Archives for 2009

Each year the Tax Foundation, a 70-year old nonpartisan tax research group based in Washington, D.C., issues a press release on Tax Freedom Day, the day in the year where the average American worker has earned enough to pay their taxes for the year. In 2008 Tax Freedom Day was April 23rd. Of course, this is a rhetorical device, since we really pay taxes throughout the year, at various rates, and not all at once, but it is a useful device that illustrates the relationship between wages and taxes.

So, this got me thinking whether this same analysis could be applied to what I’ve been calling the “Monopoly Tax”, the excess price we pay for products from a monopolist when adequate open source alternatives are available.

Let me take a stab at the analysis. First, let’s look at the price of two entry-level PC’s, identical except that one comes pre-installed with Ubuntu and OpenOffice, while the other comes pre-installed with Microsoft Windows and Microsoft Office. I’ll use Dell’s Inspiron 530/530n as an example. Same chip, same RAM, same monitor, same drive, same graphics, everything the same, except one comes with Linux and the other has the Microsoft software.

• Dell Inspiron 530 with Microsoft Vista/Microsoft Office = $818.00
• Dell Inspiron 530N with Ubuntu/OpenOffice = $428.00

So the “monopoly tax” in this case is $390, or 48% of the total cost of the system. Now that amount is probably not going to crush you or me. But for a student, a small town library strapped for funds, the recently unemployed, or a family in the developing world, this is a huge difference.

We can further quantify this by calculating the date of “Monopoly Freedom Day” for countries around the world, based on per-capita income. If you purchase a new PC on January 1st, you will work up until Monopoly Freedom Day just to pay the excess cost of the non-open source software. Up until Monopoly Freedom Day the fruits of your labors are not going to you, you family or your community. Your wages are going to Redmond, to fatten the stock portfolio of the wealthiest man in America. Think about it. You know that Microsoft has. With the poorest countries in the world being the ones who would benefit most from using open source to avoid paying the Monopoly Tax, Microsoft has started a new “Scramble for Africa” in order lock them into a costly cycle of technological dependency in a new colonialist campaign.