Massachusetts Computer Services Tax Riles IT Industry
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User Rank: Apprentice
7/31/2013 | 12:31:00 PM
re: Massachusetts Computer Services Tax Riles IT Industry
Tech in general is global, and IT services - meaning software development is an extremely competitive global market. Adding a local tax simply pushes work from local vendors to non-local ones. 6.25% is a big number, we win or lose contracts for less then 2% difference.

It worries me that I will have to charge 6.25% tax to any clients that i have in MA. but it worries me more, that any vendors that I use (1099 staff) will have to charge me 6.25%, and I will have to mark that up (2.5x) and pass it on, and then charge 6.25% on top of that.

The work to figure this out will wind up costing way more then the 6.25%, and i don't yet know what I can pass on and what I can absorb. I do know that
National, and global companies that do business is MA, will assume that they might be on the hook regardless of where the work is preformed, and simply choose to pick a different vendor.

This is a disaster, for me, and for small software companies in MA.
User Rank: Apprentice
7/22/2013 | 8:52:10 PM
re: Massachusetts Computer Services Tax Riles IT Industry
majenkins: You're right innovation doesn't just stop. But it does pack up and move elsewhere.

Back in the 70's and 80's, Connecticut had a booming high-tech industry that was was not only able to offer competitive jobs to all engineering and technology graduates, but also entice those from other states. In fact, CT was called the "High-Tech Corridor" between Boston and NY. Then in the late 80's they passed new legislation to control growth in high-tech with new taxation. What followed is a collapse of the high-tech industry as companies relocated to other states. To this date, CT has not recovered. It's a nice state, as long as your profession is NOT in high tech or in any way related to high tech.

Since engineering talent is a scarce resource, and at the top of the food chain, it is fragile and can affect so many others if critical mass cannot be maintained. A bill, just like the one proposed, can trigger major investors to move their R&D and IT centers to other states, and if R&D leaves, others follow. What executive would be against saving their company an additional 6.25% on R&D and IT costs? Doing business in MA already carries a high cost of living as well as high income, property, sales, and corporate taxes. Adding an additional burden could be the tipping point. I believe it is a too high a price to pay for covering the transportation defect.
User Rank: Apprentice
7/20/2013 | 3:04:53 AM
re: Massachusetts Computer Services Tax Riles IT Industry
It would be nice if this article would have shed some light on what exactly is going to be subject to a sales tax and what still isn't taxable in that state before and after the new law. Here in Ohio, I've always had to charge my clients the state sales tax on certain types of computer work, but not for all types of work, so perhaps Massachusetts is just catching up to Ohio. I'm also wondering what to think about the last line in this article that fails to include Ohio, since I charge sales tax for some computer work! Sadly, the article fails to clarify any important facts regarding the proposed tax, such as whether it's just normal repair, hardware, and software sales that are taxable or otherwise, and it makes me think there's more to this story than the author bothered to investigate and include in the article - just copying the A.P. wire newsfeed, are we?
User Rank: Ninja
7/19/2013 | 5:13:58 PM
re: Massachusetts Computer Services Tax Riles IT Industry
Every time someone says they plan to do something in the tech industry that someone else doesn't like one of first, if not the very first, things the people that don't like it say is it will slow/hurt innovation. Well if innovation were really that fragile then it would have been completely killed by now. I am not saying this tax is a good thing or a bad thing, heck everybody wants more money, but please stop with the clich+¨d G«£this will slow/hurt innovationG«• nonsense. Just find another dead horse to beat for a while, canG«÷t you.

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