Wednesday, March 22, 2006
The Center for American Progress has published An Open Source Tax Credit: Proposal and Economic Analysis, by John Irons & Carl Malamud. Here is the executive summary:
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.