Declaring Open Source
A one-line patch to the U.S. Code would make open source software a charitable deduction
The U.S. Code is the operating system of our system of government, the line-by-line instructions that govern our federal government. The code contains provisions for pretty much everything you can think of and lots of stuff that causes wonderment about its inclusion.
But, if you search the U.S. Code for the phrase “open source” you’re not going to find anything. United States law has innumerable provisions recognizing every aspect of our life, but when it comes to open source, the Federal Government simply doesn’t recognize this modern phenomenon.
Open source software is what made the Internet possible, which in turn made all sorts of new companies possible. From Microsoft to Google, our modern Internet was built on open source software. Last year, the Center for American Progress decided to see if we could get the phrase “open source” introduced into the U.S. Code. We set ourselves a simple goal: get some legislation introduced.
Are there more important things to worry about? You bet. But is this worth a few cycles? We thought so. And so, in March 2006, we published two proposals meant to demonstrate that there were concrete ways the government could do something:
- An Open Source Tax Credit would allow an individual to take a credit on income taxes if there were out-of-pocket costs such as computer hosting or travel that was related to the creation and maintenance of open source software.
- A National Open Source Fellowship program would have the U.S. Government, perhaps the Department of Education or the National Science Foundation, administer a program of fellowships and prizes to encourage the creation of more open source software.
Throughout 2006 we periodically “pitched” the ideas to congressional staffers, open source advocates, fellow wonks in other think tanks, and even corporate lobbyists for the computer industry. We got nowhere. Busy committee staffers had bigger fish to fry and the only folks who really got worked up about the proposal were those who sell software for a living and thought we were discriminating against them.
Some folks seem to think recognizing open source is like taking sides in a fight: If you are for open source you are against commercial software. We think the two coexist, just like public parks and business districts coexist in the real world. In fact, ideas generated by open source developers often find their way into commercial software, and thus enhance the economic value of for-profit ventures.
We recently read an exhaustive study of the open source phenomenon in Europe which underscored that point. The study, funded by the European Commission, was conducted by Rishab Ayer Ghosh, one of the most respected researchers on the net. Ghosh is the Managing Editor of First Monday, the first openly-accessible, peer-reviewed journal and considered one of the best sources of empirical information about the Internet. Ghosh worked with a team of researchers from throughout Europe to create this definitive 287-page study.
Charitable Contributions are defined in the Internal Revenue Code, Section 170, subsection (c). A charitable contribution is a “contribution or gift.” Normally, one thinks of charitable contributions as gifts of money or in-kind materials to a recognized 501(c)(3) non-profit organization. Several other categories of gifts, however, are defined as qualified charitable deductions. Cases in point: gifts to the State; a community chest; a post of war veterans; or a fraternal society. In all, there are five categories of gifts that count.
To create a charitable deduction for out-of-pocket contributions used to create open source software would be a very simple piece of legislation, a one-line addition to the existing five categories of charitable contributions. That line might read something like this:
A contribution or gift by an individual but only if such contribution or gift is to be used exclusively for the creation, dissemination, and maintenance of computer software or systems which are freely available on the Internet under any of the licenses defined by Creative Commons, a 501(c)(3) non-profit organization located in San Francisco, California and at www.creativecommons.org.
Is this merely a symbolic step? We don’t think so. That’s why we include below sample legislation to make it happen.
The U.S. is lagging behind Asia and Europe in the world of open source. Open source is used by the vast majority of U.S. businesses. Open source provides the underpinning to the Internet and has enabled the creation of e-commerce giants such as Amazon, Microsoft, and Google. And, the U.S. tax code is biased against the creation of open source software by individual developers. This seems like an easy patch.
John Irons is Director of Tax and Budget Policy at the Center for American Progress. Carl Malamud is the former Chief Technology Officer of the Center and is currently working on a book.
What a Sample Bill Might Look Like:
To amend the Internal Revenue Code of 1986 to allow expenses used in the support of open source software to be considered a charitable contribution.
SECTION 1. SHORT TITLE; ETC.
(a) SHORT TITLE – This act may be cited as the “Open Source Recognition and Individual Equity Act of 2007″.
SECTION 2. EXTENSION OF THE DEFINITION OF CHARITABLE CONTRIBUTION
(a) Title 26, Subtitle A, Chapter 1, Subchapter B, Part VI, Section 170, Subsection C (“Charitable contribution defined”) of the U.S. Code is amended by adding at the end the following new subsection:
(6) A contribution or gift by an individual but only if such contribution or gift is to be used exclusively for the creation, dissemination, and maintenance of computer software or systems which are freely available on the Internet under any of the licenses defined by Creative Commons, a 501(c)(3) non-profit organization located in San Francisco, California and at www.creativecommons.org.’
(b) EFFECTIVE DATES -
(1) IN GENERAL – The amendments made by this section shall apply to taxable years beginning after December 31, 2007.
For Further Information/Sources:
- Charitable Contributions are defined in Title 26, the Internal Revenue Code
- Open Source Tax Credit Proposal
- Open Source Fellowships Proposal
- Report to the European Commission, Rishab Aiyer Ghosh, “Economic impact of open source software on innovation and the competitiveness of the Information and Communication Technologies (ICT) sector in the EU,” November 20, 2006, European Commission Report ENTR/04/112.
- Our 1998 proposal for a hacker tax credit
- More on the Center’s Tax Reform efforts are here
- Our view on tax credits in general
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