[Discuss] taxachusetts and the future of tech

[Chris O'Connell]

I completely agree with Jack's reading... why just software?  Imagine if
the state had decided "Let's tax ALL services in the state, not just
software."  The revenue collected would have been huge.  Instead of
charging the normal rate perhaps 1% could be charged instead.  Maybe I'm
being overly simplistic, but an across the board service tax seems more
fair, would probably be simpler and would likely generate more revenue.

Regardless, it seems that Brownsberger is uninterested in doing away with
the tax or making any major modification to it. I can't say I blame him
really.  Getting the law passed to begin with must have been a monumental
accomplishment, and he did say you can't turn back.


On Thu, Aug 15, 2013 at 10:23 PM, Tom Metro <tmetro+blu at gmail.com> wrote:

> Rich Braun quoted Will Brownsberger posting at:
> http://willbrownsberger.com/forums/topic/the-software-services-tax/
> saying:
> > And, of course, we have to ask: Why single out software services for
> taxation
> > while leaving doctors, lawyers, accountants, dry cleaners and other
> service
> > providers tax exempt? Software is not like cigarettes - it is not
> something
> > one wants to discourage by special taxation.
>
> One of the articles had a plausible explanation for this: large
> consulting service organizations that bundle software sales with service
>  were gaming the system by splitting the product/services bill to favor
> service sales, thus avoiding as much sales tax on the products as they
> could get away with. (The article had an example that went something
> like a company selling $1 million in products and services, which would
> normally be something like $500K for software, and $500K for services,
> but gaming the bill to read $300K for software, and $700K for services.)
>
> The legislators probably thought they were merely closing a loophole
> being abused, but wrote a horribly bad implementation.
>
> As with any tax consideration, legislators look for where they can
> achieve their revenue targets while drawing the least negative response,
> which likely encourages them to target small populations, particularly
> ones that haven't been vocal in the past.
>
> If they were seeking to be fair, they probably would have explored
> imposing a universal service tax at a lower percentage, like a 1% or 2%
> across-the-board service tax. (It wouldn't surprise me to learn that
> some other states already do this.) There is already precedent defining
> what a service is, as that currently determines what is is except from
> the product sales tax. So the law would be simpler, and crystal clear
> for the majority of service businesses.
>
> But this would mean every service business in the state would be
> impacted, and that would generate lots of unwelcome feedback to the
> legislators.
>
>
> Jack Coats wrote:
> > And other than just another 'place to milk' taxes, why sofware
> > services are taxed under transportation and not general funds?
>
> I don't know this for a fact, but my assumption is that the new tax will
> feed into the general funds. The only reason why it has any association
> with transportation is that this was one of the revenue sources placed
> on the other side of the ledger to balance the expenditures in the
> transportation bill. A few years down the road (if it still exists),
> it's introduction as part of a transportation bill will be long forgotten.
>
>  -Tom
>
> --
> Tom Metro
> Venture Logic, Newton, MA, USA
> "Enterprise solutions through open source."
> Professional Profile: http://tmetro.venturelogic.com/
> _______________________________________________
> Discuss mailing list
> Discuss at blu.org
> http://lists.blu.org/mailman/listinfo/discuss
>



-- 
Chris O'Connell
http://outlookoutbox.blogspot.com