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Denver's tax on web and app development draws ire from software execs

denverpost.com

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Re: Denver's tax on web and app development draws ire from software execs

#11

Post by mschuster91 »

judk wrote: post #5
mschuster91 wrote: post #3

> "If we go out to Westminster to go to Costco to buy sodas for employees in the office in Denver, we're on the hook to pay the difference between the sales tax in Westminster and the sales tax in Denver," said Stefan Ramsbott, 303 Software's co-founder. Is this supposed to be a joke?! Seriously, what kind of bullsh.t is this? I accept having to pay VAT and customs when importing stuff from another country , but from…

USA is a big country, and sales tax is not federally administered. This isn't an import tax, this is an anti-evasion provision so some city elsewhere can't unilaterally undermine this city's tax policy. The USA recognizes state law as a defends against Federal tyranny.

> The USA recognizes state law as a defends against Federal tyranny.

In this case, the law allows for local tyranny. Just imagine e.g. a 30% sales tax - as long as you live in the city, you have no way of getting around this tax: "If you can't afford to move... well, not my problem"

Re: Denver's tax on web and app development draws ire from software execs

#13

Post by keithpeter »

mschuster91 wrote: post #3

> "If we go out to Westminster to go to Costco to buy sodas for employees in the office in Denver, we're on the hook to pay the difference between the sales tax in Westminster and the sales tax in Denver," said Stefan Ramsbott, 303 Software's co-founder. Is this supposed to be a joke?! Seriously, what kind of bullsh.t is this? I accept having to pay VAT and customs when importing stuff from another country , but from…

Just thinking about Scotland independence vote. Could see that kind of thing within UK soon depending on which way it goes. That is still a national boundary though.

Re: Denver's tax on web and app development draws ire from software execs

#14

Post by x0x0 »

mschuster91 wrote: post #11
judk wrote: post #5

Earlier quoted context omitted.

USA is a big country, and sales tax is not federally administered. This isn't an import tax, this is an anti-evasion provision so some city elsewhere can't unilaterally undermine this city's tax policy. The USA recognizes state law as a defends against Federal tyranny.

> The USA recognizes state law as a defends against Federal tyranny. In this case, the law allows for local tyranny. Just imagine e.g. a 30% sales tax - as long as you live in the city, you have no way of getting around this tax: "If you can't afford to move... well, not my problem"

Are you aware that if you live in a city, you can vote? If a city where to impose 30% sales tax, I can't imagine any supporter on the council or whatever form of local government that city has would last past the next election. People would also be checking local laws for recall elections as well.

ps -- and if you can't be arsed to vote, then don't bitch about the results

Re: Denver's tax on web and app development draws ire from software execs

#15

Post by x0x0 »

rexreed wrote: post #10

As much as I find these taxes ridiculous (and also hard to predict for a business owner), Couldn't they just add 3.62% to their billed costs to cover those expenses? On a $100k software gig, this would be just $3620 or so. Round it to $105k and they should be pulling in the same amount. On $10k it's just $362. So that would maybe shift a $10k project bid to $10.5k to cover those taxes and still bring in the same net…

Why are these taxes ridiculous, unless you don't support the idea of taxation at all? Lots of economic activity gets taxed, and fundamentally, if we want to have nice things (roads, utilities, public education, police, court system, etc) someone has to pay for them. It's more than reasonable to want businesses -- which use many of the above, and crucially rely on eg good public schools to get parents to live and work near the business -- to chip in.

That said, saying a 3.6% tax makes a software business uneconomical is pretty silly. If that makes the difference between profitability and unprofitability either the business was mostly investing profits internally into growth or was nearly uneconomical anyway. It mostly sounds to me like bitching that the owners may have to settle for Hawaii instead of St Barts this year.

Re: Denver's tax on web and app development draws ire from software execs

#16

Post by _delirium »

robgibbons wrote: post #12

This is some BS. Services are not usually taxed. Production of software is a service, there are no physical products.

Some states do tax services (sometimes with some exemptions). Other states don't tax services, but do tax sales of digital goods, such as iTunes downloads, ebooks, or apps. There's no blanket "sales tax = physical goods" rule (it's not clear why there would be, especially in cases like ebooks vs. paper books).

Re: Denver's tax on web and app development draws ire from software execs

#17

Post by RyJones »

patio11 wrote: post #7
mschuster91 wrote: post #3

> "If we go out to Westminster to go to Costco to buy sodas for employees in the office in Denver, we're on the hook to pay the difference between the sales tax in Westminster and the sales tax in Denver," said Stefan Ramsbott, 303 Software's co-founder. Is this supposed to be a joke?! Seriously, what kind of bullsh.t is this? I accept having to pay VAT and customs when importing stuff from another country , but from…

This is virtually universal for sales taxes in the United States -- they're all paired with "use taxes" which you're supposed to calculate and remit yourself. It is, far and away, the least complied tax in America. People occasionally get prosecuted for it, largely when a high-dollar transaction is intentionally effected in a low-tax jurisdiction to avoid sales taxes. The canonical example is rich folks in New York b…

Boeing hands over airplanes in Portland (PDX) to avoid Washington's sales tax.

Re: Denver's tax on web and app development draws ire from software execs

#18

Post by alistairSH »

x0x0 wrote: post #15
rexreed wrote: post #10

As much as I find these taxes ridiculous (and also hard to predict for a business owner), Couldn't they just add 3.62% to their billed costs to cover those expenses? On a $100k software gig, this would be just $3620 or so. Round it to $105k and they should be pulling in the same amount. On $10k it's just $362. So that would maybe shift a $10k project bid to $10.5k to cover those taxes and still bring in the same net…

Why are these taxes ridiculous, unless you don't support the idea of taxation at all? Lots of economic activity gets taxed, and fundamentally, if we want to have nice things (roads, utilities, public education, police, court system, etc) someone has to pay for them . It's more than reasonable to want businesses -- which use many of the above, and crucially rely on eg good public schools to get parents to live and wor…

For me, it's not that these taxes, in particular, are ridiculous, but that the tax code is so freaking complicated, that I sometimes need a CPA to double-check my records (AMT, odd-ball deductions, etc). And this is for my personal income taxes - it's even worse for business owners.

Re: Denver's tax on web and app development draws ire from software execs

#19

Post by adventured »

x0x0 wrote: post #15
rexreed wrote: post #10

As much as I find these taxes ridiculous (and also hard to predict for a business owner), Couldn't they just add 3.62% to their billed costs to cover those expenses? On a $100k software gig, this would be just $3620 or so. Round it to $105k and they should be pulling in the same amount. On $10k it's just $362. So that would maybe shift a $10k project bid to $10.5k to cover those taxes and still bring in the same net…

Why are these taxes ridiculous, unless you don't support the idea of taxation at all? Lots of economic activity gets taxed, and fundamentally, if we want to have nice things (roads, utilities, public education, police, court system, etc) someone has to pay for them . It's more than reasonable to want businesses -- which use many of the above, and crucially rely on eg good public schools to get parents to live and wor…

You don't have to be against taxation in general to think a specific tax is ridiculous.

Ok, a 3.6% tax is fine, I agree. How about five 3.6% taxes? Oh, now it's just being ridiculous right? Except that's exactly what the tax creep ends up being when you have politicians drunk on spending just to spend.

The US tax code is a perfect example of how this works.

Re: Denver's tax on web and app development draws ire from software execs

#20

Post by pasbesoin »

mschuster91 wrote: post #3

> "If we go out to Westminster to go to Costco to buy sodas for employees in the office in Denver, we're on the hook to pay the difference between the sales tax in Westminster and the sales tax in Denver," said Stefan Ramsbott, 303 Software's co-founder. Is this supposed to be a joke?! Seriously, what kind of bullsh.t is this? I accept having to pay VAT and customs when importing stuff from another country , but from…

To add to the other replies, one type of purchase in the U.S. where sales tax / use tax is universally pursued, is auto purchases. Plentiful (ubiquitous), "big-ticket" items.

Try purchasing a car in a state having a lower sales tax rate than your own. You won't escape your local jurisdiction's tax rate.

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