Why not an Open Source contribution tax deduction?

Have you heard of the Artists-Museum Partnership Act? Probably not. It didn’t even have a wikipedia article until I wrote it. In a few words the act would:

amend the Internal Revenue Code of 1986 to allow taxpayers who create literary, musical, artistic, or scholarly compositions or similar property a fair market value (determined at the time of contribution) tax deduction for contributions of such properties, the copyrights thereon, or both…

The artists put a lot of time, creativity, experience, and thought into their work, and then they donate it to museums so that the public can share in this art at a free or deeply reduced cost. This bill allows those artists to be justly compensated for their work. So its good for the public and good for the artist right? Maybe, depends on your political views I’d suppose. And just to be straightforward with you, this is only a proposed bill. It has not been made law yet despite the fact that it was introduced two years ago and has made it through the senate.

So the question is, if artists can work on their art only to donate it and receive a tax deduction, then why don’t open source project leaders and contributors deserve equal rights? Well first, there are some issues to consider.

Art is Understood

Actually art is quite subjective, but that’s not what I meant. Art has been around since the beginning of time, so when it comes to writing and developing federal laws, congress has time and experience on their side. There are hundreds if not thousands of laws governing art. Computers, software, and information technology on the other hand is still very new. Most of it is still not regulated, and the geezers who are writing the regulation don’t know the difference between broadband and a pickup truck. It will still be many years before they get a handle information technology.

Fair Market Value

How do you determine the fair market value of open source software? Lines of code? That is a pretty lame metric. How about prevalence in the market place – is more users equal to a great worth? What about cutting edge software? Usually those to enter the market first make a little extra something for the risk and the know how. Forget about the code. What about documentation? And the size of the community. It’s going to be extremely hard to apply any type of accurate value to most open source projects.

Many contributors

Open Source software typically has many developers. From the project leaders and major contributors to the developers who simple submit a patch or two. But also consider issues that are reported, documentation, mailing lists, and other support channels. They are in some way or another contribute to the software as a whole and are important to making the software useful. So how do you determine each individual contributor’s value and thus determine their share of the deduction?

Long development periods

With art, you have a creation period, then a final release. With software, we have  creation periods that can last years, with many intermittent releases – some of which add value to the software others of which may actually make the software less valuable. So you could take the value of this release less the value of the last release to come up with this releases value. Careful. If you introduce too many bugs, the value could be negative, and could owe the IRS. Wow.

Difficult to track

Artists produce a single artifact that is sold or donated. Software is reproducible and is almost free to do so an infinite number of times. The usage of the software is very important in determining its value. For example, a project with a couple of users probably is not worth as much as a project with hundreds of users. Your Pumpkin Path is no where near as prominent as Apache’s Web Server – or is it. How do we know? There needs to be some way to determine an exact user count or at least to determine what grade you might be in, be int 1-10 users, 10-100, users, 100-1000 users, etc. I run Architecture Rules and I honestly don’t know if I have 10 users, or 100. You could look at download counts, but maven downloads aren’t tracked. And what about when one user downloads the artifact and puts it in their organization repository. There could be 100 users from that one download. This would be a hard number to come up with, and even harder the more successful a project becomes.

Your Next 1040EZ

The bill is not law yet, but if artists deserve tax deductions for their donations, then so do open source contributors. But we are along way away from properly regulating the computer and software industries. I have also outline a number of major hurdles before us before we can even begin to determine how big that deduction might be. So next April when your filling out your tax forms (yeah, April, because you waited until the last minute) think about how much value you have created with your open source projects and how long its going to be before you see any of that value put back into your wallet.

The one thing that we can do from here is to keep an eye on this bill. If it goes into the books, then we have something to start fighting for and it might be time to call your less-than-computer-literate congressman or woman and start pressing them for your fair share.