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Print 36 comment(s) - last by rvd2008.. on Mar 27 at 10:58 AM

State of Massachusetts may impose a tax on website design and other services

The governor of the state of Massachusetts has proposed a new tax within the state that could apply to cloud-based services. If the Massachusetts state legislature approved the governor's plan, the state tax on "canned software" would be expanded covering some elements of cloud computing.
 
The proposal is for a tax of 4.5%, which is lower than the state 6.25% sales tax. The tax plan does call for an exemption for people that store music or digital books on the cloud. According to members of Governor Deval Patrick's administration, the tax would bring in an estimated $265 million during 2014.
 
"We need our tax code to catch up with the way that technology is affecting everyone in their daily lives," said David Sullivan, legal counsel for the Executive Office for Administration and Finance in WBUR's story.
 
The tax expansion would cover custom-designed software and some services that run in the cloud. The custom software design services would include things such as website designs, Java software, PHP coding, and other custom software coding. The tax expansion would also apply the 4.5% tax to the cost of hosting a website and bandwidth needed to operate the website.
 
Some of the details on the service are still unknown. However, if the tax applies to hosting, bandwidth, storage, security, and other services it would potentially be applied to anything a company uses is not hosted on the premises. 

Source: Network Computing



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RE: Heh
By eBob on 3/26/2013 9:16:00 AM , Rating: 1
No kidding. The people of Massachusetts obviously like their taxes and will gladly hand over their cash to the government. Back in 2008 they had the opportunity to get rid of their state income tax (it was Proposition 1 iirc). What do they do? Seventy-five percent of the voters vote to keep the income tax. That averages to about $3700 that each masshole could have kept in his pocket.


RE: Heh
By ShapeGSX on 3/26/13, Rating: 0
RE: Heh
By wookie1 on 3/26/2013 12:07:37 PM , Rating: 3
Yes, welfare and public programs create a lifetime of dependency for those who use them. What a sad state of affairs. You can see why politicians like to roll out more and more public works programs. The dependency is created, and the politicians of that party can always maintain/increase their power by forever increasing these programs. If you're a government dependent, are you gonna vote for the guy that wants to reduce your benefits or the guy that promises to increase them?


RE: Heh
By ShapeGSX on 3/26/2013 12:55:52 PM , Rating: 1
Indeed, I am dependent on paved roads, police for public safety, public schools, fire departments, etc...

I didn't want that stuff to go un-funded. So I voted to keep the tax, rather than spinning the state I live in into complete disarray.

The proponents of this idea had no plan whatsoever.

I'm not opposed to cutting waste. And hell, there is tons of it in MA. But at least be responsible with how it is done.


RE: Heh
By FITCamaro on 3/26/2013 1:39:33 PM , Rating: 2
Funny...several states do just fine without an income tax.


RE: Heh
By ShapeGSX on 3/26/2013 1:49:46 PM , Rating: 1
Like New Hampshire. They don't have income tax, nor do they have sales tax. But they do have crazy high property taxes. While my property tax is 1.8%, in NH the property tax can be over 30%, depending on where you live.

The money comes from somewhere.


RE: Heh
By jeffkro on 3/26/2013 7:29:31 PM , Rating: 2
Wrong this is not an all things are equal argument. The fact is some states have outrageous spending habits compared to others.


RE: Heh
By bsd228 on 3/26/2013 3:59:51 PM , Rating: 2
> Funny...several states do just fine without an income tax.

with a sales tax, or property taxes, or if they're fortunate and living in the now, extraction taxes on oil or timber or other natural resources. It's pretty easy to balance the budget in Alaska and even send money to the residents...now.


RE: Heh
By FITCamaro on 3/26/2013 4:14:14 PM , Rating: 2
Try Florida or Texas.


RE: Heh
By rvd2008 on 3/27/2013 10:58:11 AM , Rating: 2
Texas has gas and oil industry bringing in billions of dollars. You don't know about that?


RE: Heh
By ShapeGSX on 3/26/2013 9:42:17 AM , Rating: 1
$3700 back in my pocket. I'll just re-pave the road on which I drive to work with that.


RE: Heh
By Bostongunner on 3/26/13, Rating: 0
RE: Heh
By spamreader1 on 3/26/2013 10:03:39 AM , Rating: 1
You obviously have never seen Per Capita State Budget Deficit Color Coded...
Most of the budget deficit states are North Eastern New England states. Clearly we handle our taxes better in most of the southern states.

What great services do you have that don't exist down here? Besides road salting services for ice?


RE: Heh
By euclidean on 3/26/2013 10:14:54 AM , Rating: 2
Could it be that the only reason your states' budget looks good is that you're sucking more money from the Federal gov't than other states? Just saying - if everyone was limited to an equal amount (comparative to population of course), would those southern states budget look as good?


RE: Heh
By wookie1 on 3/26/2013 12:15:24 PM , Rating: 2
This is a good point, it would be great to find a way to stop the feds from giving money to states. It distorts the intended balance between state govt and federal govt. Why does someone in Montana need to chip in to pay for bad decisions made by NYC politicians?


RE: Heh
By Bostongunner on 3/26/2013 10:18:45 AM , Rating: 2
Glad you ask...this is a couple of years old but check out how much a state like MA pays in Federal Taxes and the amount of Federal spending we get.If you look you will also see where most of the states that are in the bottom are from geographicaly
http://www.economist.com/blogs/dailychart/2011/08/...

Better health care services due to our health coverage laws. Pre school for kids, and better education overall where lot of other states tends to under funds both of these programs. Better Public Transportation services, I mean I can go on and on.


RE: Heh
By spamreader1 on 3/26/2013 10:44:33 AM , Rating: 2
We have all that, and I don't know of any state that doesn't start kids off in pre-k. We don't waste money on public transportation, geographically speaking it makes no financial sense. Look at DART in Texas to see a huge waste of money in an attempt to provide public transportation.
That's all arguable I suppose and would depend on your point of view.

Your comparing apples to oranges with gdp as opposed to gdp per capita, which is more commonly used. Per capita, the highest deficits still stand on the eastern seaboard plus California, New Mexico, and Arizona.

And yes, I said most before, not all. Some of our more democratic states ,less "red" if you will, are deeply in debt and do siphon money from the federal government. I'm not denying that, there's no need. Also in that 10 year period in the link you gave; la, miss, al, and fl were hit by several large hurricanes, and requested government aid for repairs and humanitarian purposes. Not unlike the recent hurricane in New England, so i'm sure some shift in last years numbers could be attributed to federal aid.


RE: Heh
By Bostongunner on 3/26/2013 11:09:41 AM , Rating: 2
What State are you from?
Don't get me wrong I don't like to pay more taxes, and I am not sure about this proposal being put here in this article.
Also a lot services that are offered in States like NY and MA are not offered in a lot of places in the South particularly places with no state income taxes that's just a fact! you look at programs for disables individuals, to substance abuse etc There is no way around it, it's like night in day.


RE: Heh
By New Texan on 3/26/2013 12:05:34 PM , Rating: 2
Have you seen the quality of public higher ed in states like MA or NY vs Virginia or Texas?

Let me know when UMass gets even a $1 bil endowment.


RE: Heh
By wookie1 on 3/26/2013 12:13:15 PM , Rating: 2
Well, when you pay people to be disabled or addicted to drugs, you will get more of them. I believe that the number of people getting disability from the feds is 16 million. States actually employ private firms to try to get their residents to move off of welfare (state funded) to disability (federally funded). The firms get a few grand per person they shift. The feds don't really complain, they want this situation since now these "disabled" people are dependent on the federal money and will keep those in power that promise to keep the gravy train rolling.


RE: Heh
By bsd228 on 3/26/2013 3:57:54 PM , Rating: 2
> And yes, I said most before, not all. Some of our more democratic states ,less "red" if you will, are deeply in debt and do siphon money from the federal government. I'm not denying that, there's no need. Also in that 10 year period in the link you gave; la, miss, al, and fl were hit by several large hurricanes, and requested government aid for repairs and humanitarian purposes. Not unlike the recent hurricane in New England, so i'm sure some shift in last years numbers could be attributed to federal aid.

A lot of you are confusing the state budget with the uneven flow of dollars to/from the federal budget. This graph is covering the latter. California sends roughly 20B/year to DC that doesn't come back. Coincidentally, the worst of the state deficits that have to be addressed have been about that size.

Aside from Texas, the south receives more federal spending than it provides in tax revenues. And no, it's not because of hurricanes. Military spending is one factor, but the primary one is that incomes/cost of living are lower there and under our progressive tax brackets, that makes a significant difference. California, New York, and even Texas are subsidizing the budgets of the states you hold up as good examples of fiscal restraint.


RE: Heh
By JediJeb on 3/26/2013 5:42:06 PM , Rating: 2
quote:
but the primary one is that incomes/cost of living are lower there and under our progressive tax brackets, that makes a significant difference.


But what makes the cost of living cheaper say where I am in Kentucky versus what it is on Connecticut? Why should a house I can buy here for $90,000 cost nearly $250,000 there? The lumber costs the same, the pipe and electrical wire costs the same, what runs the costs up so much? I bought an 800sqft log cabin on 3 acres of ground here for $42K, how much would that cost in New York or Mass?(oh and my property tax is about $800/year or 0.019%)

I know a lot of people here still believe in the philosophy of "if you don't work you don't eat". Not to say we push people out on the street who don't have a job, but many who do qualify for assistance refuse to take it because to them it is demeaning. These people would rather live within their means than to mooch off the government. Sadly though that standard is beginning to fall away and be replaced by the same "give me what I am owed" attitude in most other places.

Someone above listed funding public schools as the reason to keep their state income tax. Here we fund it mostly through property tax at the county level, with some coming from the state and federal levels, but most is local. I can say the quality of education here is still quite high, but back when I was in school and we had even less funding, my 8th grade class had 12 kids in it, we had no kindergarten or head start and yet out of those 12 kids, one is a chemist, one a chemical engineer, one a machinist, one a welder, one a nurse, one manages a large department store. We didn't have TVs or internet or even computers in our classrooms, but we did actually learn and most went on to achieve quite a bit in life. What percentage of students now will go on to be successful versus the percentage that will end up taking the handouts and sitting at home? Maybe the reason government budgets are to large is because of things like focusing on how much money we can spend on education instead of how good of an education can be given to the students. More expensive education does not always equal better education.


RE: Heh
By Spuke on 3/26/2013 1:09:28 PM , Rating: 2
That link is old. California is running a deficit right now and has been for at least two years, maybe three.


RE: Heh
By Bostongunner on 3/26/2013 2:41:43 PM , Rating: 2
haha well do u really know what you talking about or you caan't read what this graphic was for?
this is not about State running a deficit rather the amount of federal money they get compare to what they pay the federal govt in taxes. anyway


RE: Heh
By Rukkian on 3/26/2013 10:09:29 AM , Rating: 3
Maybe they just have a sense of personal responsibility and not needing to suck more money from the federal government than they pay in. Most "red" states are the ones at the top of the list taking the most money from the federal government, which is one of the reasons we are in the current financial crisis.


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