An open source tax credit is proposed which would allow individuals who develop open source software to receive a tax credit worth 20 percent of their out-of-pocket costs. Corporations and self-employed individuals may already take a deduction for their development expenses for both open source and proprietary commercial software. The open source tax credit provides a similar incentive for individuals who currently have no means to deduct these expenses.
Subsidizing open source software development can also be justified on grounds of economic efficiency. Open source software development enhances the ability of other developers to create new products. It also enhances the development and dissemination of knowledge and ideas more broadly. Since the benefits to the broader software development community and the economy as a whole go well beyond the users of an individual software product, a policy that subsidizes open source development would increase economic efficiency.
Although I’m an open-source software (OSS) developer myself, and generally believe that government can and should pull its weight to solve big systemic problems, I have a few issues with this proposal.
On a philosophical level, I don’t think this is the sort of problem the government needs to solve. Health care is a big problem. Public education funding is a big problem. OSS doesn’t have the same moral mandate as either of those issues, so it’s hard to see why we should divert resources to it. Just because the government can contribute toward the development of Linux and other projects, doesn’t mean it should.
The free-software movement is thriving, see. It’s been fueled, for the most part, by spare time and passion, and it’s running just fine. The non-trivial amount of private money involved now can only be good news for open-source programmers and consumers alike. Large OSS projects are models of international collaboration, so it’s not like the US bears (or should bear) the burden of writing the world’s open code.
On a practical level, I just don’t think this would have much of an impact. A tax break would be nice for the people already doing OSS development, but there’s not enough money involved to lure newcomers. Basically, it would spread a small amount of money over a large amount of people in a way that wouldn’t create any tangible incentive. The proposal would allow programmers to deduct things like website hosting, conference travel, and equipment depreciation. It would not compensate people for the time they spend programming, which constitutes the bulk of the sacrifice. I’d have to fly to a LOT of open-source conferences (of which there are relatively few) in order to deduct $500 from my income, and deducting $500 from my income isn’t exactly a windfall. Maybe other programmers think otherwise.
[Update: the proposal is for a 20% tax credit, not a 20% deduction. That's a pretty good incentive, but I still don't think it would be enough to get people to start open-source development, since you need to get pretty serious about a project before you spend any money on it.]
Three alternatives:
- Governments should adopt open-source software in their own offices. Desktop software like OpenOffice and GNOME should run on workstations, and agency websites should run on platforms like Drupal or Ruby on Rails. One of the big incentives for open-source developers is the knowledge that lots of people will use their software. I know I’d be more likely to contribute to a large project if I knew a big government agency was getting good use out of it. More to the point, though, open-source software embodies principles of good government like openness, accountability, and using common wealth to promote the common good. Decisions about which software an agency uses are usually the jurisdiction of the CFO, but adoption could be encouraged through one of those “you don’t get federal money unless you do X”-type policies.
- If the government has a specific project it needs to undertake in order to adopt OSS (like a Linux security audit or a new Apache module), it should by all means hire programmers to do so, and release the results into the public domain. That would be a really cool way to strengthen the world’s basic software infrastructure, and would be a much better way to spend the money that would be lost by CAP’s proposed tax break. I understand that the Internet was created through lots of undirected research money, but if the government wants to fund the creation of the next Internet-caliber technology, it should step up research grants to universities. Which, alas, is a different issue.
- Start some education programs that teach disadvantaged kids how to program by having them contribute to OSS projects, and reward them by giving them laptops. The digital divide is one of those Big Problems that isn’t being solved by anyone right now.
/armchair-wonk
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