How About Tax Credits for Cloud Computing?

The US corporate tax rate is 35%, and there can be as much as 12% levied state government. So this $200,000 per year "saves" between $70,000 and $94,000 in taxes.

Give it Credit
But what if, in addition to this traditional bookkeeping, the government cut the business a check for the $1 million? In other words, if it granted a one-time, on-the-spot tax credit for buying this hardware?

We’re talking about Cloud Computing, so the beneficiary would be a service provider if this hardware is used for public cloud. So what if, additionally, the government cuts a check matching the annual amount this server’s customers pay for the Cloud service?

Well, the point of Cloud is the customer doesn’t always know what hardware is being used, so let’s just have the government cut checks to users of any public cloud service.

Does this sound insane? A huge waste of taxpayer money? Or would it get people to buy a lot more of this stuff? Who would turn down such a deal?

It’s similar in concept to the "cash for clunkers" program that was so popular in the early days of the Obama administration. In the end, cash for clunkers cost $3 billion and got a lot of new cars on the road – it made a dent, so to speak.

Let’s remember the Federal budget is now more than $3 trillion dollars in size. The military budget alone doubled under the Bush administration, rising to about $700 billion annually. 

Cloud-centric legislation, on the other hand, would result in tens of billions of checks being cut, depending on what was covered in it.

Credit the Workers, Too
Let’s further suppose that US companies get an additional tax credit of, say, $20,000 for every US citizen they hire to do work directly related to Cloud initiatives. Let’s say "directly related" is a loose concept.

It has turned out that the original multi-hundred-billion-dollar stimulus package from the Obama administration committed can be viewed as costing $275,000 per new job created. Sending the $20K is a lot cheaper and more direct.

Let’s say that tax credit is bumped up to $25K for every worker over 40 and every worker hired at a salary above $75,000 per year.

These jobs won’t just be created in Silicon Valley. Enterprise IT is a phenomenon throuhgout the US, reaching down to small cities and large towns in addition to the big metropolitan areas.

Time to be Bold
Let’s also say this happens in the wake of President Obama invoking the 14^th Amendment to remove the debt ceiling. The argument to do so is not insane, even if it’s unproven. But doing so would be just the type of bold move the US is crying out for right now. The President showed no hesitation or remorse in dealing with America’s most hated enemy.

Would he show the same courage (metaphorically) in dealing with his political enemies – and he should make no mistake, the folks who oppose him are not "loyal opposition," they are enemies. 

It may seem like invoking the 14^th Amendment would be risky and just add to the current chaos. To me, it would be similar to Ronald Reagan’s firing 11,000 air-traffic controllers when they went on an illegal strike. He was criticized for being rash, even crazy. But the decision stuck, the controllers were replaced, and the avuncular Reagan became feared by his political opposition.

Back on Capitol Hill…
There is no chance that the current Congress could debate something like a "Cloud Computing Technology and Jobs Bill" without larding it with everyone’s pet project, and there would be screaming from every other sector of the economy.

Besides, it seems lawmakers in Washington are not taking things very seriously, and I doubt more than a handful of Senators and Congressman are even familiar with the term "Cloud Computing." But most of their staff members are usually very bright, youngish people – seems it would be an easy sell to point out that Cloud brings new productivity to the economy and it’s primarily American technology.

This idea runs counter to the libertarian principles so many in Silicon Valley claim to prize. And certainly, the tech industry itself doesn’t always behave well. There’s been enough posturing, flaming, and business warmaking in our industry over the decades to make it difficult to throw stones at Congress.

But here we are. Waaaay up the creek without a paddle. The world needs a strong US economy, and is certainly not seeing one now. If America sneezes, the world catches a cold. Now that America has full-blown influenza or worse, what does that mean for the world?

So let’s think about it. What would, say, $50 billion in high-tech tax credits do to stimulate and help restore the economy? Then perhaps we could extend these into education…