And it is from Gavin Newsom of all people.
California is proposing extending its sales tax to cloud based software, rather than limiting it just to shrink wrapped software sold in stores.
I like this, not the least because it ends what was an effective subsidy to the cloud in the Golden State.
California Gov. Gavin Newsom announced his latest budget plan on Thursday, totaling $349.4 billion, the largest in the state’s history. The proposal includes a new 7.25% state sales tax on cloud-based software.
Currently, sales tax is only paid on software purchased in physical form, whether that’s through software sold as part of a new hardware purchase or tangible media. Cloud-based software and software as a service (SaaS) applications aren’t taxed in the same way, but Newsom’s proposal would change that.
As KCRA notes, the new tax would apply to software like Microsoft Office, Adobe, and QuickBooks, as well as Slack and Workday. Roughly half of the states currently tax SaaS products, and Newsom argues it would just mean bringing California in line with dozens of other states.
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