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The Massachusetts Software Tax

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Re: The Massachusetts Software Tax

#121

Post by smsm42 »

cinquemb wrote: post #42
kmfrk wrote: post #38

Earlier quoted context omitted.

Chicago is also boned in the future: http://mobile.nytimes.com/2013/08/06/us/chicago-sees-pension... . EDIT: Alternatively http://www.suntimes.com/news/cityhall/21642911-418/city-defi... . Keep in mind that Detroit had loaned money from other states that aren't likely to get it back.

Do states and cities release data like this for the public to see (kind of like open gov api's in csv/json/xml)? I wonder how many more cities/states are taking loan money from other cities/states and are facing the gaping holes in their budgets? It would be pretty cool to throw something together and put it up on github.

These data are probably available buries somewhere in periodic financial reports that many cities publish, but as far as I know, there's no common format, many of these reports are not well readable by tools (best case - nicely formatted PDF with numbers buried somewhere within, worst case - PDF scan of some typed pages with numbers buried within) and as far as I know no site that actually aggregates these data into one database. Given the variety of funds, arrangements, regulations and other things, it would not be very easy to create such a database, probably would require a very large investment. And since it the initiative for local authorities to participate in it is next to zero (worst case, it will expose them for criticism, best case they're OK but not getting any benefit) it would probably very hard to pull off. I'd be glad to be mistaken on this.

Re: The Massachusetts Software Tax

#122

Post by MetaCosm »

grumps wrote: post #61
MetaCosm wrote: post #8

Earlier quoted context omitted.

I stopped working with a client already over this. Simply put, cash-flow wise I can't currently risk taxes and penalties. It turned a customer into a liability because of the horrible wording and unclear guidance (seriously, they want us to pro-rate by the % of our software used in the state?). I suspect many other small start-ups will make the same choice we did until this all gets sorted out.

Out of curiosity - what made you feel that burden was placed on your company? From what I saw if you didn't have a MA tax ID and didn't have a physical presence in the state that burden would be placed on the purchaser. Personally I read that it's kind of like sales tax, and buying online. If the seller doesn't do business in the state you reside it's up to the purchaser to pay the tax.

My lawyer was unable to assure me of this -- the law is terribly written. Due to the nature of the data worked on, I have to travel to MA and do a major component of the work on site.

My understanding is "rewording and clarifications" are coming. I know my client (employes hundreds of people) has unleashed a bit of hell over this -- we will see what will happen.

Re: The Massachusetts Software Tax

#123

Post by yason »

pc86 wrote: post #49
rayiner wrote: post #18

Unfortunately Mass. has unfunded pension liabilities exceeding $20 billion (not including municipalities), and unfunded health care liabilities exceeding $45 billion (including municipalities. At the same time, states will have to deal with the new normal, which is lower economic growth indefinitely and lower returns on invested assets. As a result, states will ratchet up taxes to cover their increasingly untenable b…

It isn't a foregone conclusion that states and other governments must increase taxes. If there's less money to go around, they could always spend less money. I'm not trying to make a political point, but there are certain states where the knee-jerk reaction is all too often to increase taxes - or to tax unpopular things like cigarettes - rather than take a look at the budget and see if there's a middle ground.

Simply increasing taxes will educate the decision makers about the http://en.wikipedia.org/wiki/Laffer_curve eventually.

Taxing spending on harmful things is better than to tax work and activities because what you tax will diminish.

Re: The Massachusetts Software Tax

#124

Post by georgefox »

Houshalter wrote: post #104
rwl wrote: post #96

Earlier quoted context omitted.

OK, you're trolling here, and if I could downvote you for it, I would; but since I can't, let me try to raise the level of discussion: > I would prefer to pay for services I use I invite you, sometime, to think about which services you really use, and try to figure out how much it would cost to purchase each of them if you were doing so on your own. Don't forget: police protection, fire protection, military protectio…

>I invite you, sometime, to think about which services you really use, and try to figure out how much it would cost to purchase each of them if you were doing so on your own. Don't forget: police protection, fire protection, military protection, paved roads, functioning traffic signals and signs, groomed parks, trash collection (some places), up to sixteen years of education, enforcement of workplace safety standards…

> First of all the comment he was replying to was talking about services like housing, transportation, and healthcare, which already are provided by the market and aren't really things the government has any advantage in. As for all the stuff it does pay for, at best it costs exactly the same amount as you have to pay in taxes. But the government spends money on a lot of other things with your taxes that don't really benefit you. So you would save a decent amount of money. And with no competition, the services they do provide cost a lot more then they probably could.

Health care in the U.S. generally costs a lot more than government-run health care in other western countries.

Re: The Massachusetts Software Tax

#125

Post by rwl »

yummyfajitas wrote: post #113
rwl wrote: post #96

Earlier quoted context omitted.

OK, you're trolling here, and if I could downvote you for it, I would; but since I can't, let me try to raise the level of discussion: > I would prefer to pay for services I use I invite you, sometime, to think about which services you really use, and try to figure out how much it would cost to purchase each of them if you were doing so on your own. Don't forget: police protection, fire protection, military protectio…

Don't forget: police protection, fire protection, military protection, paved roads, functioning traffic signals and signs, groomed parks, trash collection (some places), up to sixteen years of education, enforcement of workplace safety standards, financial protection if you become suddenly disabled, a legal system in which to resolve disputes. Those services make up a fairly small portion of government spending. The…

Do I think our actual government could do a better job of figuring out what to spend money on? Yes. Are there things I wish it did not spend money on, and other things I wish it spent more on? Absolutely. Is it possible that, if the government spent money on exactly what you or I thought was ideal, it would be raising fewer tax revenues and spending a lot less? Sure.

So what should we spend our money on? This is a policy question, and fortunately one which (however indirectly) we each have a say and a stake in. That is also what makes answering it a very messy process.

But answering it presupposes the principle that taxation by democratic government is legitimate. This is the principle which thecodeore was casting rhetorical aspersions on, and that I was defending.

Re: The Massachusetts Software Tax

#126

Post by randomdata »

loumf wrote: post #67
IanDrake wrote: post #66

I live in Mass, but my consulting company is in CT. My current client is in MA and I do some work for them on site. I read the law and best I can tell, I don't qualify for this. It seems to be centered around "pre-written" packaged software. I'm writing it right now, so how can it be "pre-written"? I won't pay this tax until I hear a valid argument that doesn't start with "Well, to be safe...". I'm not paying the sta…

If you are writing totally custom software, you are exempt (IANL -- but, it's pretty clear in the FAQ). If you customize pre-written software, you might have to collect/report tax (that's where it's vague what customize exactly means). Using a library isn't customizing, according to the FAQ -- as long as the work done to use it is < 10% of the total project. So, if you take 5 months to write an iPhone App, then you n…

iPhone development, and application development in general, essentially is near 100% interfacing with libraries though. Even if you can add a new library to your project in two days, that work most certainly will be to tie the new library to the existing libraries that you have been building upon from the start (the iOS SDK, in this instance), and thus that work would theoretically still not be exempt.

Sounds like a complicated mess.

Re: The Massachusetts Software Tax

#127

Post by loumf »

blahedo wrote: post #108

Holy crap, everyone here needs to take a deep breath. And, preferably, look at the law itself (not just this article). Despite the author wringing his hands and clutching his pearls about how this law is soooooo hard to understand, it's really not that complicated. It's a sales tax. It works like sales taxes tend to work, with similar distinctions between industrial product (sold as a good) and bespoke construction (…

I am generally sympathetic to this point of view -- I am not against sales taxes, and as someone who has been in shrink-wrapped software for most of my career, I've had to deal with sales tax pretty much forever (and it's not a big deal, unless you have to deal with WA's per county rules)

In this case, though, they are charging sales tax on some services (that's what the law is about). It has to do with services tied to "goods" or pre-written software. So, integrating, customizing, installing, etc.

I believe that this is the area that might get amended or clarified soon (I have written the MA DOR about it, as I know many have). They need to clarify the line between bespoke and pre-written but customized a little better.

Also, I've heard a few time (but don't know if it's true) that this law is modeled on laws in 24 states. If true, then a lot of people on this list are probably supposed to be dealing with this already.

Re: The Massachusetts Software Tax

#128

Post by velodrome »

DannyBee wrote: post #91
velodrome wrote: post #4

Earlier quoted context omitted.

They should create a tax for lawyers. They are far less productive than engineers -- all they do is argue all day and not create anything of value.

Uh, you have a strange view of 1. what the average engineer does all day 2. What the average lawyer does all day Most lawyers spend time working on client's problems, not "argue all day". Lawyers bill their time often in 5 minute increments, and only charge for time they are actually doing something. If the average engineer sat down and tracked what they did every 5 minutes of the day, i think you'd find they are a l…

In California, lawyers bill hourly and in the $300-400/hr range.

But your right, we should look to Congress because they are actually quite productive. Majority of them have a background in political science and law.

http://www.fas.org/sgp/crs/misc/R42365.pdf

http://www.senate.gov/CRSReports/crs-publish.cfm?pid=%260BL%...

Re: The Massachusetts Software Tax

#129

Post by anonymoushn »

rwl wrote: post #96
thecodeore wrote: post #73

Earlier quoted context omitted.

I would prefer to pay for services I use then to have the money stolen from me by force while people pretend it is moral because it is called "taxes"

OK, you're trolling here, and if I could downvote you for it, I would; but since I can't, let me try to raise the level of discussion: > I would prefer to pay for services I use I invite you, sometime, to think about which services you really use, and try to figure out how much it would cost to purchase each of them if you were doing so on your own. Don't forget: police protection, fire protection, military protectio…

Let's check out the federal budget!

http://en.wikipedia.org/wiki/File:Fy2010_spending_by_categor...

19.63% for generational theft, which I pay into but will never see a penny of.

18.74% chiefly for killing brown people on the other side of the planet, generally people who were not a threat to the U.S.

16.13% for programs that are like basic income except that they create awful incentives, are vulnerable to fraud, and have high administrative overhead (mostly people trying to stop the fraud?).

12.79% for health care for the elderly. This program is actually pretty effective, if we ignore the bit where health care providers dramatically overcharge people who do not use it to make up for being underpaid by those people who do use it. It's also questionable whether it will exist in its current form 40 years from now.

It makes sense for me to look at the federal budget because I pay very little in state and local taxes. People who pay more state and local taxes generally end up spending it on paying CHP staff $400,000/year or ensuring that teacher pensions return 8% year over year when no investment on the market does that.

Given this state of affairs, it's not unreasonable to think that you could make some substantial savings when purchasing the services you would use through means other than an annual mugging.

Re: The Massachusetts Software Tax

#130

Post by cinquemb »

smsm42 wrote: post #121
cinquemb wrote: post #42

Earlier quoted context omitted.

Do states and cities release data like this for the public to see (kind of like open gov api's in csv/json/xml)? I wonder how many more cities/states are taking loan money from other cities/states and are facing the gaping holes in their budgets? It would be pretty cool to throw something together and put it up on github.

These data are probably available buries somewhere in periodic financial reports that many cities publish, but as far as I know, there's no common format, many of these reports are not well readable by tools (best case - nicely formatted PDF with numbers buried somewhere within, worst case - PDF scan of some typed pages with numbers buried within) and as far as I know no site that actually aggregates these data into…

I think you are spot on. I've been searching, and mostly coming up with PDF's (that do give the overall numbers) with very little break down for cities.

It's a pity that with all the hand waving over Open Gov initiatives that things like this are still buried, while I can easily find out all the different colors of street lamps implemented for the past 10 years for xyz neighborhoods…

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