Here is the complete email:

Immediate Benefits

The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act include health insurance market reforms that will bring immediate benefits to millions of Americans, including those who currently have coverage. The following benefits will be available in the first year after enactment of the two bills.

Small Business Tax Credits
Offers tax credits to small businesses beginning in 2010 to make employee coverage more affordable. Tax credits of up to 35 percent of premiums will be immediately available to firms that choose to offer coverage. The full credit will be available to firms with 10 or fewer employees with average annual wages of $25,000, while firms with up to 25 or fewer employees and average annual wages of up to $50,000 will also be eligible for the credit.Effective calendar year 2010. Later, when Exchanges are operational, tax credits will be up to 50 percent of premiums

No Pre-existing Coverage Exclusions for Children
Prohibits health insurers from excluding coverage of pre-existing conditions for children. Effective six months after enactment, applies to all employer plans and new plans in the individual market. (This provision will apply to all people in 2014).

Access to Affordable Coverage for the Uninsured with Pre-existing Conditions
Provides $5 billion in immediate federal support for a new program to provide affordable coverage to uninsured Americans with pre-existing conditions until new Exchanges are operational in 2014. Effective 90 days after enactment.

Closing the Coverage Gap in the Medicare (Part D) Drug Benefit
Provides a $250 rebate check for Medicare beneficiaries who hit the ‘donut hole’ in 2010. Effective calendar year 2010. (Beginning in 2011, institutes a 50 percent discount on brand-name drugs in the donut hole; also fills the donut hole by 2020.)

Patient Protections
Protects patients’ choice of doctors by allowing plan members to pick any participating primary care provider, prohibiting insurers from requiring prior authorization before a woman sees an ob-gyn, and ensuring access to emergency care. This provision applies to all new plans. Effective six months after enactment.

Re-insurance for Retiree Health Benefit Plans
Creates immediate access to re-insurance for employer health plans providing coverage for early retirees, helping to protect coverage while reducing premiums for employers and retirees. Effective 90 days after enactment.

Extension of Coverage for Young Adults
Requires insurers to permit children to stay on family policies until age 26. Effective six months after enactment, applies to all plans in the individual market, new employer plans, and existing employer plans if a young adult is not eligible for employer coverage.

Free Prevention Benefits
Requires coverage of prevention and wellness benefits in all new plans and exempts these benefits from deductibles and other cost-sharing requirements in public and private insurance coverage. Effective six months after enactment.

Free Prevention and Wellness Visits in Medicare
Medicare beneficiaries will receive a free, annual wellness visit and will have all cost-sharing waived for preventive services. Effective January 1, 2011.

Access to Quality Care for Vulnerable Populations
Makes $11 billion investment over five years in Community Health Centers to provide the funding needed to expand access to health care in communities where it is needed most. Effective Fiscal Year 2010.

Ensuring Value for Premium Payments
Establishes standards for insurance overhead and requires public disclosure to ensure that enrollees get value for their premium dollars, requiring plans in the individual and small group market to spend 80 percent of premium dollars on clinical services and quality activities, and 85 percent for plans in the large group market. Health insurance plans that do not meet these thresholds will provide rebates to their policyholders. Effective January 1, 2011. This provision applies to all plans, including grandfathered plans, with the exception of self-insured plans.

No Lifetime Limits on Coverage
Prohibits insurers from imposing lifetime limits on benefits. Effective six months after enactment, applies to all plans.

Regulated Annual Limits on Coverage
Tightly regulates plans’ use of annual limits to ensure access to needed care in all group plans and all new individual plans. These tight restrictions will be defined by the Secretary of Health and Human Services. Effective six month after enactment, applies to new plans in the individual market and all employer plans. (When the Exchanges are operational in 2014, the use of annual limits will be banned for new plans in the individual market and all employer plans.)

Protection from Rescissions of Existing Coverage
Stops insurers from rescinding insurance when claims are filed, except in cases of fraud or intentional misrepresentation of material fact. Effective six months after enactment, applies to all new and existing plans.

Prohibits Discrimination Based on Salary
Prohibits new group health plans from establishing any eligibility rules for health care coverage that have the effect of discriminating in favor of higher wage employees. Effective six months after enactment.

Public Access to Comparable Information on Insurance Options
Enables creation of a new website to provide information on and facilitate informed consumer choice of insurance options. Effective not later than July 1, 2010.

Health Insurance Consumer Information
Provides assistance to States in establishing offices of health insurance consumer assistance or health insurance ombudsman programs to assist individuals with the filing of complaints and appeals, enrollment in a health plan, and, eventually, to assist consumers with resolving problems with tax credit eligibility. Effective Fiscal Year 2010.

Appeals Process
Requires all new health plans to implement an effective process for appeals of coverage determinations and claims. And, states will provide an external appeals process to ensure an independent review. Effective six months after enactment.

Increasing the Number of Primary Care Providers
Provides new investment in training programs to increase the number of primary care doctors, nurses, and public health professionals. Effective Fiscal Year 2010.

New, Voluntary, Long-Term Care Insurance Program
Creates a long-term care insurance program to be financed by voluntary payroll deductions to provide benefits to adults who become disabled. Effective January 1, 2011.

What changes now, or in 2011?

Although existing group health plans will be “grandfathered,” several requirements will now be effective for plan years beginning six months after the date of enactment.

Changing between now and next year:
* No lifetime benefit limits and only limited annual benefit limits
* Coverage for dependent children up to age 26, as long as they do not have access to other employer-sponsored health coverage (the reconciliation bill also assures that this coverage can be provided on a tax-free basis)
* No preexisting conditions for children under age 19
* No cancellation of health coverage, except in cases of fraud (primarily an individual insurance policy issue)

Other items that are immediately effective include a Medicare Part D provision that provides that beneficiaries who are in a Prescription Drug Plan and who reach the doughnut hole in 2010 would receive a one-time $250 rebate, as well as a reinsurance program for pre-Medicare retirees (more on changes to retiree plans below).

In 2011, FSAs, HRAs and HSAs can only reimburse participants for over-the-counter drugs with a prescription written by their health care provider.

What changes in 2014 and beyond?

* The Health Insurance Exchanges, individual mandates, subsidies to purchase insurance coverage take effect.
* The employer “free-rider” mandate begins, requiring that employers with over 50 employees with an employee that obtains subsidies for coverage in an Exchange pay a financial penalty. The penalties, detailed in the senate summary, are changed and increased in the reconciliation bill.
* In 2018, the excise tax on health plans above a certain threshold would take effect.

Keep reading for more on the changes to your plans and who pays below.

How will this affect my plan and how much it costs?

Employers are not required to provide health insurance coverage. However, automatic enrollment in health insurance plans sponsored by large employers is mandated.

Large employers (50 or more employees) that fail to offer minimum essential coverage during any month for which a full-time employee has enrolled in a qualified plan and receives a premium assistance tax credit or cost-sharing reductions will be liable for an additional tax. That penalty will equal the product of the applicable payment amount (defined as, with respect to any month, 1/12 of $750) and the number of full-time employees employed by the employer during such month.

Large employers offering coverage to employees who qualify for premium assistance tax credits or cost-sharing reductions also will be liable for an additional tax equal to the product of the number of full-time employees for the month and 400 percent of the applicable payment amount. Large employers with extended enrollment waiting periods (generally those exceeding 90 days) will be liable for an additional tax of $600 for each full-time employee for whom the extended waiting period applies. Special rules would apply to construction employers.

The reconciliation legislation would improve the transition to the employer responsibility policy for employers with 50 or more full-time equivalent workers by subtracting the first 30 full time employees from the payment calculation (e.g., a firm with 51 workers that does not offer coverage will pay an amount equal to 51 minus 30, or 21 times the applicable per employee payment amount).

The provision would also change the applicable payment amount for firms with more than 50 full-time workers that do not offer coverage up to $2,000 per full-time employee. It would also eliminate the assessment for workers in a waiting period, while maintaining the 90-day limit on the length of any waiting period beginning in 2014.

Information returns. Employers and other entities providing minimum essential coverage will be required to file information returns with the IRS identifying the individual, the coverage and the amount of premium, if any, paid by the individual. Penalties will be imposed for failure to file an information return.

Flexible spending arrangements. FSAs contributions are capped at $2,500 (indexed for inflation). The use of FSA funds for over-the-counter medications is not allowed. These changes apply to distributions and reimbursements for taxable years beginning after December 31, 2010.

The Reconciliation bill would delay the implementation of the limitations on FSAs until December 31, 2012. To prevent an end-run around the new FSA restrictions using cafeteria plan rules, the measure provides that, if a benefit is available under a cafeteria plan through employer provided contributions to a health FSA, the benefit will not be treated as a qualified benefit unless the cafeteria plan provides that an employee may not elect for any taxable year to have salary reduction contributions in excess of $2,500 made to the arrangement.

Health savings accounts. Individuals under age 65 must pay an additional tax for nonqualified distributions from a health savings account (HSA) and increases the additional tax from 10% to 20%. (The additional tax on Archer medical savings accounts would increase from 15% to 20%.)

Cafeteria plans. The cafeteria plan rules are relaxed under the Affordable Care Act to encourage more small employers to offer tax-free benefits to employees, including those related to health insurance coverage. A safe harbor is carved out from the nondiscrimination requirements for cafeteria plans for qualified small employers.

What changes for retiree medical plans?

* Retiree reinsurance program: A program that will take effect within 90 days of enactment will reimburse plan sponsors for 80% of claims between $15,000 and $90,000 for pre-Medicare retirees age 55-64. The program is funded with $5 billion and is designed to be a bridge to the exchanges in 2014.

* Medicare Part D: Beneficiaries who are in a Prescription Drug Plan and who reach the doughnut hole in 2010 would receive a one-time $250 rebate. In 2011, the reconciliation bill provides a 50% discount on brand-name drugs in doughnut hole for retirees in a Prescription Drug Plan; 75% discount on generics. The measure is designed to eliminate the doughnut hole by 2020.

For employers with a tax liability, the Retiree Drug Subsidy will become taxable in 2013. These employers should immediately consult with their actuaries and accountants as to the implication of this tax change. This change will not generally affect multiemployer plans or governmental plans.

Tomorrow marks the anniversary of a dull and factually inaccurate movie that was released some 31 years ago depicting a meltdown at a nuclear power plant. A week and a half after that, a partial core meltdown occurred at a nuclear reactor in the eastern United States. I’m referring of course to the movie The China Syndrome and the meltdown at Three Mile Island that eerily coincided with the movie’s release. That was March 28, 1979, the day the American public decided to abandon nuclear power. Amazingly, despite some incredible advances, many left wing progressives are still stuck in this era of nuclear technology despite the fact that, as it stands right now, nuclear power is the most likely solution to achieving the 0 carbon emissions before 2050.

Obama, in his deliberative, reasoned way, has rightly concluded that nuclear power must be a cornerstone of our energy production in the future. And for this he is facing a backlash from the left. Recently in the Huffington Post, Sierra Club director Carl Pope and actor Alex Baldwin both wrote anti-nuclear pieces. A few weeks ago, Keith Olbermann did an anti-nuclear piece on his (usually excellent) show. I’m sure all have what they think are good reasons to oppose nuclear energy, but they are wrong, uninformed, and frankly stuck 30 years in the past. That wouldn’t be so dangerous if we didn’t need to move into the future- like now.

In my opinion, the new starting point in this discussion is Bill Gates’ most recent TED talk. If you haven’t seen it yet, it is a must watch. The overall thesis is “innovate to zero.” We need zero carbon emitted per energy unit produced to solve the climate crisis, period. According to all the scientific data he reviewed, no amount of cutting emissions short of cutting them all makes the problem any better. He then goes on to talk about the 4 most viable solutions he’s analyzed: carbon capturing and storage, wind, solar (photovoltaic and thermal), and nuclear.

Gates himself hopes that hundreds of companies innovate in all of these areas, and from that, one or several solutions to this problem might materialize. He doesn’t rule any of them out. But it also seems clear that, barring any unforeseen new breakthroughs, nuclear power is by far the front runner. A molecule of Uranium has about a million times the energy as a molecule of coal, making it the only carbon-free energy source that can produce the energy we need in the amounts we need it at the cost we need it to be.

Wind and solar simply require too much space. As Gates points out, it is the difference between energy production and energy farming. Vast expanses of windmills and solar panels we would have to be built, and transporting energy at that scale would be daunting. It has been suggested that we could cover the Mohave Desert in solar panels and power the nation. Of course that means transporting enough energy across the country to power say, New York City. Not a trivial issue.

Carbon storage is even worse. First of all, to actually capture and store 100% of all carbon emissions is an engineering challenge to rival that of building a nuclear plant. It isn’t cheap or easy. Plus, if you think nuclear waste is a problem, this carbon waste will be worse. No, it isn’t radioactive, but there will be much, much more of it. So we would have this huge volume of waste we would have to secure in the Earth somehow and as Bill Gates puts it “hope it stays there.”

Now look at nuclear. Expensive to build the plant, but cheap thereafter, nuclear energy has the potential to dramatically lower energy prices and provide us an abundance of carbon-emission-free energy. But what of the waste, the safety issues, and nuclear proliferation, you ask? I am now aware of 2 different approaches that address each of these concerns. One is the approach of TerraPower, Bill Gates’ nuclear startup. The other involves technology that was developed in the late 1950’s but was literally forgotten about until the year 2000: Thorium based reactors.

To understand both of these advances, the first thing to know is today 100% of all nuclear energy in the world is produced using uranium U-235. Expensive, hard to make, and it leaves behind a lot of radioactive waste. The Gates approach with TerraPower is to use U-238 instead. U-238 is, in fact, what we currently refer to as “nuclear waste.” That’s right, Gates can provide power by burning our existing stockpiles of nuclear waste. He estimates that the waste in storage at Paducah, KY is enough to power the United States for 200 years. In addition to this amazing feat, it is also much safer because each cylinder will burn for 60 years. This means a lot less swapping out of fuel, which is a safety risk. The technique produces very little waste, and even that can be recycled. No need for a Yucca mountain.

Even more exciting than this approach perhaps, are thorium based reactors. At the dawn of the nuclear age the director of the Oak Ridge National Lab, Alvin Weinberg built a small Thorium reactor and published his work in a book titled Fluid Fuel Reactors. The U.S. government in the 60’s wasn’t unaware of his work either, they deliberately choose to use Uranium based reactors because uranium fueled reactors produce plutonium, which can be used to make nuclear weapons. They wanted power and nuclear weaponry. Using uranium got them the proverbial two birds with one stone. Nowadays, we no longer want one of those birds.

Enter NASA engineer Kirk Sorensen, who found Fluid Fuel Reactors languishing on a shelf collecting dust. He was fascinated and took it home for further review. After close analysis of the text, he believed he had found the solution to our energy woes, and has slowly been persuading the government and the public of that ever since.

Thorium based reactors produce minuscule amounts of waste, effectively eliminating that problem. Also, it cannot be weaponized. This was a detriment in the Cold War era when we were in an arms race with the Soviet Union, but today is a major selling point. If Iran were building thorium based reactors, there would be no fuss about it. Finally, thorium is abundant on our planet. It takes a lot less effort and environmental destruction to mine thorium than to mine uranium. Wired magazine wrote a piece on thorium in their Jan. 2010 issue. In it, they provide this comparison:

If that isn’t a drastic improvement, I don’t know what is. Small and cheap, these plants can fit into existing cities, where traditional plants need to be built far away from population centers. And while there are design challenges to using thorium on a mass scale, the concept has already been proven- 50 years ago! Weinberg and his team performed hundreds of tests on it into the early 70’s and demonstrated the effectiveness of their approach.

Gates’ TerraPower will need a little more work in the R&D department, but computer simulations have demonstrated that their approach is doable. They key thing is that both approaches address the traditional nuclear energy problems: safety, proliferation and nuclear waste.

Opponents of nuclear energy have long used the talking point that there have not been any nuclear advances in this country for decades. This was true, as would be expected after our national consensus to give up on nuclear in the late 70’s, but is true no longer. Americans are right at the center of the R&D phase of this nuclear renaissance, but it is not clear whether we, as a country, will gain much. Both China and India are making heavy national investments in these technologies. India especially has committed to a thorium program. Both France and Japan have been using nuclear power in greater and greater amounts. In France, 75% of their power comes from nuclear sources. These are the places that will benefit first from nuclear power advances, because they use it.

So like on many other fronts, the United States is falling behind the rest of the world, and I’m afraid that ironically, it is the forward-looking progressive movement that is holding us back with their worn, dated, and now obsolete arguments against using nuclear power. It is accurate, in my opinion, for the left to claim that the modern conservative movement thrives on fear mongering, especially concerning the issues of health care reform and terrorism. For those on the left doing the same on this nuclear issue, I must call out the hypocrisy. You are speaking not from a position of knowledge, but rather regurgitating talking points conceived by Jane Fonda 30 years ago. She wasn’t even qualified to give an opinion then really, and those talking points are even more irrelevant now. If you take climate change seriously (which you should), you should take nuclear power seriously.

As a left-leaning independent, statements by Senator Orrin Hatch of Utah usually cause me great irritation and increase my blood pressure. So I was surprised as anyone to wholeheartedly agree with him when he said, “I don’t know of anything more beneficial to the country… as nuclear energy powered by thorium.” The ellipsis in there is when he makes the caveat, “as far as environmentally sound power.” I think the statement is truer without it.

This bill is extremely complicated and riddled with glaring loopholes that I tried to explain to the Senate Finance Committee to no avail. The bill’s goal is to tax only the download equivalent of shrink-wrapped software, which is currently taxable (which by the way, is how they avoid the whole TABOR amendment issue). The problem is that software is a big amorphous mess that defies almost any attempt to rein it into legal language.

For example, most software solutions for companies involve combining a number of pre-packaged software solutions into a larger, custom solution. Does the tax apply to the components of the custom software? If a client buys a software solution from a vendor and then has that vendor customize that software, do you deduct from the software tax based on the lines of code customized?

Try as they might, the Senate did not have a good answer for these questions, but passed the bill anyway. See, the biggest problem with this bill is that is can discourage companies from entering our State, but offers software companies a dozen ways to avoid these taxes simply by changing how they structure their work contracts.

Another oddity: They explicitly have excluded SaaS models from the tax, for some sensible reasons. However, at Planet Telex we sell our inTouchUI as either a download that a customer pays once for, or as a monthly service. So we have a single code base that is taxable if we sell it one way, not taxable if we sell it another. Will this ruling have the odd effect of pushing more companies to adopt SaaS business models? I expect so.

I also brought up another glaring loophole that was misunderstood by the Senate and not addressed at all. It is this: software will be taxed based on a “use model.” This basically means that purchasers should pay a tax per user of the software. They did this so that the physical hosting of the software (where they data centers are) wouldn’t make any difference, hoping this would avoid a mass migration of data centers out of the state. So customers are to be taxed per user of the software at the time of purchase.

Put yourself in the shoes of a CEO trying to get his company through this recession. You have 25 employees and you need a specific software package that would be taxed by this law. That tax will be incurred at the time of purchase for the number of users who need access to the software. Let’s say that ideally, you want all of your employees to use this software, but don’t want to pay tax on 25 users. Software vendors have long known that people take liberty with the licenses we sell them. Odds are that CEO buys a license for only a couple users within that company, and somehow all 25 people will end up using it. Now the state and the vendor get short changed.

Of course, the legality of all of this hinges upon whether this is a new tax or an existing tax. Those that want to you believe this is an existing tax argue that a download is no different than a CD or DVD contained in a box. Oh, except that one is a “tangible personal asset” and the other is not, which is the litmus test they are using to make this determination.

I have downloaded thousands of .zip and .exe files in my day, yet I’ve never held one in my hand. The state has some powerful legal minds working on this bill, but the one thing they will never be able to convince me of, is that bits are tangible. I’ve been in the software business for over 10 years now. I have never seen a bit, felt a bit, heard one, nor tasted one. I interface with software that flips bits on and off, but I don’t even consider that tangible. I don’t have any disks for most of my software- I therefore cannot hold Google Chrome in my hand. It’s an asset to be sure. Personal? Maybe. Tangible? Definitely not.

The saddest thing is that because most of the money these new bills raise is to be spent on education it seemingly pits the software industry against the welfare and education of our youth, which is exactly how the Senate Democrats see this issue. It is a particularly unfair way to look at it, because the software industry in CO has been working hard to improve education throughout the state. The CSIA and Planet Telex were among many software related entities at this year’s STEMapalooza, an event meant to encourage kid’s interest in science and math. One of the most talented programmers I know has been working on a computer based learning system for kids for the last 2 years. Many of us have kids of our own. Of course we want our kids to have the best education possible. I don’t even have kids and I have been trying to connect with educators on using new multi-touch devices (like the Microsoft Surface) to enhance our classrooms. We all understand that our kids are the key to success in the future for our nation and state.

The problem with HB 1192 is that it is illegal, won’t do much to help, and will stifle our technology sector. It is illegal because it violates TABOR. It won’t help much because it has a ton of loopholes in addition to not helping much in the first place (it fills in only the tiniest fraction of our deficits). It will stifle technology because technology companies are very mobile and have a habit of setting up shop in the friendliest environment for their business.

For a long time, Colorado has been a very friendly environment to software companies. Ergo, software companies have come here in droves and some have flourished. All have created jobs. There are those of us that believe that Colorado’s technology sector is a major reason why our state is faring better than the national average in this recession (both unemployment and deficit are better here than most states).

Those who know me know that my politics run more liberal than conservative, but I am as always, an independent. So I feel a little weird being all cozy with Republicans on this issue, but the plain fact remains that I don’t think this bill will do very much good and will do some damage. It saddened me yesterday to lose right down party lines. Even a few sensible amendments from Keith King (R) were roundly rejected along party lines. If our political system is broken, it’s because people no longer make decisions in governance, political parties do. And while you can reason with a person, you can’t reason with a party.

The bill is still going in the House, but hope is not totally lost.  Apparently the word is getting out there and the resistance is growing.  The CSIA has posted a new article on exactly why this bill is so damaging and the efforts to stop it here.

- UPDATE Jan. 28th, 2:30PM -

Bad news, HB 1192 advanced this morning, 6 voting for, 5 against.  It is scheduled to be heard before the House tomorrow.  There is still time to voice your opposition though, call or email the representatives today, you can see a list of ALL members of the house here.

The new tax regulations will mean that:

• Data centers will have to collect tax from all of its customers that had “users” with access to the SaaS system located in Colorado.
• Charges to customize “base software” could be taxable if not separately stated from the overall purchase of software.
• Taxable software would include all prewritten updates/upgrades.  If these charges are not separately stated from a maintenance fee, the full charge for maintenance and update becomes taxable.

Not to mention that this is a NEW TAX that we, the people, CANNOT VOTE ON.  This is a violation of our state constitution (the TABOR amendment).  So, this is an illegal tax that will drive jobs out of our state.

- UPDATE 3:10PM -

The measure is HB 1192 and is being lumped together with twelve other exemption/credit reversals in an effort by the governor’s office to rush this through legislation. It will be voted on Wednesday, Jan. 27th.

- Original Post -

This very week the Colorado House Appropriations Committee is going to vote on whether to levy additional taxes on software in the state of Colorado. This would make Colorado only 1 out of 11 states to enact such measures and will likely put the brakes on our state’s blossoming tech industry.

Through the CSIA and their relationship with the Governor’s office, we have learned that not only is the house committee trying to fast track the vote on the legislation (they are voting early this week!), but also that its effective date has been accelerated to March 1 instead of July 1.

To make matters worse, the committee and Governor’s office have yet to share the specific language of the bill with the public. What we know is on the table are additional taxes on electronic downloads, SaaS-sold software, custom software development, and even “IT services” (as vague as that is).

The CSIA has estimated that this will likely add an 8-10 percent tax burden to all software purchases across the state. Technology companies and professionals in Colorado already spend 1 to 2 billion dollars in taxes a year, and this new tax would only deepen that burden.

As the majority owner of a small software development company, I would like to make it clear to the house committee that if this proposal is passed, companies will flee the state. Unlike most other industries, software development can be done from anywhere in the world, and team members can collaborate across continents. Realizing this, it should also be understood that to attract software companies to your state and city, you must provide an environment that attracts them. This is indeed what has been happening across our state, even in the midst of the recession, Boulder especially.

Boulder is a hot bed of tech startups. According to a Business Week analysis, Boulder came in first in a list of “Top Small Cities for Startups”, citing 5.5 startups per 1000 inhabitants. There are a lot of small cities around this nation that would love to claim this mantle, and while the Boulder culture is well suited to the startup lifestyle and we who live in both Denver and Boulder love to live and work here, that is not powerful enough to fight the sheer economics of the situation. If I’m put into the situation where it is either move out of town or close shop on Planet Telex, I’ll be moving- and I’d wager most small companies are in the same boat.

The 5500 technology companies employing over 175,000 people in Colorado are a major reason why Colorado has only 7.5% unemployment right now as opposed to the national average of 10%. I can’t believe that those in governance want to jeopardize that right now. 2009 was a tough year for most of us, and while I’ve been optimistic about 2010, it is clear to me that the industry is still not at pre-recession levels, and many of us are still struggling. This proposal does nothing less than kicks us while we’re down. It will hurt my company, it will hurt many other small companies in Colorado, it will deter new companies from moving to Colorado, and will ultimately hurt the future development in this state.

The CSIA is working with several law firms and lobbyists to fight this new measure, but that effort needs support from the industry. To that end, I encourage anyone who will be affected by this new legislation to call or email the house committee representatives and voice their dissent. Below are phone numbers and email addresses of key people on the House Committee and the Governor’s office. Urgent action is needed; remember they might vote as early as today.

House Committee Representatives:

Governor Ritter’s office: 303-866-2471

The clever people at Google just moved to Hong Kong.  Bad pollution, but free from tyranny.  Needless to say, the Chinese government is pissed.  To Google I say: awesome move worthy of the Tai Pan himself.  To the Chinese government I say: in your face you paranoid dickwads.

– Update Jan. 22 --

On this subject, Secretary of State Hillary Clinton said, “Censorship should not be in any way accepted by any company from anywhere.  American companies need to take a principled stand.  This needs to be part of our national brand.”

Well said.  Left or right leaning, all Americans should really be unified in this opinion and commend Mrs. Clinton for her concise and unambiguous analysis.

– Original Post –

With an estimated 338 million Internet users in a country of about 1.3 billion, expansion into China is a no-brainer for any Internet based company. As China continues to modernize, those eyeballs amount to nothing less than the market to end all markets, yet it persists in being a market largely impenetrable to western companies. One reason is that we have different cultures, and trends that ignite the western world fail to catch on with the Chinese people. Another reason is that the Chinese government is quite paranoid.

Google entered this market in early 2006 knowing both of these things and has worked hard to make Google.cn the most popular western based Internet site in that country, with an estimated 80 million users- almost a quarter of all internet users in the country. Now Google and the Chinese government are engaged in a very high-stakes game of chicken and both have a lot to lose.

When Google entered the Chinese marketplace, the government was putting the finishing touches on a program it had been developing for the last 8 years. Known as the “Golden Shield Project” officially and unofficially as the “Great Firewall of China”, this project is as close as any real government has ventured into the Orwellian dystopia of 1984. According to the International Centre for Human Rights and Democratic Development, its ultimate objective is to “integrate a gigantic online database with an all-encompassing surveillance network – incorporating speech and facial recognition, closed-circuit television, smart cards, credit records, and Internet surveillance technologies.”

From a western perspective, that sounds downright evil. Google’s motto is famously, “Don’t be evil.” How did they reconcile this in moving into China? According to David Drummond at Google, they “launched Google.cn in January 2006 in the belief that the benefits of increased access to information for people in China and a more open Internet outweighed our discomfort in agreeing to censor some results.”

They agree that censorship is bad, but agreed to do to it because basically, they believe that the flood of information is too great for the Golden Shield to catch everything and the information that did get though would benefit the people of China and the ideals of free speech. Making that argument does have a “pact with the devil” feel to it, but the reality is that Google was largely correct. Four years later it turns out that Google.cn users are on average better educated and wealthier than those who use Baidu.com, the search engine used by the majority of Chinese Internet users. As in most countries, these are assumed to be the most liberal segment of the population, and those who most value free speech. They are also the ones who are best equipped to bypass government censorship.

But the paranoia of the Communist Party of China knows no bounds. Either that or they are extremely sensitive people. Either way, anyone who says anything remotely critical of them is a target to be shut down. This includes mentioning Tiananmen Square, Tibet or the Dali Lama, Taiwan, Uighur riots, pollution problems, or their human rights violations, of which there are many. If you are in China and search for any of these things, Google will likely tell you, “In accordance with local laws, regulations and policies, part of the search result is not shown.” This is part of their self-censorship deal with the government. The Chinese government tells Google which search terms to censor, then watches Google big brother style to make sure Google complies.

No doubt this situation was unpalatable to Google executives at the time, but even more than their “wedge of free speech” argument, they put up with it because of the incredible amount of money they could make in the most populated country on the planet. This fragile status quo has been in place since the inception of Google.cn but last Tuesday (Jan. 12, 2010) Google said no more.

The change of heart came about after Google discovered that the Chinese government was hacking their infrastructure to gain access to accounts and information pertaining to Chinese human rights activists. Not just Google accounts either; according to Google’s official statement at least twenty other large companies were targeted. Even if they were not aware of it, their company’s infrastructure was doing evil.

Google’s response has been to declare that it will no longer take any part in any censorship, even if that means getting kicked out of the country. This is where things stand now, and how this problem resolves will no doubt have far reaching implications. Google stands to lose a whole lot of money. It is rare the corporation that is willing to lose that kind of revenue for an essentially idealistic stand. Virtuous to be sure, but we can also be thankful that Google makes money hand over fist in other markets, giving them the leeway to make this threat credible.

What does the Chinese government have to lose? Mostly, it risks upsetting the 80 million Google users in China. The question then becomes, how much do these people like Google? Will they switch back to Baidu.com with a shrug, or will it cause a bigger backlash? These are among the most wealthy and educated Chinese after all, suggesting they might have elevated influence.

What I really want to ask the Chinese government is, “What are you so afraid of?” If the United States has been able to prove anything, it’s that giving citizens the ability to freely criticize their government doesn’t seem to affect that government’s power one iota.

A lot of the Chinese censorship policies seem to have their origins in preventing the China Democracy Party from gaining control. Of course, the China Democracy Party is currently banned, so if it is indeed a threat, it’s a true phantom menace.

Although I have never travelled there, I had spoken to several people that have lived in China. Based on these conversations and what I’ve read, I have concluded that if you made of list of countries at risk for a revolution or citizens revolt, China would near the bottom. Most people who understand this country agree that the average citizen of China has absolutely no interest in a new government, especially though any sort of dramatic means like a revolution or a coup. This is an ironic situation. The Chinese government has taken the most extraordinary measures to censor the information their citizens receive, all the while the citizenship of the country is among the least inclined to rise up against the state.

All of this suggests that the government of China is afraid that honest discussion of many of these important issues will turn their loyal subjects into revolutionaries. If that is indeed the case, I would suggest that any censorship is just postponing the inevitable. Tech savvy Chinese have been bypassing the Golden Shield for 5 years now, and will similarly bypass the newer “Green Dam Youth Escort.” If news from the outside world, or criticisms of the government were truly inflammatory enough as to provoke a revolution, it probably would have already happened. Rural China is isolated to be sure, but with their incredible cell phone coverage they aren’t that isolated. If their government had done something to truly make their blood boil and cause wide scale civil unrest, I’m convinced that the word would have spread.

My point is that the Chinese government is spending tons of money in this incredible effort that is either postponing the inevitable or protecting against something that will never happen. Either way, it doesn’t seem like the best way to address their concerns. If they believe that censorship is only postponing inevitable civil unrest, the best idea would be to attempt to address the reasons for that unrest, which might include censorship. On the other hand, you could be spending all this time and energy censoring people whose actions and decisions would be roughly the same had you not spent all that time and energy. In the business world, we call that bad ROI.

Clearly my advice to the Chinese government would be to allow Google to continue to operate Google.cn uncensored. From a negotiations perspective, this is the only win-win outcome. I’m convinced that such a move would be truly beneficial to both Google and the Chinese government, but I doubt the Chinese government will see it this way. To them I would ask that they objectively evaluate the value of their censorship efforts. Weigh that against openly addressing your critics and trusting your citizens to deal with criticism of their government responsibility. Such a move would generate a lot of positive press.