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Washington State Wants to Punish Indie Programmersby George Ziemann -- March 27, 2010 The State of Washington is considering adding a 10 percent tax on custom software, which seems as if it will be a problem for "software firms and consultants that work on web sites, business applications, and other specialized programs." Except Microsoft. There's a lengthy explanation about this at TechFlash, a Seattle tech-oriented news site of sorts with featured section on things like "Venture Deals," "Pink Slip Watch," "Microsoft's New OS" and the ever-popular "Bill Gates Watch" and "Jeff Bezos Watch." Right now software designers, web developers, database programmers are considered to be service industries, meaning that what they're really selling is their labor, rather than a product. This is especially true of custom software projects, which usually cannot be resold to other clients. A lot of businesses use custom software because everything they can buy off the shelf has some sort of limitation or, in many cases, there just isn't software designed to do what they need. Custom software is made to conform to the needs of the clients' processes, as opposed to changing the processes to accommodate the quirks of the software. The latter leads to the familiar phrase, "The computer won't let us do that." I'm currently using a database that tracks album info, royalties, songs, customers, sales, vendors, vendor invoices, receipts, payments, inventory, multiple bank accounts, account transfers, expenses, accounting summaries, a chart of accounts and some administrative functions. I didn't need payroll, since I don't have any employees. I don't have any manufacturing, but every time I make a Hayden's Wall or Hurricane Alley CD, it will deduct the blank CD-R, case, insert, and a little bit of ink from the inventory. There's no way I could go buy something off the shelf that'll keep track of bank accounts and the track-by-track information of our repertoire, both released and unreleased. Did an inventory database once for a large well-known company. All it did was inventory and vendors. What they really wanted was a fast, efficient search function based on numerous parameters. There are really a lot of companies out there who require the services of people that can give them software that complements their work instead of complicates it. Or maybe they need someone to put a web page together. It could cost an extra 10 percent in Washington soon. That's a pretty significant tax, especially if they're going to see how this goes and start applying it to other occupations if no one puts up too much of a fuss. While you might be able to swing an extra 10 percent for the auto mechanic, a 10 percent stealth increase in doctor fees would be really annoying right now. Of course, Microsoft is exempt because they've got some kind of tax dodge going but, really, nothing they make could be called "custom." They're lucky to achieve "functional" from time to time, during brief moments while the hackers are at a conference in the subterranean passageways under the city of New York, planning the next simple exploits of Windows and thus keeping Security Update Tuesday alive. And I think the hackers easily fall under the category of developers of custom software. Does this apply to them? It should, just to help the state see how stupid this idea is. If you live in Washington and get scammed for $100,000, now it's going to cost an extra $10,000 in taxes. Bend over, baby. |
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