March 17th, 2006
An open source tax credit?
John Irons and Carl Malamud (right), both fellows at the liberal Center for American Progress think tank, have developed a proposal they call the Open Source Tax Credit.
The idea is that corporations can write-off their work developing software in many ways, but individuals can’t. And they should.
While I hate to look a gift horse in the mouth, I think this thing is mis-named. Corporations developing open source tools can already get the write-offs. The problem Irons and Malamud are addressing is that individuals can’t write-off their research time, regardless of whether they are writing open source or proprietary code.
Where open source may come into play is where you decide to create a company to gain those write-offs from your work in open source. You can’t claim to run a company if all it does is lose money.
But is that really a problem? Doesn’t the open source business model work for everyone? After all, if you get some consulting income or freelance work because of your open source development efforts, having a corporation would let you shield that money from taxes, making your time a cost of doing business.
Corporations are cheap to create. There are folks in Nevada who create them for a living, and you need not move there to get the benefits. (No state taxes, either.)
So is this a solution in search of a problem? Or does this idea make sense to you?
Dana Blankenhorn has been a business journalist for 30 years, a tech freelancer since 1983. You can follow Dana on Twitter. See his full profile and disclosure of his industry affiliations.
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