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I don't get it. When I am shopping for hosting services or hardware, I am shopping across entire country, I don't care if the vendors had to markup this or tha

by DenisM 14y ago

I don't get it. When I am shopping for hosting services or hardware, I am shopping across entire country, I don't care if the vendors had to markup this or that, and I don't have to buy local, and vendors don't mark up their prices based on my location within US. When selling, I am paying tax only on sales to WA residents, which is like 1% of my world-wide sales, and on those I am paying like 0.5% gross receipts tax. So it's 0.005% tax rate total. How did you end up with "for a software/internet startup who buys hosting from a single provider only, it is probably more like a 3-4% income tax." ???

rdl 14y ago
Most businesses buy a lot of products and services locally. It is infeasible for your garbage collection service or other utilities to be sourced from outside the local area, for a lot of goods there are licensing or transportation issues which make them local, etc. Internet companies are a huge exception to normal businesses. (which is why they're so awesome and can turn into scalable startups so easily). Income tax is on profits, so if you have a low margin business, or an earlier startup business, you'd be paying low total income taxes even at the 3-4% rate., so a tiny B&O direct expense and higher costs for facilities, contractors, etc. translates to a much higher equivalent income tax rate. B&O isn't a good argument against setting up your tech company in WA; it's just an unfair tax which penalizes some businesses (inherently local ones) while favoring others (prof services and internet). (the only good argument against tech startups in Seattle is the somewhat-smaller-than-Bay-Area pool of tech workers, largely better now than it was 10y ago when they were just Boeing and Microsoft, and the lack of great VCs (there are a few, but not the best in the world, and not many vs. SF, NYC, or Boston).

by DenisM 14y ago

rdl 14y ago

Most businesses buy a lot of products and services locally. It is infeasible for your garbage collection service or other utilities to be sourced from outside the local area, for a lot of goods there are licensing or transportation issues which make them local, etc. Internet companies are a huge exception to normal businesses. (which is why they're so awesome and can turn into scalable startups so easily). Income tax is on profits, so if you have a low margin business, or an earlier startup business, you'd be paying low total income taxes even at the 3-4% rate., so a tiny B&O direct expense and higher costs for facilities, contractors, etc. translates to a much higher equivalent income tax rate. B&O isn't a good argument against setting up your tech company in WA; it's just an unfair tax which penalizes some businesses (inherently local ones) while favoring others (prof services and internet). (the only good argument against tech startups in Seattle is the somewhat-smaller-than-Bay-Area pool of tech workers, largely better now than it was 10y ago when they were just Boeing and Microsoft, and the lack of great VCs (there are a few, but not the best in the world, and not many vs. SF, NYC, or Boston).