New York Tax Credit for Open Source

The New York State Assembly is considering a bill to provide open source developers a tax credit. This is much more interesting that the traditional “thou shalt” approaches to open source use we see so often in Europe and Asia, which are… problematic.

New York has a vested interest in subsidizing this work, since the legislature itself uses a lot of open source software. There’s also a “fair play” argument in the bill: corporations are able to get tax breaks for doing software development work of all kinds, while the unincorporated, unaffiliated individuals who do so much of the development in the open source world don’t have access to those incentives.

More broadly, the bill is explicitly trying to solve the commons problem in open source development. By sweetening deal, New York will encourage open source contributions from folks who would otherwise save their skills for paying work.

Setting aside the fact that there doesn’t appear to be any commons problem in the first place, the credit is a paltry $200 a year. At contract wages for a developer, that’s an hour or two of work. No great shakes.

I’m also concerned about the implementation details: what licenses qualify as open source? Who qualifies as an open source developer?

Given that it costs about $125 to incorporate in New York State, and the process is relatively simple it seems like it would be much cleaner to subsidize the cost of filing, or streamline the process for open source developers, so it’s easier for them to create a sole proprietorship (or whatever) and grab those incentives that already exist for the big boys.

But that’s optimization. For a government that wants to encourage open source development, you could do a lot worse than this. Instead of crudely mandating open source use by fiat, paying developers to build software in the state’s interest doesn’t seem like a bad idea at all.

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