Opensource and taxation

A long time I was thinking of ways the government might help to promote the use of open-source software (OSS). Now I realize I was looking at the issue from the wrong side. Proprietary software depends on the enforcement of intellectual property rights by the government.

Without the police power of the state and publicly funded courts, there is no intellectual property. It follows that the government could stimulate OSS simply by revoking its recognition of proprietary software. I admit this would be an extreme action and hence I would propose a more moderate policy.

Proprietary software will continue as a legal construct, but the developers will be required to pay a 15% tax on the royalties they earn. This is justified by the benefit principle of taxation, to cover government expenses on the enforcement of proprietary software.

Developers of OSS will not be required this royalty tax as they do not rely upon the government for the enforcement of intellectual rights. To be true, no software developer will have to pay this tax but if he refuses to pay, then his software will be open-source by default.

9 thoughts on “Opensource and taxation”

  1. Sounds fair.

    I think the Israeli system of government investment is also a good idea. Unlike in most countries, where the Israeli government invests they get a return on profit, like any investor.

        1. Anyway, it resembles some idea I have. If the government would fund some research and private businesses will apply for patents on inventions resulting from such subsidized research, they should pay some of their royalties to the state.

  2. Hmm.

    This popped up on my reader. Some vague comments. I’m not disagreeing btw…

    Firstly, just to review for any other readers, Open Source (as well as Free) software development is in most cases not free as in zero cost. The developers are typically paid by their employers (or sometimes clients), to make improvements to existing free/open software. Think a google employee fixing bugs or adding features in Linux, which it relies on for its business, or a grad student fixing a bug or adding a feature to a scienfitic application. That’s one of the bargains you make with Free/Open software — you want a bug fixed now, on the one hand you can fix it yourself and send it back to be included in the official release, on the other hand, there’s no obligation for anyone else will fix it.

    Second, A large fraction of Free/Open software, under GNU GPL licensing, does positively rely on copyright to prevent non-free software from making use of their work without abiding by the license requirements, which in the case of GPL stipulates that derived works may only be distributed under the same license. This was an essential mechanism to creating the Free/Open source world as we enjoy it today.

    IMO the best way for a government to encourage use of Free/Open software (1) simply to use it (2) to pay developers to develop things, (3) to release code created under government grants (e.g., NSF etc) under established Free/Open software licenses. Neither taxation is not necessary, nor is it necessary to place proprietary software at a disadvantage. In the long run, Free software tends to always win.

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