Paying the bug tax - Embedded.com

Paying the bug tax

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Death and taxes. We can't avoid them. While it might be possible to evade taxes — for a while at least — both the grim reaper and the IRS eventually extract their pound of flesh.

Most of our household expenses are more or less discretionary. Though no one is thrilled about making mortgage payments, we do have the option of moving into a cheaper place. That unwanted electric bill is the product of the TV, a broadband 'net connection, and heating and air conditioning. Slice it in half by freezing in the winter and roasting in summer. Taxes, though, are involuntary payments made because the alternative is spending the summers and winters in jail with our new best friend Bubba.

While writing that check to the IRS hurts more than a root canal we recognize that at least some of the money goes to the public good. Education, roads, some (not enough in my opinion) fundamental research, police, fire, and other services do give us certain direct benefits. But too many of our tax dollars disappear into the sinkhole of bureaucratic waste; it's dissipated like entropy, serves no useful purpose, and drains families' coffers in difficult economic times. None of us supported these improvident expenditures; the government essentially sneaks in like a thief in the night and raids the checkbook.

The famous May 2002 NIST study pegs the cost of software errors at up to $60 billion annually. Ultimately these costs are born by consumers. So each of the 108 million families in the United States pays, on average, $555 per year for unwanted bugs.

Did you order $555 worth of bugs last year? I didn't. Yet these charges are buried in the cost of the products, services, and utilities we buy. It's a tax, a charge extorted from consumers. By, well, us. Software developers. NIST blames our inadequate testing for the costs. I'd argue there are a lot of other factors also responsible for the poor quality, but ultimately it comes down to the developers and companies providing crummy code.

That $555 might not sound like a lot in the grand scheme of things. How does it shape up against other taxes?

Federal taxes on individuals total $1.038 trillion, or just under $10k/family. That's a big bite!

Property taxes vary widely depending on the jurisdiction. In my home state of Maryland such revenues account for $472 million over about 2 million households, or less than half the bug tax.

Sales taxes in my state run about $2.9 billion, or two and a half times the bug tax. Most of us wince at the sales tax when buying a car or computer; we should be equally squeamish about the cost of bugs.

Some products are taxed multiple times, with one duty levied on top of another. Take liquor, for example. There's a federal tax, a state tax, and sales tax on top of that. If it's imported, duties add to the government's revenue as well. The feds tax a quart of 80 proof liquor at $2.75. Current liquor statistics aren't available, but based on 1995 data it's reasonable to estimate consumption at about 2 billion gallons per year. So we pay $22b per year in federal liquor taxes, or $203 per family. About a third of the bug tax.

Gas prices today are the stuff of road rage. Yet in England the petrol tax approaches 75% of the price of a gallon of gas. Those poor Brits pay 80 pence/liter, or $5.50/gallon. That's $65 to fill a small car's tank. Ouch.

Here in the USA Federal and local authorities levy about 40 cents per gallon, or less than 20% at today's fuel prices.

Passenger cars averaged 20.5 MPG in 1999 despite CAFE standards mandating 27.5. The 196 million cars currently in use each average 12,100 miles per year. Doing the math we find the average family in the United States pays $461 in gas taxes, less than the amount we cough up for the bug tax.

(I know that most taxes are far higher than advertised; the 40 cents/gallon on gas, for instance, doesn't reflect other Federal levies on the companies that produce fuel. But it's not unreasonable to assume that some similar mechanism inflates the bug tax as well).

Rebellion followed England's imposition of the Stamp tax on unwilling American colonies. Will our customers revolt against the bug tax? Will some proposition 13-like movement force software engineers to reinvent the way we build systems?

But wait — I can hear a crowd in the distance, their anti-bug banners are flying. They're chanting something. It sounds like, “We're mad as hell and we're not gonna take it anymore!”

Jack G. Ganssle is a lecturer and consultant on embedded development issues. He conducts seminars on embedded systems and helps companies with their embedded challenges. Contact him at . His website is .

Reader Response


You may hear a crowd, but I don't think they're talking about a “bug tax.” Income, sales, and realestate taxes are all examples of obvious taxes: you see them spelled out on you paycheck, your sales receipt, yourproperty assessment. When someone buys software (embedded or not), a bug tax isn't added to the cost at theregister. It's part-and-parcel of the item's cost. Same can be said for marketting snafus (someone had to pay forGM naming a car NOVA, and it was the buyers of GM cars later), lawsuits (ladder cost has been going up), otherdesign mistakes (electical, mechanical, manufacturing), and other “non-value added” costs.

It's an interesting point of conversation, but it's not really a tax. It's part of the cost, plain and simple.

– John Patrick


Wow, $60 billion wasted! That sounds horrible and we ought to be ashamed of wasting so much money. However, I always take these studies with a grain of salt.If you read enough newspapers you will see that $ “large number” billion is wasted on obesity, smoking, trafficjams, pollution, internet surfing, spam, medical errors, compliance with tax laws, et cetera. Add them up and youmight push the GNP into negative territory!

– Ken Altschuler


I think we should wipe out all human error. We should make it illegal. Until this happens all software shipmentsshould stop.

– John Gay


Since producing bug-free software is so difficult and expensive, we can not depend on profit-drivencommercial companies to do it on their own initiative. We need to set up a government program to mandate andsupport the removal of all software bugs. The cost of this can be paid for by a bug-removal tax added to allsoftware sales. In the long run this will lead to less expensive software due to the elimination of the $60billion per year bug tax. Do you think that will satisfy the crowd in the distance?

– Harold Lehman Dewar


Jack — You've got to be kidding — The US GNP is only about $30K per person. I would have guessedthat the total amount of that GNP spent on software would have been less than $500 per person. Most people I knowonly paid $500 for their PC and software together (I am the exception being an engineer) and their majorinvestments are their house and car. If they have a small business they might have another $500 in a cash registersystem.

Cars can be lemmons for a lot of reasons, but many of the cars on the road are still pretty basic software wise. Most houses are pretty basic as well (my brother lives in a yurt which is even more basic)

Most software is written once and mass produced, making for economy of scale. (This embedded stuff sometimes getsinto small odd runs though)

To put things in perspectiveyou're saying software quality is so bad that effectivly it was the same as smashing everycell phone made that year in the whole world, witha hammer productivity wise.

– Wally Murray


Wooooooowee yehaaa!!!!

It's sounds like it's raining Taxes! And it does'nt stop there jack, so I did organized search of current& futuretaxes that we all face in todays american bliss.check this out coders!!!

The Petrol duty,The TV licence fee,Inheritance tax,luxury tax ,state tax(welfare, corrections, legislature)(blah!),federaltax,gas tax ,sales tax ,cigarette tax beertax ,land tax ,fica ( what that is I dont know!!!!)and last but not least the bug tax.

After all that we might as well take our keyboards and bury them with us(–;

/* rememmber freedom comes at a cost$ */

D.C.O.A.A.T

Dead .Coder. On. Arrival. After .Taxes

– fred barnes


Us hardware jocks are equally to blame. Only we call our problems defects. Bug = Defect. Quality is an issue in all products. Same principle, same kind of “tax”.

– Tom Sullivan


I think back to when my father was engineer in USSR. He told me Stalin was not happy with engineering quality so he put all the engineers in prison. What did he get. Only one kind of crudy car in one color. You had to keep a log book of which gates were good on each IC in the lab so If you need 5400 with gate 3 good you have to hunt through log book for such IC to run experiment. Things were not so good with so much government. Hey if MS word has feature that not work, I write it in my logbook and not use.

– Ivan Yakov

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