States Struggle to Tax the Cloud

June 1, 2015 Off By David
Object Storage

Grazed from GovernmentTechnology. Author: Liz Farmer.

Two years ago, Massachusetts took a bold step. The legislature passed a bill to tax the cloud. But they didn’t stop there. Lawmakers also levied taxes on other tech activities. While the cloud may be where the fastest growth is taking place, technology overall is an increasingly large part of a state’s economy. Massachusetts didn’t want to lose out on a chance to include it in its revenue base. Legislative analysts projected that the taxes would bring in $160 million a year.

But just two months after passing the “tech tax,” as it had become known, Massachusetts repealed it. Opposition from the state’s business forces rained down pressure on lawmakers. The new law, they claimed, was putting them out of business. “It got very bruising,” says Andrew Bagley, research and public affairs director of the antitax Massachusetts Taxpayers Foundation…

Meanwhile, the Department of Revenue struggled to provide guidance to business owners on whether the service they were providing was subject to the tax. Amy Pitter, director of the department at the time, admits the complexities and confusion surrounding the law were a burden. So the legislature voted to repeal it and then-Gov. Deval Patrick, who had proposed the law in the first place, signed its retraction…

Read more from the source @ http://www.govtech.com/budget-finance/States-Struggle-to-Tax-the-Cloud-.html