I’m thinking there may be a bit of a kerfuffle over this.

Massachusetts could be readying to level a state tax on cloud-computing providers.

Governor Deval Patrick is proposing a sales levy on “computer and data processing services,” a broad categorization that includes everything from building Websites to backing up data in the cloud—in fact, according to his budget for fiscal year 2014, the only exemptions are “(1) downloaded books, music, videos or ringtones, or (2) computer facilities management services.”
“I think the best way to say it is we need our tax code to catch up with the way that technology is affecting everyone in their daily lives,” David Sullivan, legal counsel for the Executive Office for Administration and Finance, told the radio station. “Our tax agency is no different from the rest of the world. We’re not living in the 19th century any more.”

The station also quoted Paul Davis, CEO of local data-analytics firm Intelligent Integration Systems, as saying the proposed tax was “untenable.”
The question now is whether those entities potentially affected by the Massachusetts tax will push back—if enough firms threaten to leave the state, it could compel the governor to adjust his plan.

And it doesn’t stop there:

The tax would cover custom-designed software and services based in the cloud. “Custom” software includes the design of Web sites, so the cost to local businesses of a new Web site would increase by 4.5% on contracts to design the site, write Java, PHP or other custom code. The cost of site hosting and bandwidth would also be taxed.

  1. MikeN says:

    People connect to my software from their computer to my software running on a server located on Earth, so I’m in the clear.

    Basic rule for liberals is
    If it moves, tax it.
    If it keeps moving, regulate it.
    If it stops moving, subsidize it.

    • dadeo says:

      Basic rule for liberals is
      If it moves, tax it.
      If it keeps moving, regulate it.
      If it stops moving, subsidize it.

      Basic rule for pseudo-conservative republican is same as above but blame the libs.

  2. Bob says:

    Well, they can now tax you (or is it a fine this week, sorry its hard to keep up sometimes) for just living in the country, so really, is it any surprise they would tax the internet?

    If you want Big Government you have to have big taxes.

    • Ken says:

      They can tax you for not living in the country. Even if you give up your citizenship (ie. right to live or visit a tax jurisdiction), they’ll still tax you for 10 years.

  3. The Real Fletch says:

    It is time for us to start taxing our politicians!

  4. ECA says:

    Lets see..

    Cars get better MPG, means less hiway taxes/less gas taxes..
    MORE sales on the net, means LESS tax in the state from sales..

    USED to be 20 corps would bid on hiway/road projects in the States, NOW there arent that many..1-5 companies, price go up..unless you can do it CHEAPER..

    1 cop in 1000 people isnt to bad…1 cop in 10,000 people, isnt bad until you get SHOT…and complain there arnt ENOUGH COPS..

  5. MWD78 says:

    This reminds me of how the USPS was going to try and put a “stamp tax” on E-Mail in the early days of the internet.

  6. TooManyPuppies says:

    “the only exemptions are “(1) downloaded books, music, videos or ringtones, or (2) computer facilities management services.”

    That would mean a Tax just to read this article as it’s not exempted. So, who would pay it? The reader or JCD?

    • Ah_Yea says:

      You got to the point.

      The only way this is going to work is to tax the local internet service providers.

      That would include traditional ISP’s, along with cable companies, phone companies, and cell phone providers in the state of Massachusetts (yes, a heavily liberal state).

      And of course this tax isn’t going to help the internet in any way.

      Watch for a mysterious explosion of satellite dishes!

  7. deowll says:

    Let’s be fair here. The state is spending a lot more than it takes in so they are going to take it out of the hides of their citizens. If the citizens don’t like it they can vote the rascals out or move out of state. Once you get enough people living off the tax payers you end up with a loop of ever higher and more comprehensive taxes until the economy dies and things go third world. You still get free health care but it takes a month or more to see a provider and even then what they pay for may amount to take two aspirins and come back in six months even if you have advanced cancer. Maybe especially if you have advanced cancer. Why waste money on somebody that is most likely going to die anyway?

  8. super77 says:

    The thought of more taxes is absolutely spectacular! More money for our bloated government to waste and mismanage.

    • Phydeau says:

      Except for the vital and essential government program your congressman gets for you, of course. 😉

  9. Uncle Patso says:

    I wish the state sales tax in my state was only 4.5% !

    • MWD78 says:

      Seriously…if Massachusetts is “heavily taxed” at 4.5%, what about other liberal strongholds in New England like my birthplace in CT@6% and where I now live in upstate New York @8-9.4% depending on the individual county?

      I definitely think taxing “the cloud” is a foolish way to go about things, but clearly there’s wiggle room on MA’s sales taxes overall compared to some of her neighbors. I can’t remember RI or VT’s sales tax rates off the top of my head, IIRC NH is a sales tax-free state.

    • MikeN says:

      The sales tax is higher than that in Massachusetts. I don’t know where they get that number. Perhaps it’s by including things that are exempt.

  10. Simon Templar says:

    The internet routes around stupidity whenever possible. As companies relying on internet to transport their services become taxed, they will relocate. What will be the 21st century version of the Rust Belt be called?

  11. msbpodcast says:

    They’ll tax the cloud just as soon as they can find its address.

    Whadda ya mean its outta state?

  12. Number33 says:

    Hey Guys!

    Let’s hug it out because bad news makes for bad feelings and that could mean for really bad things. I’ve been there. Solution: a nice hot shave for us all. Let’s go!

  13. Glenn E. says:

    Taxing cloud services, simply because they’re there? And likely because they have so little financial muscle to fight back. By this logic the state should tax public libraries, colleges, hospitals, health clinics, law offices, funeral homes, etc. They provide useful services, too. But don’t charge a sales tax, to the public. So why single out Cloud Services? Just because it can be labeled 21th century thinking? Yeah, way to tax the future, a-hole officials. While you’re at it, levy a future tax on Star Fleet Academy. Got to get that one in there, before the 23rd century sneaks up on us. The only reason they don’t want to tax Ringtones, is the major carriers screamed bloody murder. And most people would probably just stop buying them.

    And BTW, Massachusetts should talk about “not living in the 19th century any more”. That state has kept its property taxes lower than most other states in the US. Even though some of the richest people have lived there. The first Democratic candidate to run for office, who suggested raising the tax, lost the election to a Republican. Meanwhile, the rest of US pays for most of the state’s major highway improvements. Like Boston’s “Big Dig”.

    Wanna raise taxes? Tax the Kennedys, why don’t ya?


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