Texas data processing tax (1987)
The Texas Legislature imposed the sales tax on data processing services in 1987, when data processing meant mainframes and data-entry workers. The tax was later applied to cloud-based systems that didn't exist when it was written.
The tax applied to a narrow set of data processing services in the mainframe era.
Decades later, the tax was stretched to cover electronic health records, patient portals, and other modern digital services, driving up healthcare costs.
Shows how a tax designed for one technological era gets applied to entirely different services, and why the Comptroller's office is now reviewing its interpretation.
