The Massachusetts Software Tax

This is surely one of the most irresponsible pieces of legslation nywhere this decade.

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.

This is going to increasingly become common esp as governments try to cover budget gaps. We just went through a sales tax audit for our SaaS company and so are expecting a good size bill for taxes not paid + penalties. Yes - fun stuff.

Honestly, the gov't folks are playing whack-a-mole here trying to keep up with fast-growing areas that don't fit the old "you sell this widget for $X" model they're used to. And so they're going to write overly broad rules as they don't understand technology and related industries. There is no intrinsic reason that SaaS should be free of tax and so the more worrying aspect of this legislation (NY has similar) is that it is so difficult to understand and open to interpretation and the mental tax it imposes on businesses who live in a cloud of of uncertainty about how they should treat their revenues.

That said, I think the idea that it will drive biz out of the state is naive. California is not a particularly biz friendly state in terms of taxes but the Valley and even LA seem to be doing just fine.

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.

Until people realize that all taxes are theft, they're doomed to have new taxes imposed on the most productive of them. It's really a simple test to see whether taxes are theft or not: if there was no way for IRS to find out how much money anyone made, would people still be paying taxes? My guess is that 90% of people who preach about the social contract and helping the poor would keep the money.