EDITORIAL: Unsatisfied Denver techies could be drawn to the Springs [Gazette, The (CO)]
(Gazette, The (CO) Via Acquire Media NewsEdge) If the City Council and the mayor want more private-sector jobs on their watch, they'll seize on a problem up north and embark upon solving it. In Denver, a lot of the coveted young professionals are not too happy.
Young software entrepreneurs have made Denver their home only to have the city prey on them for new taxes - even penalizing them for buying pizza in the suburbs. Research by the Denver Post and the city's tax division found Denver's tax policies among the country's least friendly for a major segment of tech. Trust has been severed, and some CEOs want out.
"This has made us seriously consider not being in Denver," said Mike Gellman, CEO of SpireMedia, as quoted by the Post. "The problem is, when Denver starts charging unfair taxes on software, we are really worried about how this going to affect Denver moving forward."
The least disruptive option for those who need to move - one that keeps them in the Rocky Mountain air and at the base of majesty - should be Colorado Springs. For techies on Denver's south side, it's a 40-50 minute move. We offer an abundance of affordable commercial real estate.
The depth of Denver's new dilemma unfolds in a May 22 Denver Post story by Andy Vuong, which examined the plight of 303 Software co- founders Stefan Ramsbott and Matt Jaffe. Just as Denver Mayor Michael Hancock "rolled out the red carpet" in May for Layer 3 TV - granting tax exemptions for the company to relocate its Boston headquarters to Denver - city auditors interrogated 303 Software regarding obscure taxes enacted last year.
Auditors told Ramsbott and Jaffe they owed $160,000 for failing to collect and remit a new 3.62 percent sales tax imposed on online software and mobile app development. Denver enacted the tax in 2013, but Gellman and Jaffe said they knew nothing of it until an auditor came calling, armed with penalties and interest.
The fledgling company finally negotiated the bill to $50,000 but had to incur debt to pay it.
Few other cities tax companies for software development. When a host of Denver-based software companies complained, city officials reviewed tax structures in major tech hubs throughout the United States. They found Denver, as of 2013, has the most anti-software tax structure in the country. As the Post explained, in a study of eight cities - including San Francisco, San Jose, Calif., Seattle and New York - only Denver and Austin, Texas, tax custom software development.
It's not just the software tax that has entrepreneurs wanting to move. Auditors trying to collect scrutinize companies for use-tax compliance. If a firm in Denver buys pizza for employees in a neighboring suburban strip mall, auditors examine whether the company paid lower-than-Denver sales taxes and demand the balance. Just ask 303 Software executives, who learned of their misbehavior during the audit.
"If we go out to Westminster to go to Costco to buy sodas for employees in the office in Denver, we're on the hook to pay the difference between the sales tax in Westminster and the sales tax in Denver," said Ramsbott, 303 Software's co-founder, as quoted in the Post.
Mayor Steve Bach told The Gazette he's anxious to speak with Denver's most dissatisfied software executives so he can learn how to make life better for them here.
The City Council should also get on board, looking to solve the problems of businesses that create good jobs and fuel strong economies.
Just as this community has grown by providing affordable residential alternatives to Denver, it should become the cooperative incubator for young professionals creating jobs and products society needs.
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