Has Governor Ritter Lost His Mind?

Apparently, the answer is yes, if reports are true that he is trying to fast track a bill that would create a special new tax for Colorado-based software companies.

End result?  Job killing.  While I usually am skeptical of politicians decreeing that “taxes kill jobs” (I don’t think it’s always clear), this one is very clear.

If you enact a special tax on software companies, they will go elsewhere, Bill.  This isn’t the Silicon Valley.  And while Colorado is a great place to create a company, we are still competing with a lot of other great places for talent and venture dollars.

Colorado should want to foster its innovation economy to improve job growth in this state.  A short-sighted money grab is bad a policy for long term economic success.  Read more about it here.

(As an aside, it’s not even entirely clear WHICH types of software companies will be affected.  There are some that think SAAS-based business won’t be taxed, while other, traditional software delivery companies will be taxed.  Whatever the definition is, this is bad for Colorado).

  • Not that I support this bill, but from what I understand it is only going to apply for in-state purchases, so sales outside of Colorado would not be affected by this. So while it will be annoying, it won't be that serious of a drag on at least my company. I hope it doesn't happen, but since I'm in the Software business I'm totally biased.

  • Ida Lau

    You feel strongly about this issue. Let the house know how you feel; come testify today: http://coloradotechnology.site-ym.com/

    Yes, it's Colorado specific and impacts any sales that occurs in Colorado including updates, maintenance components, SaaS services (you host, we buy, you have to figure out sales tax to charge,etc.), downloads, data centers, etc.

    Here's the bill: http://www.leg.state.co.us/Clics/CLICS2010A/csl.n… and select the correct bill number range (house bills 1151-1200) and look for 1192: "Sales & Use Tax Of Standardized Software".

  • Beth

    The original email to Sen. Hodge from Sal

    > February 9, 2010
    >
    > The Honorable Mary A. Hodge
    > Colorado Senate
    > 200 East Colfax Avenue
    > Denver, CO 80203
    >
    >
    > Dear Senator Hodge:
    >
    > I am writing you on behalf of all of the companies across all industries
    > in the State of Colorado to ask you to oppose HB 1192 because it is costly
    > and confusing, and will move jobs and companies out of the state. I am
    > also concerned that because the session have moved so quickly, you have
    > not been offered enough time to fully understand the consequences of this
    > bill or what it will do to all the companies and families in your district.
    >
    >
    >
    > Every single company in every industry will be impacted, including
    > hundreds in your district because every company will have to inventory all
    > of the software that every employee touches throughout the year. Consider
    > businesses who have payroll clerks, logistics or salespeople, office
    > clerks – and all — who use some kind of software program to log in time,
    > access information or do their work. Think of the software the local
    > newspaper uses to lay out the newspaper, process advertising, conduct
    > admin services, and even write the stories. The local bank uses countless
    > types of software to protect your bank account, provide you online banking
    > or even process deposits and checks. Think of the local delivery company
    > or any florist who uses delivery services. And, think of the local realtor
    > who accesses residential or commercial lists!
    >
    >
    >
    > Each of the companies will have to inventory all of the software every one
    > of their Colorado employees even touches during the year. Next, they will
    > have to go back and determine if the software program was assessed sales
    > tax at the original sale – even if the software was purchased in another
    > state by a home office, and even if the software was purchased ten years
    > ago. Next, the company will have to determine the sales tax then due on
    > every piece of software(not originally bought with tax) every Colorado
    > employee uses, and submit that. Can you imagine the amount of time and
    > frustration this will cause?
    >
    > We know that companies cannot bear the administrative nightmare this would
    > cause – how are car dealerships and bakeries and banks going to be able to
    > add this kind of administrative complexity given what they are already
    > doing? Then, think of how companies will just move jobs to the other
    > nearly 40 states that don't require this!
    >
    > HB1192 will create reasons for companies to move jobs out of Colorado into
    > our neighboring states like Utah, Wyoming, Kansas, Arizona – or the other
    > more than 35 states across the US without this confusing new regulations.
    > And, because the regulation is so confusing, many more will be impacted —
    > many who will be calling you to ask you what it means, and why they are
    > suddenly finding themselves owing extra taxes.
    >
    > Our economy depends on all of these jobs, and so too do the families in
    > your community.
    >
    > This new tax will impact every one of these companies and most don't
    > realize this new tax impacts them. We ask you, as their elected official,
    > to protect them before this confusing bill is passed and care about the
    > jobs in your community that will be lost.
    >
    >
    >
    > Please vote "No" on HB 1192 and help our communities.
    >
    > Sincerely,

    > Sarah Christ

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