An open source tax credit?

Corporations developing open source tools can already get the write-offs. The problem they are addressing is that individuals can't, regardless of whether they are writing open source or proprietary code.

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?

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