TechNet supports tax policies that promote and foster an economic climate that benefits investment and innovation that, in turn, allows companies to compete, thrive, and expand in the United States and around the globe.
Due to many factors, the tax landscape at the state level is currently fluctuating at a rate not seen for decades. Research and development tax credits are popular in some states and under siege in others. Years of scarce budgets and underfunded infrastructure and public services are driving policymakers to consider new taxation schemes that will likely be counterproductive for long-term budgeting purposes. New policy priorities in the area of clean tech are also creating new opportunities for smart tax incentives.
TechNet’s state program supports the following principles:
- Research and development tax credits that spur growth in key technology sectors.
- Lowering corporate tax burdens and/or preventing attempts to raise corporate and payroll taxes in order to pay for other government services.
- Preventing attempts by states to tax pre-written computer software and cloud computing services or SaaS.
- Engagement by members on nexus tax issues, including but not limited to, marketplace facilitator nexus, economic nexus, payment facilitator nexus, remote seller representative nexus, and click-through/affiliate nexus.
- Promotion and expansion of investment tax credits and angel investor tax credits.
- Tax policy that provides clean energy technologies with a stable tax environment that appropriately supports the unique financing needs of clean energy technologies.Finding an amenable and consistent way for states to tax the “sharing economy,” which is rapidly growing and forcing policymakers to grapple with how to tax disruptive technologies that do not rely on brick and mortar presences in a state and are infringing on traditional industries that are already regulated and taxed.
Exempting Cloud/Software as a Service (SaaS) Taxes
Many states and small businesses consider SaaS or cloud purchases as an untapped source of revenue as hardware offerings become less of a factor. The question centers around whether offering storage space in the cloud is a tangible “good” (subject to sales taxes), a “service” (subject to use taxes), or neither of those. Different states are making different decisions and the situation is still evolving. TechNet will continue to oppose state-by-state efforts to extend traditional sales taxes to SaaS and related technology services.
State policymakers continue to try to expand the definition of what creates a nexus that will trigger a tax obligation. These efforts can be especially tricky because they are labeled as updates, modernization, or clarifications so that the additional revenue collected is not considered a “new” tax, but a tax already owed that has not been collected. This has political, legal, and fiscal implications.
Legislators consider the taxing of remote sellers based on a substantial nexus as a huge revenue-generating source. Until Congress acts, there will be continued attempts to ‘Kill Quill.’ Quill is the Supreme Court decision which held that vendors with no physical presence in a state lacked the substantial nexus to impose tax collection duties under the Commerce Clause, and defined what constitutes a nexus and how to collect taxes on purchases made online. This will, of course, impact technology companies if states impose a sales tax obligation on businesses that sell to residents via the Internet, catalogs, television, or telephone.
TechNet will try to block attempts to ‘Kill Quill’ and prevent changes to state tax code that augments a state’s ability to expand the definitions of the type of activity required to create sufficient nexus for tax collection purposes.
Investment Tax Credits
Legislation related to tax credits, such as research and development, employment credits for job creation, angel investor, venture capital, and technology investment/development tax credits, can spur growth, incentivize desired economic activity, and help companies make decisions regarding where to expand operations. The 2017 landscape for tax credits is increasingly unstable. Traditional credits are embraced in some states and discontinued or in jeopardy in others. Increasingly, new tax credit ideas have been focused on the startup sector to ensure increased access to venture capital and angel investor dollars needed to succeed in a competitive market. TechNet will educate policymakers about the value of smart investment tax credits, work to protect and restore traditional credits, and promote consideration of new kinds of credits that expand the benefits into the innovation economy.
Clean and Renewable Tax Incentives
Many companies have a vested interest in “going green,” and consumers expect technology companies to be leaders in this area. Also, because of the global scope and nature of technology companies’ offerings, it is critical that they have sources of affordable, predictable, and reliable energy that will not have interruptions due to the myriad circumstances outside a company’s control. Lower energy costs allow for tech companies to use those savings on other areas of their businesses. TechNet will promote the continuation and adoption of these incentives.