Entrepreneurs in Massachusetts breathed a sigh of relief this week when lawmakers vowed to repeal the so-called ‘Tech Tax’.
Democratic legislative leaders agreed Thursday to repeal an unpopular new technology tax and said they would not propose any other taxes to make up for the lost revenue.
[Governor] Patrick and legislative leaders expressed concern that the controversy surrounding the new tax was creating a perception that Massachusetts had become a less friendly environment for innovative technology firms that had long been viewed as a pillar of strength for the state’s economy.
‘‘The reputation damage that we have suffered will take time to repair,’’ said Chris Anderson, president of the Massachusetts High Tech Council, who urged lawmakers and the governor to engage with industry leaders on way to spur growth in the technology sector.
The tech community in Massachusetts flexed its muscle on Beacon Hill, showing that computer and software corporations have substantial influence with critical players at the state house. Since these tech companies are now mobilized and fresh off a political victory, I offer a humble suggestion that the leaders go to bat against another Tech Tax: the surveillance tax.
In order to make Massachusetts a truly friendly environment for technology firms, we need to update our digital privacy laws to reflect 21st century innovation. Unfortunately, as the law stands, both taxpayers and companies are getting screwed.
Massachusetts taxpayers are losing by paying out the nose for the privilege of being spied upon, and companies are losing because they can’t promise their users that they will protect their confidential information from unwarranted government seizure, making Massachusetts a less-than-healthy environment for tech companies competing with the world.
Government spying: bad for business
Just yesterday, Massachusetts democrat Senator Ed Markey sent letters to all the major telecom companies asking them for, among many other things, detailed information about how much money the corporations make off of responding to government requests for user information. We know the figure is likely to be substantial.
While the major telecoms profit off of this surveillance, the taxpayer is footing the bill. That might make it seem like corporations come out on top in the surveillance state, but all is not equal. Start-up internet and software companies are not major telecoms. Whereas the telecoms face little competition, Massachusetts-based software companies are competing with tech companies all over the world.
Putting Massachusetts on the map with the best digital privacy laws would give our tech companies a critical edge over the competition.
Government demands to these companies are often simple subpoenas, letters filled out by prosecutors but never seen by judges. No evidence of criminal activity or probable cause is required when prosecutors want to get private information about you from your email provider or a cloud storage service. Here in Massachusetts, we know that prosecutors file thousands and thousands of these requests each year.
If Massachusetts companies want to thrive and outperform the competition, they need to make sure that their users trust them to protect their information. The path to building that trust requires that the state of Massachusetts institute clear laws that put a firewall — in the form of a probable cause warrant — in between the government’s spooks and our data.
Luckily, such a proposal is currently sitting before the Joint Judiciary Committee.
Passing the Electronic Privacy Act, which would require that law enforcement produce probable cause warrants to third party companies in order to obtain data about their users, would bolster tech business in the commonwealth. Consumers would have more reason to trust, and therefore share with, our burgeoning tech industry. And tax payers would rest easy knowing that their hard earned money wasn’t being used to conduct fruitless or abusive fishing expeditions into their private lives.
The gold standard of American justice, the probable cause warrant, protects the integrity of investigations — meaning better public safety outcomes — as well as the personal privacy of ordinary people. And, critically for the coalition that successfully pushed to defeat the Tech Tax, the warrant requirement fosters trust among technology companies and their customers.
Revelations about the NSA spying on our communications without warrants have led to fears that the technology industry in the United States is going to lose billions of dollars as users look for alternatives overseas, out of range of DOJ prosecutors and subpoenas. Massachusetts should take note, and pass the Electronic Privacy Act.
Privacy is good for business.