Jul 14, 2011

Will a new law in Texas encourage Cloud hosting growth?

Lawmakers in Texas are pushing a bill that would exempt having a server presence in the state from being accepted as having a _business_ presence in the state. This will spare Rackspace and SoftLayer from having to collect state taxes from their customers.



Is this just a handout to 2 large cloud providers, protecting them from cheaper competition that's located elsewhere, or is it part of a larger overall scheme to encourage more businesses to move to the cloud?


It appears that the lawmakers' original attempt to collect tax revenue from out-of-state businesses backfired, and the Comptroller's office is trying to fix the PR nightmare. Texas is home to a number of high-tech companies (Dell, Rackspace, Tivoli, etc.) and so while it would make sense that the State would want to encourage the growth of Texas-based cloud hosting companies, the upcoming change in the law is more about not losing votes than acknowledging the importance of the trend towards cloud-based services.

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