epaper.ardemgaz.com/WebChannel/ShowStory.asp?Path=ChatTFPress/2005/12/25&ID=Ar00101

Proposed tax change worries businesses

By Mike Pare Staff Writer

A state board is proposing a sweeping change to make computer software used in business subject to property taxes, a move that some business leaders contend could drive up costs and hurt job growth in Tennessee.

  "This would be a significant chunk of change," said Hayes Ledford, the Chattanooga Area Chamber of Commerce’s director of public affairs.

  Carl Hartley, a Chattanooga attorney representing some businesses, said the change could put a considerable tax bite on some companies whose businesses are heavily based on computer use, such as banks, finance companies, leasing firms and insurance businesses.

  Officials at UnumProvident Corp., the Chattanooga-based insurer with 3,000 workers in the city, said the shift could add a substantial cost to doing business in Tennessee. Spokeswoman Mary Clarke Guenther said UnumProvident buys a lot of software.

  "We have 600 software applications in use throughout the company," she said, adding that not all of its computer work is based in Chattanooga.

  Currently, there is no consistent approach to determining what business software should be considered taxable, according to the executive secretary of the State Board of Equalization, which proposed the change.

  However, software already is taxed as property in some Tennessee counties, said Kelsie Jones. He said county assessors have taken "varying approaches" in making distinctions about not only taxing software, but the kinds, as well. For example, Mr. Jones said, some tax operational software but not that which is applicational.

  The new rule would provide a uniform standard across the state, he said.

  "One of the reasons for the proposal comes down to consistency. The rule as proposed would quit worrying about distinctions," he said. "All software becomes assessable."

  Hamilton County Assessor of Property Bill Bennett said his office has taxed operational software at companies where it has done audits for six or seven years. The proposed rule "would take the gray area out," Mr. Bennett said.

  The board has set a Jan. 23 hearing on the change in Nashville. Mr. Jones said staff members will receive comments on the proposal, consider changes, and at a later date it could go back to the board for a vote.

  Ray Childers, president of the Chattanooga Manufacturers Association, said the proposal has "serious implications" for businesses. Mr. Childers said he is concerned the change may be done administratively rather than legislatively.

  "I understand there may be constitutional issues," he said.

  State Sen. David Fowler, RSignal Mountain, said he is so concerned that he has asked that a bill be drafted to permit the Tennessee General Assembly to consider the issue.

  "I do think it’s a major change in tax policy with economic ramifications that needs to be considered by the legislature," he said. "It may be the legislature agrees with the rule change."

  Mr. Ledford said the rule change would hurt service companies and high-tech manufacturers as well as small and medium-size businesses.

  "It’s an added burden," he said.

  Mr. Jones said Tennessee is a lowtax state, and taxing computer software would be just one component of a number that businesses consider. Also, he said, the state offers tax incentives to companies considering moving to the state.

  Mr. Jones said the rule change was coming from the state level. He said the personal property section in the state comptroller’s office works with county assessors in Tennessee.

  "The board will listen for reasons for or against the change," Mr. Jones said. He said he did not know how much revenue a change would bring in, nor did Mr. Ledford. Revenues generated from a property tax on software would go to the county in which the tax was assessed.

  In Georgia, Catoosa County Chief Appraiser Dale McCurdy said his office doesn’t tax computer software as property. He said he believed that the state exempted software in the late 1990s.

  E-mail Mike Pare at [email protected]

Always with the tax increases!

You never hear politicians talking about slashing expenses.

The business's should be leaving by the thousands.

Insignificant chunk of change? Then why are they after it?

In other news, Tennessee companies inexplicably embrace Linux...

Uhm, software companies have spent the last 20 years foaming at the mouth claiming that what you hand over money for doesn't actually become your property, they just grant you the temporary and limited right to use their Intellectual Property.  You don't own anything.

So now the gov wants to collect property tax on something you don't have any ownership claim to?

If they tax by the number of lines of code, COBOL programs wil be a win fall.

be well
Maxwell

Quoted: Always with the tax increases! You never hear politicians talking about slashing expenses.

Government is now an industry.........an industry that wants to expand and grow.

Expand = control more and more aspects of our lives thru more and more bureaucrats.

Grow = get more and more of our $.

Slashing expenses?........Why would any industry limit itself?

Welcome to the "New Amerika".

Taxing software?...........only a government bureaucrat could come up with that shit?

Quoted: flymeaway.net/images/blink.gif epaper.ardemgaz.com/WebChannel/ShowStory.asp?Path=ChatTFPress/2005/12/25&ID=Ar00101 Proposed tax change worries businesses By Mike Pare Staff Writer A state board is proposing a sweeping change to make computer software used in business subject to property taxes, a move that some business leaders contend could drive up costs and hurt job growth in Tennessee.

Wonder what the political make-up of that "state board" is?

Wanna bet it is a bunch of the typical good ole boy Dems????

Assholes.

Quoted: Uhm, software companies have spent the last 20 years foaming at the mouth claiming that what you hand over money for doesn't actually become your property, they just grant you the temporary and limited right to use their Intellectual Property.  You don't own anything. So now the gov wants to collect property tax on something you don't have any ownership claim to?

Here starts the argument against this propisition! Absolutly right, read the EULA!

What was the Boston Tea Party all about?

Quoted: If you can deduct it against your income and depreciate it, it can be taxed.   TN has no state income tax so there are quite a few strange corporate tax laws and why many of us here in private business never incorporate.   Still some of you guys upset, I've lived your states and know the difference.  I pay 1/4 of the property tax I did in Ohio or IL and a good six percent of my income doesn't get skimmed off the top. This is a very anti-tax state so I wouldn't hold my breath on this bill passing. Tj

You are correct, it will not pass.  I personally know David Fowler and there is no way in hell he would let this thing get very far.

according to the executive secretary of the State Board of Equalization

WTF? Sounds like something out of Atlas Shrugged....

Quoted: Currently, there is no consistent approach to determining what business software should be considered taxable, according to the executive secretary of the State Board of Equalization, which proposed the change.

IOW, they're socialists who will tax where they think they should instead of how they should.

What they think they're "equalizing" is wealth, not to mention their funding is probably self-induced with these "proposals".

I've never even heard of this board & I live & vote here.

Looks like I've got yet another topic to add to my letters to the wonderful elected officials. I might have to hire a secretary at this rate.

This is slightly off-topic, but..... I guess the govt of TN has never heard of cut-backs, rather than revenue streams.
==========================================================================
Food Tax Sends Tenn. Shoppers Out of State

Dec 26, 4:34 AM EST

By BILL POOVEY
Associated Press Writer

CHATTANOOGA, Tenn. (AP) -- When Julie Abel goes grocery shopping each week, she drives more than 25 miles to Georgia to avoid paying the nation's highest average tax on food: 8.4 percent in Tennessee.

"If you can save $5 it is worth driving down the road," Abel said after traveling from her rural home in Hamilton County, which collects 2.22 percent sales tax on food on top of the 6 percent for the state. Georgia does not tax food sales.

Abel is not alone in her frustration. Rep. Michael Kernell, D-Memphis, said he regularly hears complaints about the state's almost 60-year-old food tax and he predicted it would change.

"A lot of people can't believe it," he said. "People are leaving the state to buy groceries."

Chris Daly, chairman of Tennesseans for Fair Taxation, wants to end the state's tax on food because he said it victimizes low and middle income people.

An "average family of four could eat for free from Thanksgiving to Christmas on the tax they pay on food in a year," Daly said.

A recent report from Daly's group shows Tennessee leads the nation with the highest average sales tax on food, 8.4 percent, and a 9.4 percent sales tax.

Tennessee is among nine states that either have no state income tax, or collect it on dividend and interest income. Some say a state income tax could help ease the burden of the tax on food.

Gov. Phil Bredesen has said that if re-elected next year he will not support a state income tax. Bredesen spokeswoman Lydia Lenker said the Democratic governor has shown that state government "can operate within its means."

Bredesen's state finance commissioner, Dave Goetz, said the report that shows the state has the highest average tax on food is no reason to change the tax system.

"The people in Tennessee have been clear they are comfortable with the tax system we have," Goetz said. "While it may seem high to some, apparently most people don't feel it's a real problem."

Another report by Tennesseans for Fair Taxation shows average sales taxes on food in states that border Tennessee range from no tax in Kentucky to 8 percent in both Alabama and Arkansas.

In Alabama, a spokesman for Montgomery-based Alabama Arise, an advocacy group for the poor, said there is an ongoing effort to eliminate or at least reduce the tax on food.

"We are taxing the poor on the necessities of life and that is something most states avoid. But we are doing it with pride," said Alabama Arise director Kimble Forrister.

Carolyn Denison, 71, of suburban Chattanooga, said she frequently drives across the state line to shop but thinks Tennesseans would oppose replacing the sales tax on food with an income tax "because they just see it as another tax."

"I don't think it is as fair as an income tax," Denison, a retired public school teacher, said of the tax on food.

AARP Tennessee and some advocates for the poor, such as the anti-hunger group MANNA in Nashville, will continue to push to end the tax on food, which accounted for $443.1 million, or 4.6 percent of all state taxes collected by the state in fiscal 2005.

Brian McGuire, legislative liaison for the 615,000-member AARP Tennessee, said "clearly the food tax represents absolutely the worst aspect of Tennessee's revenue system."

---

On The Net:

Tennesseans for Fair Taxation: http://www.yourtax.org

The Sales Tax Clearinghouse: http://thestc.com/STrates.stm

© 2005 The Associated Press. All rights reserved

Quoted: This is slightly off-topic, but..... I guess the govt of TN has never heard of cut-backs, rather than revenue streams. ========================================================================== Food Tax Sends Tenn. Shoppers Out of State Dec 26, 4:34 AM EST By BILL POOVEY Associated Press Writer CHATTANOOGA, Tenn. (AP) -- When Julie Abel goes grocery shopping each week, she drives more than 25 miles to Georgia to avoid paying the nation's highest average tax on food: 8.4 percent in Tennessee...

You can stand in Chattanooga and pee into Georgia. I know people that drive further than that to buy organic produce.

Like it or not a state does have to have at least some kind of revenue incoming.  If every legislator everborn or ever will be born there knows that talking about an Income Tax is the instant route to political suicide, you can expect them to be pretty clever about other ways to raise taxes.

Quoted: .... A state board is proposing a sweeping change to make computer software used in business subject to property taxes, a move that some business leaders contend could drive up costs and hurt job growth in Tennessee.....

I'm positive almost all the major data centers and NOC's around Tennessee will move out of state. Alternatively, there are always a way around it.......

Quoted: I'm positive almost all the major data centers and NOC's around Tennessee will move out of state. Alternatively, there are always a way around it.......

I don't know about that.  All of the data centers I've been in software was a near $0 expense.  You get Cisco IOS upgrades for free with a service contract, Solaris comes free with the Sun servers, and everything else is open source.  I've seen a few customers of the data centers that use proprietary crap, but not much by the data center itself.z