A Midwest U.S. state should follow suit with several other states in the nation and pursue service classification for cloud computing, according to an unsigned editorial in one of that region’s biggest newspapers.
The Detroit News encourages legislators in Michigan to follow that track as a method of encouraging the growth and development of business, noting it is better to embrace the technology and clean up complex regulations rather than disregard the matter.
Such an effort would be pursuant with other drives in the Great Lake State, which has spawned stronger business ties and development. If cloud computing is considered under contract status rather than as a service, the state then applies taxes.
“Many states are making the determination on how to treat this new and growing technology, making it all the more important that Michigan clarify its tax intent,” Senator John Proos told the news source. “Taxing this service is the incorrect answer.”
Merging efforts with Senator John Pappageorge, Proos co-sponsored the legislation that advocates for a competitive job market, increased investment, and strong technological advancement, according to Proos’ website.
The Michigan senate has passed the measures, which are State Bills 335 and 336. The legislation now moves on to the House of Representatives.
Six other U.S. states earlier this year pegged cloud computing as a service, which drew in increased amounts of high-tech business. Those states are Nebraska, Mississippi, Idaho, Virginia, New York and Massachusetts.
The hitch in the Wolverine State finds its genesis in the state Treasury Department, which has not acceded to two lawsuits that resulted in cloud computing being identified as a service. The department said the appellate process is in operation for both rulings.
Attorney Gregory Nowak won those cases and he said he strongly believes that taxes should not be applied.
“The clearest policy would be to not tax these transactions,” the partner told the news source.
The editorial notes cloud computing will continue mushrooming, which underscores the importance of state treasury leaders’ acquiescence. That will encourage businesses to remain and plant roots in Michigan.
Both court decisions support that opinion, but the treasury department did not heed that direction. For that reason, the lawmakers should continue driving forward with efforts to have cloud computing as a service, the editorial states.
Doing so will underscore the importance of remaining competitive within the high-tech component of the state economy.