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Maryland To Tax Custom Programming and Computer Services

kdawson posted more than 6 years ago | from the strangling-the-golden-goose dept.

Government 395

mcwop writes "Early this morning Maryland passed legislation to apply a new 6% sales tax to 'custom computer programming' and other computer- and hardware-related services. Computer industry groups lobbied hard against the measure to no avail. Purchasers of IT services may find that in-house IT and buying out-of-state become attractive options, as well as cutting money out of other projects."

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buying out of state isn't an option (3, Informative)

Anonymous Coward | more than 6 years ago | (#21428029)

since companies have to pay a use tax for those cases

IOW (1)

WindBourne (631190) | more than 6 years ago | (#21428185)

Maryland gets you coming or going. I wonder what those congresmen do to the hookers

Re:IOW (4, Funny)

Sponge Bath (413667) | more than 6 years ago | (#21428273)

I wonder what those congresmen do to the hookers

Pay them with your tax dollars. That's a fact.

Re:IOW (3, Funny)

rivaldufus (634820) | more than 6 years ago | (#21428953)

Not me - I specifically wrote in "not to be spent on hookers" on my last check to the IRS.
 

Re:IOW (5, Funny)

Paco103 (758133) | more than 6 years ago | (#21428829)

I wonder what those congresmen do to the hookers
The same thing they do to their constituents. . . .

Re:buying out of state isn't an option (3, Interesting)

superwiz (655733) | more than 6 years ago | (#21428567)

Funny how you said "cases". A friend of mine recently avoided most of the tariff for a computer he sent to Germany by declaring it as a computer "case". Yes, I know you meant something else. I am just wondering... what pun?

So... (4, Insightful)

jacobcaz (91509) | more than 6 years ago | (#21428039)

So, no more development companies opening up in Maryland then? Smart move MD!

Re:So... (0)

Anonymous Coward | more than 6 years ago | (#21428207)

Out of state companies will probably be taxed for goods and services that they provide to companies and individuals doing business in MD.

Re:So... (2, Insightful)

jcr (53032) | more than 6 years ago | (#21428507)

So, no new IT companies in Maryland, and out-of-state vendors will prefer to work for clients who aren't in Maryland.

Yeah, the legislators have really screwed the pooch here.

-jcr

Re:So... (1)

UncleTogie (1004853) | more than 6 years ago | (#21428831)

Out of state companies will probably be taxed for goods and services that they provide to companies and individuals doing business in MD.

How? AFAIA, your sales tax is reported to the state and then collected in-state. What legal authority does Maryland have over the denizens of another state?

None from what I can tell, but then again I'm definitely not lawyer-shaped.

Re:So... (4, Insightful)

PocketPick (798123) | more than 6 years ago | (#21428237)

This isn't an attack on a software or hardware end-product (those were already taxed at the point of sale). What it says is that computer services - PC repair, network consulting, customer support phone charges, etc... will be taxed like other services and products.

And why should we be suprised by this?. The last time I took my car in for repair, I paid sales tax on part and labor. When I have my car parked Valet, taxes are factored into the the cost. And when UPS delivers a package for me, I pay tax on that too.

Yeah taxes suck, but I'm more suprised to learn that it wasn't taxed for all these years, rather than that it's taxed now.

Re:So... (4, Informative)

Stamen (745223) | more than 6 years ago | (#21428307)

You payed "sales tax" on labor? Serious question, and perhaps that's how it works in your state. But in my state (CA), if you only provide services, without selling any product, you don't even have to get a seller's permit, as there is no taxes on services. I know because my company only provides services and no products.

Re:So... (1)

PocketPick (798123) | more than 6 years ago | (#21428413)

Interesting...did not no that. In the state I'm from, typically sales taxes bis applied to any service where the goods provided has a sales tax. There are other services which are also subject to tax (it varies).

Re:So... (5, Informative)

merreborn (853723) | more than 6 years ago | (#21428371)

And why should we be suprised by this?. The last time I took my car in for repair, I paid sales tax on part and labor. When I have my car parked Valet, taxes are factored into the the cost. And when UPS delivers a package for me, I pay tax on that too.


In California, repair and installation labor is non-taxable [ca.gov] .

Point being, some labor is untaxed in some parts of the country, so this development may come as a surprise to some of us.

Re:So... (1)

trolltalk.com (1108067) | more than 6 years ago | (#21428955)

"In California, repair and installation labor is non-taxable."

It will probably be taxed sometime next year or the year after. The alternative is California having its' credit rating downgraded, because of the huge (10 billion bucks) [sfgate.com] shortfall in taxation revenue, which is likely to grow to approximately $30 billion by 2009, as the rest of the mortgage resets, foreclosures, and reposessions work their way through the system.

Re:So... (1)

letxa2000 (215841) | more than 6 years ago | (#21428415)

No taxes on services/labor in Colorado, either.

Re:So... (0)

Anonymous Coward | more than 6 years ago | (#21428455)

No, the proposal is that computer repairs, consulting, etc will be taxed *unlike* other services which are not currently taxed in maryland.

Re:So... (4, Insightful)

nick_davison (217681) | more than 6 years ago | (#21428383)

More likely...

A mailbox is going to get opened in Delaware and a cell phone registered to that address, while everything else remains exactly where it always way.

Why do you think just about every credit card and predatory lending scheme seems to get mailed to you from Delaware? Because they've figure out it's a great business model to take half the amount of tax on all of everyone else's dubious business whilst not having to support anything more than the name-only corporate HQs.

Get real! Why should one business be favored ... (0, Flamebait)

trolltalk.com (1108067) | more than 6 years ago | (#21428573)

FTFA:

The measure increases sales tax by 1% and adds computer support services, data center support, custom programming, consulting, and disaster recovery services to the list. Legislators approved the change as part of a tax package they passed early Monday morning.

In other words, It will now have to pay its fair share of taxes, same as other businesses.

Why should people who have to shop at WallyWorld pay more than their fair share of taxes, so that IT consultants can pay none?

Get real! This is totally fair. Or does the IT industry somehow not benefit from the services provided by tax revenues?

And while you're all at it, better get used to it. There's trillions of dollars in debt that has to be paid back, with interest. Taxes have only one way to go - up! And everyone has to contribute. funny how you all scream about how unfair loopholes are, until someone does a goatse on your own personal loophole.

Re:Get real! Why should one business be favored .. (1)

PitaBred (632671) | more than 6 years ago | (#21428903)

Except that you're comparing apples with oranges. Way to go, troll. The programmers still have to pay sales tax, just like everyone else. The issue is that they're now taxing their services, which will basically start limiting the availability of those services and eliminate their associated jobs in-state since companies will now either farm out the work, bring it in-house, or just not do it.

Re:Get real! Why should one business be favored .. (1)

etymxris (121288) | more than 6 years ago | (#21428913)

Why should people who have to shop at WallyWorld pay more than their fair share of taxes, so that IT consultants can pay none?
I'm not sure that programming services deserve to be exempt from taxes, but this plan is likely to backfire. All the IT consulting services will simply move out of Maryland since their bids will be 6% higher than everyone else's. It's a bad idea to be the only state to tax a highly mobile industry like programming services. Someone else said that the IT service industry can't move out of state, but that's not true at all. The NYC company I worked for a few years ago did IT consulting for some D.C. companies. If they need someone on site for long periods of time, then the out of state firm will simply hire a local support tech. But since he works for an out of state firm, no 6% tax will apply even though he and the local firm are in Maryland.

And it's not like state or local governments operate with any sense of fairness when it comes to taxes. Often people building an industrial plant will shop around to find the state or locale that gives them the largest tax breaks--there's no way that can be fair to the smaller businesses that don't have that kind of clout.

And while you're all at it, better get used to it. There's trillions of dollars in debt that has to be paid back, with interest. Taxes have only one way to go - up!
The federal government is trillions of dollars in debt. State taxes, which this article is about, make no difference to the national deficit.

First Post! (1, Funny)

Anonymous Coward | more than 6 years ago | (#21428047)

Great, now our politicians want outsourcing.

Re:First Post! (1)

night_flyer (453866) | more than 6 years ago | (#21428419)

you haven't been paying attention, have you?

This is awesome. (1, Interesting)

Anonymous Coward | more than 6 years ago | (#21428061)

I do custom programming work in Missouri. All you Maryland folks can call me for tax-free work.

Oh, and congratulations to the Maryland government for chasing those pesky high-paying jobs out of your state. I'm sure your citizens will thank you.

Re:This is awesome. (4, Insightful)

superwiz (655733) | more than 6 years ago | (#21428595)

Hey, it's a lot easier to run on the platform of helping the poor if you have more poor.

If they wanted to send all the programmers away... (1)

filbranden (1168407) | more than 6 years ago | (#21428063)

Well, if they wanted to send all the programmers away, they just did it. With all the outsourcing to India and out of US, it was already a problem to keep a job before that, now that they introduced taxes, it's just got a lot harder.

Or just don't pay... (0, Troll)

Unlikely_Hero (900172) | more than 6 years ago | (#21428067)

You could also just opt to not pay the tax.
Yes it's illegal, but I posit the following:
Who cares anymore?

The law in this country has become a complete and utter travesty where you're a felon pretty much no matter what you do.
Have someone write the code and pay them in cash.

Or will it take people until they begin taxing air to do this?

Gah, doesn't anyone have limits?

Attn: Maryland State Government: Pull your heads out of your collective asses. You're not entitled to shit.

Re:Or just don't pay... (1)

TeraCo (410407) | more than 6 years ago | (#21428107)

You're not entitled to shit.

Put your money where your mouth is and stop paying ALL your taxes. Fight the power!

Re:Or just don't pay... (1)

Unlikely_Hero (900172) | more than 6 years ago | (#21428121)

And hopefully by not paying, make the power collapse under its own grotesque weight. Worthless fuckers

Re:Or just don't pay... (1, Flamebait)

UbuntuDupe (970646) | more than 6 years ago | (#21428119)

But if we simplify the tax code, that would benefit the rich! --- Actual barrier to reform.

Neil Stephenson is laughing somewhere... (1)

Orthuberra (1145497) | more than 6 years ago | (#21428183)

As freelance coders such as Hiro Protagonist [wikipedia.org] move underground, while the government falls apart.

Re:Or just don't pay... (1)

Unlikely_Hero (900172) | more than 6 years ago | (#21428223)

I would like someone to justify how that is a troll. I sincerely believe what I wrote above. If this offends you, that is not my fault.

Re:Or just don't pay... (2, Informative)

moderatorrater (1095745) | more than 6 years ago | (#21428517)

I obviously didn't mod you, but I would guess it's because you are advocating that people do something which is illegal and illogical, since not paying taxes would be a very bad thing overall since I enjoy our social contract, corrupt as it is. You're also insulting to the government of Maryland, offensive in general and insulting of those who don't support your position. Insulting and offensive while lacking useful content isn't technically trolling, but it should be modded down and there's no option that fits, so the mod could have chosen troll because it fit the closest. Personally, I wouldn't have modded you down, but I don't think it's inappropriate.

Re:Or just don't pay... (1)

Unlikely_Hero (900172) | more than 6 years ago | (#21428597)

Thank you for the reply, I appreciate the speculations

1. I don't think something being illegal has any kind of correlation to its morality or ethical standpoint and its only illogical if I agree that the social contract is desirable as it stands, you may enjoy the social contract but I think its corruption mandates its dismantling.
2. Why is insulting a government a bad thing? Who can give me an argument that insulting a government is a bad thing unless the insult is malicious whereas I view it as legitimate.
3. No one has a right to not be offended, I think my position, while perhaps offensive to some, is legitimate.
4. I do not see where I insulted those who disagree with me.

I do not think my comment deserved to be modded troll. I think the moderation was based on the opinion expressed and not based on the spirit it was given in, which was honest.

Its not that far of a drive to Deleware (4, Insightful)

vertinox (846076) | more than 6 years ago | (#21428075)

I don't see why this tax would do anything other than push computer related jobs out of the state and/or overseas.

So is this good or bad for coders? (4, Interesting)

phorm (591458) | more than 6 years ago | (#21428147)

In one case, it adds to the cost of hiring a contractor, thus raising the price of short or quick contract work (bad for contractors). On the other hand, hiring an in-house IT guy to do coding (which I'd assume isn't taxed beyond normal income taxes) may seem better, which perhaps means more permanent jobs.

Stupid taxes are still stupid, but is this one good or bad for the IT sector in general?

Re:So is this good or bad for coders? (1)

bahwi (43111) | more than 6 years ago | (#21428229)

Not everyone wants a permanent position, contractors are not necessarily unhappy or those who have been laid off, some of us do this for a living and enjoy it. It is a permanent job, just not for everyone. It's good bad, in which it changes the playing field and is bad in some circumstances, and good in others(permanent job). Unfortunately, I can't see it being very good because of 49 others states, india, russia, and others.

Re:So is this good or bad for coders? (1)

moderatorrater (1095745) | more than 6 years ago | (#21428333)

Overall it's bad for the programming sector in the US. Whether you prefer contracting or employment, it doesn't change the fact that it also encourages the companies to go overseas. Also, it encourages less programming in general. This is overall bad for the IT sector.

Re:So is this good or bad for coders? (1)

letxa2000 (215841) | more than 6 years ago | (#21428485)

Stupid taxes are still stupid, but is this one good or bad for the IT sector in general?

Does it matter? I don't trust the legislature to make consulting/full-time decisions for the sector. That should be decided by the employees and employers.

Taxing should be used to raise the absolute minimum for legitimate and constitutional government functions, not for social engineering. Taxing something is always a bad idea. The only possible exception to this is tariffs on imported goods, in some cases, to compensate for reciprocally high tariffs of the other country in question, or for inequivalent labor/environmental regulations that put them at an unreasonable advantage when compared to domestic companies that have to worry about those things.

Other than that, it is absurd to think that taxing something will actually help it in the market.

Re:So is this good or bad for coders? (1)

Watson Ladd (955755) | more than 6 years ago | (#21428569)

How do you like those 16-hour workdays in unsafe conditions then?

Re:So is this good or bad for coders? (1)

letxa2000 (215841) | more than 6 years ago | (#21428587)

I don't. I said that compensating for that is the only exception, where using taxes for social engineering is reasonable.

Re:So is this good or bad for coders? (1)

moderatorrater (1095745) | more than 6 years ago | (#21428709)

Strikes and unions have been more effective than regulations at keeping people out of unsafe conditions. My dad is an electrical engineer who works 12 hour days on salary without any overtime pay. The lineman that work under him earn roughly the same amount of money, but they also get overtime and better benefits because they have a union and are have gone on strike before.

Re:So is this good or bad for coders? (2, Insightful)

Bluesman (104513) | more than 6 years ago | (#21428917)

Good or bad depends on who you are. What's meaningful to discuss are the effects of this tax. Maryland IT in general is now 6% less productive, overnight.

This will factor into the "cost of doing business." Some number of employers who would have paid for services before will now either do without or look somewhere else where they don't pay the 6% penalty, ultimately they'll do without the productivity boost they previously would have had.

Those are the facts, it's simple supply and demand. What can be argued is that this money will be better off in hands of the Maryland government than being used to make Maryland business more productive. That's a judgement call. You can also argue that the higher tax will drive business out of Maryland and essentially provide little to no (or even a negative) revenue boost.

I used to do web development as a side job in Maryland for a few small businesses. They could pay very little, so I'd do for them what they could afford, and they were fairly happy with what I could provide. I was happy enough with what they could pay.

A 6% sales tax means that it's no longer worth it for me to do any work in Maryland. The companies I provided services to will be hard pressed to find someone who will work as cheaply as I did, so they'll likely keep going with what they've got, hoping it doesn't break substantially. The state of Maryland will lose the tax it used to receive from the work I did there.

While my individual contribution is a drop in the bucket, I'm sure this particular circumstance will repeat itself many times.

Why? Government jobs are onsite, that's why (5, Insightful)

gelfling (6534) | more than 6 years ago | (#21428153)

You can't move an awful lot of government programming offsite. It's where it is. There is a gigantic amount of government work in MD so the state sees a big juicy way to tax the Federal government (and itself) to suck some money into their own pockets.

The Feds are in DC (1)

hotsauce (514237) | more than 6 years ago | (#21428297)

Um, no. The feds are in DC.

And most programming shops in the area are in Northern Virginia. The few that are left in Maryland will move to Virginia, too.

The only programming strength Maryland has is in Biotech, and there's no reason that can't move to Virginia, too.

Re:The Feds are in DC (0)

Anonymous Coward | more than 6 years ago | (#21428599)

Plenty of feds work in Maryland -- Social Security, for example.

Re:The Feds are in DC (0)

Anonymous Coward | more than 6 years ago | (#21428705)

Examples abound: NSA is a huge one. Plenty of companies with large federal government contracts do business in Maryland.

If it weren't for the huge infusion of federal money, the state would be in more desperate financial straits than it already is.

Re:The Feds are in DC (1)

INT_QRK (1043164) | more than 6 years ago | (#21428803)

Not sure what you mean by "the Feds are in DC." Some are, some aren't. For example, the Pentagon and CIA are in Virginia, the NSA is in MD, and actually federal agencies are distributed all throughout the region. DC is a relatively small-to-medium size city (pop. ~400k). The surrounding VA & MD region is about 5 million. Something else to keep into perspective is that most of the federal development spending that accrues to this region goes to companies either in MD or VA (or even WV). Since the government doesn't produce anything directly, but just contracts to private industry to do any development, then companies with the lowest bid, ergo overhead, will be advantaged. That means that some migration will likely occur, with companies (which might very well be incorporated elsewhere anyway, for example Delaware), can easily just end their office space lease in MD and lease VA office space, with their workers just changing their commute route. Maybe exchanging an inner-loop to work outer-loop home, to outer-loop to work, inner-loop home on the Beltway. Whatever. No problem.

Re:Why? Government jobs are onsite, that's why (1)

Gr8Apes (679165) | more than 6 years ago | (#21428437)

You can't touch federal programs. The federal government can't be taxed by states.

Re:Why? Government jobs are onsite, that's why (0)

Anonymous Coward | more than 6 years ago | (#21428465)

You can tax the pieces that go into it. You think federal employees don't pay state taxes?

One more positive for packages (1)

Maxo-Texas (864189) | more than 6 years ago | (#21428217)

You don't pay a custom programming tax on "Word" or "Windows" or "Linux" and probably not for "Infinium" or "TMS" or "PKMS".

So this will be another factor boosting the use of packages by companies.

Given the enormous crunch coming for labor in general and programmers in particular, this is pretty much a nail in the coffin for one sector of business in that state. And as some companies successfully use packages, that will be used a model for other companies elsewhere.

buying out-of-state might not help (1)

stomv (80392) | more than 6 years ago | (#21428219)

if they structured it anything like the sales tax, then there's an accompanying "use tax" of equal percentage. Generally speaking, states charge x% tax on anything purchased in the state payable at the point of sale, but also charge x% on the dollar value for all items purchased out of state and brought into the state, payable on tax forms. If they set up the same plan in this case, than buying out-of-state merely delays the tax due date by some time interval less than a year but doesn't change the amount owed.

Re:buying out-of-state might not help (1)

moderatorrater (1095745) | more than 6 years ago | (#21428787)

Usually companies pay more for custom programming than they do for pre-packaged code, and they perceive themselves to be paying less for out-of-country programming. It's just another cost to hiring someone that companies won't want to pay.

Idiocy like this... (5, Insightful)

SputnikPanic (927985) | more than 6 years ago | (#21428251)

... is the price that we Marylanders have to pay for returning one-party rule to the state. This tax is part of a $1.3 billion tax package that our "rock star" governor called a special session to get. In addition, he just increased the sales tax by 20 percent, an increase that disproportionately impacts poorer folks, the very people who the governor and his party keep telling me they deeply care about.

Re:Idiocy like this... (0)

Anonymous Coward | more than 6 years ago | (#21428445)

In addition, he just increased the sales tax by 20 percent

Better work on that 'framing the language of debate' a bit more.

Everybody reading that thinks 'boy is this guy trying to make a 5->6% move sound like a bigger deal than it is'.

Re:Idiocy like this... (3, Interesting)

tkrotchko (124118) | more than 6 years ago | (#21428847)

"'boy is this guy trying to make a 5->6% move sound like a bigger deal than it is'."

Yeah, how dare he do the math and quote the correct percentage increase.

Another round of "Name that party" (0)

Anonymous Coward | more than 6 years ago | (#21428459)

hmmmmmmmmmm, you forgot to name what 1-party rule you are living under.
Would it be the party of, as some of my friends call him, The Jew Puppet Bu$Hitler Chimpy McHaliburtin?

No?
Really?

I thought that party was the fount of all evil and Goldsteinism.

Well they certainly can't be Democrats.

Re:Idiocy like this... (1)

INT_QRK (1043164) | more than 6 years ago | (#21428491)

Its the price we pay for our failure to pay attention to state and local politics, because national politics gets all of the media coverage. A while back when Comrade O'Malley proposed the tax grab (of which this discussion only covers a very small part) I took the time to download my state Senator and three Delegate's email addresses (yes, MD works different from national two Senator and one Congressman model). I've voice my concerns regularly, but of course, with one party domination (Democrats) what do they care? My personal strategy from now on is to reflexively vote against every incumbent at the state level unless I have specific reason not to.

Re:Idiocy like this... (1)

letxa2000 (215841) | more than 6 years ago | (#21428525)

is the price that we Marylanders have to pay for returning one-party rule to the state.

Out of curiosity, then, is this the brainchild of the Democrats or the Republicans?

Re:Idiocy like this... (1)

ScrewMaster (602015) | more than 6 years ago | (#21428559)

You know, at some point in the distant past that question actually had relevance. Nowadays, they're all on the take and want nothing more than to increase their take.

Re:Idiocy like this... (2, Insightful)

letxa2000 (215841) | more than 6 years ago | (#21428647)

They "take" from special interests, usually not from government coffers. I can't imagine how taxing labor is in the interest of either party, although it does sound like something Democrats would do due to their lack of understanding of economics. Republicans overspend because they're addicted. Democrats do it because they think it's actually a good idea.

Re:Idiocy like this... (1)

Detritus (11846) | more than 6 years ago | (#21428733)

There is only one party, comrade. The ballot in the last state election reminded me of the USSR. For most offices, the choice was between voting for a Democrat, usually the incumbent, or not voting for anyone.

Re:Idiocy like this... (1)

SputnikPanic (927985) | more than 6 years ago | (#21428881)

Out of curiosity, then, is this the brainchild of the Democrats or the Republicans?

In this case, this is the Democrats' baby, but I have to agree with another reply here that the question is beginning to lose relevance. Anytime one political party controls all the reigns of government, it just gives that party a green light to go to excess. Republican, Democrat, local, state, federal -- none of that seems to matter. The particular brand of excess differs with the parties, but the tendency to strong-arm their respective agendas is the same.

Re:Idiocy like this... (1)

Detritus (11846) | more than 6 years ago | (#21428571)

They also doubled the tobacco tax to $2 per pack of cigarettes, another tax that disproportionately affects low and middle-income residents of Maryland.

Who voted for these weasels? It wasn't me. Of course, the thought of cutting spending never entered their tiny little brains.

Re:Idiocy like this... (5, Insightful)

superwiz (655733) | more than 6 years ago | (#21428669)

Like I said in a previous post, it's a lot easier to run on the platform of taking care of the poor if you create more poor.

It's just awful (1)

tkrotchko (124118) | more than 6 years ago | (#21428731)

Call your representatives. And write them a letter.

One of mine had a staffer to answer the phone, and she said she felt betrayed by her representative. She said "I don't know what they were thinking; it doesn't make any sense what they did". She urged me to write a letter.

My other two representatives didn't have the balls to answer the phone.

For the typical Maryland family, this tax will cost us about $1K-3K per year. Possibly less if you're at the poverty line, but then it hits you harder because you don't have the opportunity to avoid things like sales tax.

And then increased spending at the same time they just raised taxes by a record amount. They get my vote as the most out-of-touch legislators I've ever been "served" by.

Taxes suck (1)

Fuzzums (250400) | more than 6 years ago | (#21428259)

But they help to pay for infrastructure, education, healthcare and maps and such.
For the future of our children.

Re:Taxes suck (1)

Unlikely_Hero (900172) | more than 6 years ago | (#21428655)

I question whether they pay for the future of anyone's children.
The healthcare system and educational system in this country are horrifically mismanaged and our infrastructure is aging and in some cases crumbling.
Maybe some taxes go to keep these services up to token levels but I think the rest lines corrupt individual's pockets

Say goodbye to... (1)

DrPeper (249585) | more than 6 years ago | (#21428263)

Say goodbye to your many of your businesses Maryland.

Re:Say goodbye to... (1)

DrPeper (249585) | more than 6 years ago | (#21428337)

And say goodbye my proper english, apparently as well!

I meant to say "Say goodbye to many of your businesses Maryland."

It's not a sales tax if it applies to services (1, Interesting)

GnarlyDoug (1109205) | more than 6 years ago | (#21428275)

If the tax is being applied to services like computer programming, then it is no longer a 'sales' tax. It's effectively a income tax. No goods changed hands here, this is work for hire and services. What next for MD? 'Sales' taxes on mechanics and plumbers?

To sum up, less attractive to business, higher cost of living, more of the economy goes underground and out of the tax system, precident of selecting specific service industries to be taxed at special rates and the corruption that will engender, and overall economic damage to MD. Brilliant.

Re:It's not a sales tax if it applies to services (0)

Anonymous Coward | more than 6 years ago | (#21428309)

What next for MD? 'Sales' taxes on mechanics and plumbers?
Last time I had a plumber out, I had to pay tax... why should programming be any different?

Saskatchewan (1)

innocent_white_lamb (151825) | more than 6 years ago | (#21428285)

We have had 5% Provincial Sales Tax on computer programming services in Saskatchewan for a few years now. And the 6% Federal GST as well.

Re:Saskatchewan (1)

otis wildflower (4889) | more than 6 years ago | (#21428347)

And that's why when I think of a dynamic high-tech destination, I think "Saskatchewan".

daydreaming (4, Funny)

oliphaunt (124016) | more than 6 years ago | (#21428287)

If only there was some way to write the code out-of-state, and then transfer it to the buyer in Maryland... ... like a big series of tubes ...

Re:daydreaming (1)

ScrewMaster (602015) | more than 6 years ago | (#21428889)

If only there was some way to write the code out-of-state, and then transfer it to the buyer in Maryland... ... like a big series of tubes ...

Yes, well ... that's the thing isn't it. Nobody is saying that custom programming cannot be done via outsourced projects (I've done a few jobs that way and it's unlikely I'll ever do it again.) What is relevant is that States claim they want to keep good jobs in-state for their residents. I mean, those are the people whose best interests the Legislatures are supposed to serve. Then they pull crap like this which obviously has the express purpose of encouraging the export of said jobs to other States or even overseas so the whole country loses out. Why does it seem that the United States is deliberately shooting holes in both feet? Good job, Maryland. Makes me regret that I spent the first eleven years of my life there. Of course, odds are they need the money to pay for educating and caring for their illegal alien population, and if thousands of programmers and tens of thousands of businesses get shafted, who really cares?

Also, you have to realize that outsourcing custom development is no panacea, and is fraught with problems. I've been doing this for twenty-seven years now, and no matter what anyone tells you, you're much better off having your hired programming talent able to come in and deal with your people and products directly. Sending code via The Tubes(tm) just doesn't cut it, because there are substantial hidden (and not so hidden) costs that are involved when dealing with non-local development staff. Frankly, it sucks, you don't get to know the people and you have no idea if you can trust them, or they you. Don't undervalue the power of personal relationships and face time when it comes to the contracting game. The Internet is simply no substitute for that, and never will be.

Furthermore, if you do what I do, which is write real-time data acquisition and process control systems, you really can't do it remotely. You have to work with the equipment, have to be on site. Sure, you can fly someone in to do the work, but that just adds to your costs and adds to your deadlines when you could have just hired a competent developer who lives in the vicinity. Worse, when you need support and your programmer is a few thousand miles away ... well, now things get really expensive. Nobody with half a brain (or any understanding of the consequences) really wants to outsource: the only benefit is financial and that is by no means guaranteed. Odds are you won't get better quality code, and God help you if you need maintenance.

I'm sorry to say it but in this regard, my home State is full of little red ants. I'm damned glad I don't live there anymore. Idiots.

Yay Maryland! (5, Insightful)

Bluesman (104513) | more than 6 years ago | (#21428291)

Having lived and owned a home for nearly ten years in Maryland, one of the most taxed states in the nation, this doesn't surprise me in the least.

It's one more reason for those heavily dependent on government services to flock to and continue to live in the state, and those who are actually productive to leave. And it's a downward spiral, they'll kill their small businesses and find new things to tax when they can't balance the budget for the umpteenth year in a row.

But the people of Maryland will keep voting the same bozos into office that will continue this spiral. Watching the election ads there was hilarious -- they catered to imbeciles like I've never seen -- and it worked.

Hell, it's a microcosm for our entire stinking, failing republic-turned-democracy.

Man, I'm bitter. But who wouldn't be?

state constitution (1)

arbitraryaardvark (845916) | more than 6 years ago | (#21428305)

Art. 10. That freedom of speech and debate, or proceedings in the Legislature, ought not to be impeached in any Court of Judicature.
Art. 40. That the liberty of the press ought to be inviolably preserved; that every citizen of the State ought to be allowed to speak, write and publish his sentiments on all subjects, being responsible for the abuse of that privilege.

Re:state constitution (1)

Unlikely_Hero (900172) | more than 6 years ago | (#21428689)

maybe Maryland took a cue from Bush, perhaps the Governor views the Maryland Constitution as just a piece of paper.

Milkin' the BRAC cow? (1)

otis wildflower (4889) | more than 6 years ago | (#21428321)

Methinks the gov wants to prepare for BRAC and have the mechanisms in place to milk all those new jobs..

Here's hoping Delaware isn't so stupid as to not take advantage of this.. Especially with the housing armageddon fixing to annihilate a ton of credit-related jobs...

Pah! (1)

beadfulthings (975812) | more than 6 years ago | (#21428323)

I can look out of my window and across the Inner Harbor to "Tide Pointe," which is supposed to be Baltimore's pride-and-joy "technology incubator." We also have a new "technology high school" somewhere in the city; a sexier term, I guess, than the old "Polytechnic" of yore. I guess the technologies--and the technologists-- will now be incubated in Delaware. Some friend sent me a list of fifty appropriate new state mottoes. Maryland's is now even more appropriate: "Maryland--if you can dream it, we can tax it."

Expensive lawn care, free programming (5, Funny)

athloi (1075845) | more than 6 years ago | (#21428339)

Hi, I'm in Maryland, and I'll cut your lawn for $25,000 and throw in a custom eCommerce system absolutely free!

trapped (1)

mugnyte (203225) | more than 6 years ago | (#21428353)

It'll be a long time before the state feels the pain of this - its simply too good for them to pass up. MD is a host to many gov subcontractors that write *nothing but* custom code for projects. They'll feed off of the teat of subcommittee wins for those projects until nearby states figure out a way to coax those offices over the border. Probably to Delaware, which is traditionally business-friendly (although trending away).

  So frankly, this simply crunches the contractor work a bit. Many feel it is just closing a loophole.

  What I want to know is how does one define "customization" ? Macro? Shell script? showing someone how to download something? installing something? Eh...

Re:trapped (1)

superwiz (655733) | more than 6 years ago | (#21428719)

What I want to know is how does one define "customization" ? Macro? Shell script? showing someone how to download something? installing something? Eh...
Pretty sure it would be anything not offered at a standardized price to general public as an already-developed product. Which begs the question, does Internet access modify your computer?

Maryland SUCKS!! (1)

R2.0 (532027) | more than 6 years ago | (#21428355)

No, really - I live here, and this is just the latest. This is part of a plan to cover a $1B+ gap in the budget. The new Governor proposed raising taxes to cover the gap AND increasing spending on various social programs. Spending cuts? Not even on the radar.

Even better is that 90%+ of the tax burden falls on 1 county (albeit one of the richest ones in the country). And the county delegates to the legislature - you know, the ones who represent the citizens - offered token resistance then rolled over and took it "for the good of the Democrats...errr, the State".

Opportunity! (1)

hdparm (575302) | more than 6 years ago | (#21428471)

I think I shall start advertising in Maryland. Remote support (linux,windows), rsync backups, VPNs, Desktop support... NZ$ fees will look more attractive than when buying these services from other States, too.

Here in Illinois (5, Insightful)

ScrewMaster (602015) | more than 6 years ago | (#21428509)

They tried the same thing here in my State: so far it's been voted down. Our Governor claimed that the State could bring in an extra 50 million a year if they taxed such services. That would only work for a year or so, because all the people like me would immediately look for greener pastures. I mean, for crying out loud, if the goal is to efficiently remove the ability of in-state companies to avail themselves of local software talent, this is a great idea. From any other perspective, it's just mind-bogglingly stupid.

In any event, I'm really tired of our taxing bodies looking for every possibly opportunity to increase their take, regardless of the effect it will have on the local population. Only a complete fucktard who is totally ignorant of what he or she is doing could possibly propose such regulation. Of course, I just described your typical politician. They are ignorant and they really don't care.

I did some contract work recently (software only), and the head accountant requested my Tax I.D. so they could apply the proper sales tax. I told them they couldn't have it because, as of this date, custom software was not taxable. Had my lawyer verify that, and I faxed them a copy of the appropriate language (right from the Department of Revenue Web site.) They were surprised, because they had been told by their people that custom software was taxable. I figure I saved them some few bucks.

Re:Here in Illinois (1)

king-manic (409855) | more than 6 years ago | (#21428755)

They tried the same thing here in my State: so far it's been voted down. Our Governor claimed that the State could bring in an extra 50 million a year if they taxed such services. That would only work for a year or so, because all the people like me would immediately look for greener pastures. I mean, for crying out loud, if the goal is to efficiently remove the ability of in-state companies to avail themselves of local software talent, this is a great idea. From any other perspective, it's just mind-bogglingly stupid.
Sort of like simcity, where you raise the tax the day before the end of the month.

I don't get your arguments (1, Funny)

Anonymous Coward | more than 6 years ago | (#21428511)

Many many many posters on Slashdot are leftist/progressive's. This is your chance to increase the redistribution of wealth. You should thank Maryland by moving there and doing contract work.

Lets tax dying markets !! Smart move MD (0)

Anonymous Coward | more than 6 years ago | (#21428529)

Well, it's not as if anyone is still using domestic programmers anyway. So much for Maryland's chances on getting more computer science students.

Just more reasons to pretend your disabled and collect money from the state.

Insterstate Commerce (1)

johngaltchi (1192001) | more than 6 years ago | (#21428629)

The Computing Technology Industry Association should look into filing a case in federal Court claiming the new tax violates the Insterstate Commerce Clause. It might work if they can show that a sufficient amount of the work that will be taxed actually crosses state lines (they'd have to show a number of other things too). It's a longshot, but might be worth a try. In any case, 0% up to 6%?! Good work Maryland legislature. Morons!

A better way to do taxes (0)

Anonymous Coward | more than 6 years ago | (#21428741)

Instead of having governments come up with random laws like this and trying to impose them on the people; why not have the people write the laws?
http://www.metagovernment.org/ [metagovernment.org]
It just makes more sense.

Is it really a big deal? (1)

Bitsy Boffin (110334) | more than 6 years ago | (#21428807)

You'll have to excuse my ignorance here, but in NZ we have GST (like many other countries) at 12.5% on all goods and services (with only a couple of exceptions), but naturally those who supply goods and services effectively do not pay the GST on the goods and services they procure during the course of the business activity as GST is a tax on the end-of-the-chain (the GST they paid to thier suppliers is deducted from the GST they recieved from thier customers before they remit it to the inland revenue).

I would have assumed that the various "Sales Taxes" in the states worked in a similar way, that being a tax for the consumer, not the supplier.

In that case, as "custom programming" is really not something your average consumer needs, but more often something your average business (supplier) needs, isn't it mostly a moot point, as the supplier wouldn't effectively be paying that tax anyway? Or is "Sales Tax" levied to all, and not reclaimable by registered suppliers, that would seem to be pretty crazy as it would be being levied at each level of the supply chain!

MIchigan screwed too (1)

DreadSpoon (653424) | more than 6 years ago | (#21428837)

Michigan recently passed a law that, among a great many other things, also adds sales/service tax to any kind of out sourced IT work. The law is being reconsidered after the massive outcry from various other industries that also got hit by this nonsense. Michigan is by far the worst state in the union in terms of jobs and economics, and our idiot governor decides to pass legislation that makes businesses even less likely to grow and flourish in Michigan. I mean, who's going to contract to someone who has to add a 6% tax to everything he does? I can't just "eat" the cost, since in the global IT market I'm already working for dirt fucking cheap, so there's no way I can match the rates other contractors offer _and_ pay the 6% tax. Thankfully this will soon (hopefully) be shot down in Michigan again, and hopefully people in Maryland manage to fight the stupidity there, too.

How will freelancers do this? (1)

xENoLocO (773565) | more than 6 years ago | (#21428857)

If you freelance in maryland, do you now have to apply for a business license? I assume you have to collect the 6% tax yourself and pay it to the state quarterly, like you would do for sales tax as any other business... thing is you need a federal employee ID number to do that...

What a giant pain in the ass...

What's the difference? (1)

Trailer Trash (60756) | more than 6 years ago | (#21428859)

Here in TN, we tax custom software. To the law, there's no difference between something I write, and going to the store and buying something off the shelf. Most of my clients are out of state, so it hardly matters, but it's a pain to deal with it every quarter. I had a friend who doesn't charge tax, the state went after him, and he got a judgement against the state (they had to pay him), so the laws aren't 100%.

Thanks to my great state or Maryland (0)

Anonymous Coward | more than 6 years ago | (#21428893)

Leave it to my state (one of the most heaviest taxed in the US.) to completely screw itself. Like mentioned before the tax to "help the poor" is also a burden to poor. We are going from 5% to 6% sales tax. Then this brain far move. This is to drive out business from Maryland. Mr Omalley is an idiot. Blames everything on previous administration which followed budgets. Fought Slot machines tooth and nail before he was elected now acts like he thought of it. Yes typical politics. What is to stop business from farming to out of state contracters? Well Mr idiot will figure out in about 3 years this move lost the state of Maryland Income tax revenue. My guess this will hurt FAR MORE in the short run and long run. But hey He will never figure it out as he will be living on state retirement in 4 years. So what does he care

Taxes won't stop us from catching you, Senator! (1)

Bushido Hacks (788211) | more than 6 years ago | (#21428909)

Something suspicuous is going on if government wants to tax custom computer programming. Pehaps they don't want us to find out what else is on that pork bill. A new yacht for some shady senator. A government kick back for some big software company. A cover-your-ass move by some cowardly lawmaker who thinks that a tax will stop computer programmers from finding out why they are getting hit with a 6% tax for the job that they do.

In the near future, expect an investigation as to why the government thinks they can slow down an industry by passing a bill. In the near future, expect no mercy from the men and women who work behind the keyboard.

49 other states: YES! (1)

wardk (3037) | more than 6 years ago | (#21428919)

wow, nice work Maryland

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