Microsoft gets it.

Microsoft wants the University of Washington to stop this "open source software" nonsense and use proper Microsoft software, UW fires its OSS developers and switches to Microsoft.

Microsoft wants competing software developers taxed, they get taxed.

Re:typical of Washington State (0)

Anonymous Coward | more than 4 years ago | (#31631214)

Yeah and Apple, Google and the other Fortune 500 companies try their hardest to pay as much taxes as they can. Get real...

The only fair corporate tax rate is 0%. (-1, Troll)

Anonymous Coward | more than 4 years ago | (#31630942)

Or less, because the government assets (land, sea, military hardware, etc) need to be liquidated and any resulting profits proportionately returned to the tax-victims.

All forms of government are theft.

(Signed: Alex Libman's sock-puppet.)

Re:The only fair corporate tax rate is 0%. (1)

Wyatt Earp (1029) | more than 4 years ago | (#31631496)

Corporations have the same rights as citizens, so they should pay the same tax rate at the Federal and state levels.

How about some honesty in taxation? (2, Insightful)

mosb1000 (710161) | more than 4 years ago | (#31630974)

Or, they could be honest and raise the money though an old-fashioned income tax, or sales tax. But I'm sure they'd rather hide the tax burden from the people who are ultimately paying it. Gotta love the government.

Re:How about some honesty in taxation? (2, Funny)

dsavi (1540343) | more than 4 years ago | (#31631188)

Maybe this is why a large part of the American population hate taxes (But love to complain about them)- Because their government screws up every time they make a new one.

The End is Near (1)

xdor (1218206) | more than 4 years ago | (#31631014)

I for one salute our freely elected overlords!

Move (2, Interesting)

ScientiaPotentiaEst (1635927) | more than 4 years ago | (#31631024)

Fortunately my little corporation isn't in Washington. I know first hand that there are many states more conducive to small business. Unless there is some specific reason for remaining there, it isn't be too hard to move. 10% is no small increase, so it's definitely worth looking into a change of locale.

I don't suppose anyone in the WA government considered reducing expenditures enough to make up the difference. Too radical a concept I guess.

how best to raise another $300 million (0, Troll)

commodore64_love (1445365) | more than 4 years ago | (#31631026)

Cut 300 million dollars worth of government workers.

Done.

Those who remain would therefore have to work 8 hours a day, instead of wasting 4 hours each day surfing the net (as they did in my government office).

Re:how best to raise another $300 million (1)

Locke2005 (849178) | more than 4 years ago | (#31631068)

You're obviously surfing the net instead of working right now! Pot, kettle, stop calling each other "black"!

Soak the Rich Big Businesses, Screw the Little Guy (1, Insightful)

jameskojiro (705701) | more than 4 years ago | (#31631034)

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....

This just in... (1)

bugs2squash (1132591) | more than 4 years ago | (#31631038)

Washington state representative suffers from BSOD, requires reboot.

Re:This just in... (0)

Anonymous Coward | more than 4 years ago | (#31631210)

Reboot? Nah, lets toss them out and install new ones that don't have as many programming glitches...

Marx? (0)

Anonymous Coward | more than 4 years ago | (#31631058)

I know his "theories" we're misappropriated and used to justify some pretty horrific things but didn't Karl Marx have something to say about Capitalism eating it's own babies and such? It seems to be lately all-out class-warfare with corporates in their own smug corner right along with government. Isn't government and business hand-in-hand called fascism?

What's good for Microsoft is good for WA...? (1)

Count Sessine (1135193) | more than 4 years ago | (#31631156)

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

Maybe they could move their sales office to Nevada too?

Nothing to see here, folks. Move along. (-1)

Anonymous Coward | more than 4 years ago | (#31631224)

This whole story is just more whining from the usual statist anti-Microsoft complainer brigade. The fact is they provide tens of thousands of jobs in this state, while "small developers" simply do not. If you want to talk about tax fairness, how about we talk about how the top earners in the USA get taxed at a far far higher rate than people who are too stupid, fat and lazy to even get a job. What is fair about that?

I need an explanation.... (1)

joocemann (1273720) | more than 4 years ago | (#31631248)

WTF is 'Custom Software'??? What are the definitive characteristics of Custom Software and non-Custom Software?

This is totally bogus, and a blatant demonstration of the ability of business to pervert political processes.

Software is software. I don't know why or how they even feel validated in taxing software at all, aside from a sales tax, let alone specifically discriminating certain software and alleviating tax burden on other software.

It looks like some people need a talking to.

Re:I need an explanation.... (1)

sed quid in infernos (1167989) | more than 4 years ago | (#31631398)

Custom software is the software that isn't being taxed now, as opposed to all the software that is currently taxed in Washington State. It is the status quo that requires a definition of "custom software." If this new bill becomes law, it won't matter whether software is custom, because all software will be subject to the tax. This new bill ends "discriminating certain software and alleviating tax burden on other software."

That doesn't necessarily make it a good change. But at least complain about the right thing.

The sponsor of the bill (3, Informative)

Vinegar Joe (998110) | more than 4 years ago | (#31631308)

Is Senator Margarita Prentice. According to her bio, she is a member of:

"American Civil Liberties Union; Amnesty International; Democratic National Committee; First Vice President, Washington State Nurses Association, 1968-1972; Labor Officer, Washington State Nurses Association, 1974-1978; Sierra Club; Renton Historical Society; Audubon Society; Humane Society of United States."

http://www.senatedemocrats.wa.gov/senators/Prentice/biography.htm [wa.gov]

Microsoft is doing what anyone would do (0)

Anonymous Coward | more than 4 years ago | (#31631362)

it is every American's duty to minimize their taxes using every legal avenue available. Corporations are entitled to do the same.

The problem isn't with Microsoft; it's with the laws that allow what Microsoft is doing.

Why not tax what costs the most in infrastructure? (2, Insightful)

Marrow (195242) | more than 4 years ago | (#31631386)

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.

Just drop "custom" (0)

Anonymous Coward | more than 4 years ago | (#31631408)

All you have to is to burn the binaries to a CD to put a 10.000$ sicker on it. There you go... non-custom software.

Tax axiom 0: no such thing as corporate tax. (0)

otis wildflower (4889) | more than 4 years ago | (#31631434)

All taxes levied against corporations are passed onto either customers or employees. FACT.

So, this 10% is actually a tax on programmers' customers, or against the employees' salaries/benefits or even employment.. 10 programmer group hit with 10% tax, either raise your prices 10% to compensate (pass along) or fire 1 employee and spread their load across the remaining 9.

Guess what? In a recessionary environment, the former (raise prices) isn't gonna fly, so time to cut staff.

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