[IP] more on open source tax credit
Begin forwarded message:
From: Carl Malamud <carl@xxxxxxxxx>
Date: March 18, 2006 4:13:56 PM EST
To: dave@xxxxxxxxxx
Cc: ip@xxxxxxxxxxxxxx
Subject: Re: [IP] more on open source tax credit
Hi Dave -
Two quick in-line comments:
From: Dana Blankenhorn <dana@xxxxxxxxxx>
Date: March 18, 2006 3:13:22 PM EST
To: dave@xxxxxxxxxx
Subject: Re: [IP] open source tax credit
<snip>
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.
Our credit proposal only allows writing off of out-of-pocket expenses.
That's the way charitable contributions work in the tax code: you can
delete your expenses, but your time is "worthless" (to paraphrase the
Mastercard commercial ;).
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.
If you are a consultant, you can [almost always] write off your open
source development expenses, assuming they are arguably business
related.
Our proposal is aimed directly at the person who has a day job
on salary but doesn't do outside consulting. In other words, the
young programmer with a W-2 Form. That person doesn't have
the ability to deduct expenses because they have no self-employed
income to offset it on their Schedule C.
The reason we've crafted this as a credit instead of a deduction
is because credits are more progressive: they benefit those with
lower incomes more than those with higher incomes.
Regards,
Carl
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