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Microsoft Enticed To Move To British Columbia
MartinB writes "The BBC is reporting that British Columbia have offered MS a home 100 miles away in Canada. 100 miles of geography, a million miles of juristiction. If MS are in Canada, the US legal system can't touch 'em. Or can they? " Well, I suppose they could move - but that wouldn't totally forestall US Legal Moves, because they'd be forced to maintain a US subsidiary. In addition to not really escaping the DOJ, there's the tax and issues of getting 20,000 people to move.
The provincial tax brackets for BC are:
$0 to $30,004 8.4%
$30,004.01 to $60,009 12.4%
Over $60,009 14.35%
Federal tax is:
$0 to $29,590 17%
$29,590 to $59,180 26%
Over $59,180 29%
Thus the absolute maximum income tax you will pay is 43.35%. And you're only paying this if you are a complete fool. There are a million ways to get tax deductions, most Canadians pay a fraction of this amount. In addition, you can put money into RRSP's thus deferring paying tax on them until, for example, retirement at which point you are earning a reduced income so can probably make a smaller tax bracket.
I've lived in California and Ontario, Canada. The standard of living is higher here, despite constantly hearing from my US friends about how bad our taxes are.
Obasan
If a tree falls in the forest, and kills a mime, does anyone care?
Notably including the cost of real estate. Perhaps not quite as bad as Silly Valley, but real estate prices got bid up by folks from Hong Kong that were concerned about having a haven from the Communists.
Decent locations to work tend to be in the downtown, and access is controlled by about half a dozen bridges. Not exactly a good thing for commute times.
Throw an extra 20,000 people into the mix, and you'll see the traffic get worse, as well as watching a nice real estate price "bump" up, as something around $10B gets spent on real estate.
The choices are limited; MSFT would need a full-service airport nearby, which, in BC, forces them to try to stay near Richmond.
And remember, Gates loses, in such a move, his massive advantage, namely a state legal system that he apparently understands quite intimately as a result of growing up in a "legally oriented" family. BC law is not the same as Washington law, and that is likely to prove to be a jarring problem.
Of course, that provides another cost issue; MSFT would incur the costs of creating a sizable new "law stable" to deal with the local regulations.
Most entertainingly, this comes along with the demerit that a bunch of the former MSFT lawyers get discarded due to not being "Canadian-law-compliant."
Those lawyers are going to be none too happy about the change, and remember, they're lawyers. They're likely to sue Microsoft for whatever they can, and mutter things about "wrongful dismissal."
If you're not part of the solution, you're part of the precipitate.
Don't be so proud of this technological terror you have created. The ability to dominate a market is insignificant next to the power of the source.
IAAL also, and ditto on the disclaimer.
Hawk is right. Such a tactic would have no effect on the proposed split, contrary to the majority view expressed here by non-lawyers.
BTW, IMO, Hawk should be moderated up, so that all the non-lawyers who are speculating here can see his points.
Furthermore, even if MS left the US, this would not get them out of future trouble. Foreign companies that do a sufficient amount of business in the United States are subject to the laws of the United States and the jurisdiction of its courts. "Sufficient" is a wriggly lawyer term, but one that MS probably couldn't escape from. (BTW, this principle holds true in most countries of the world -- the concept is that if you avail yourself of the benefits of the laws of a jurisdiction by participating in activities there, you are also subject to its rules -- a pretty fair concept, on its face).
The question then becomes how such a court enforces its judgment on extra-nationals. Many of you seem to think that court orders could only affect MS product shipped into the US. Wrong! The powers of a U.S. federal court are vast, particularly if MS were to engage in criminal contempt of court by ignoring the judgment.
Do you know why indicted/convicted drug kingpins (and in the assumed scenario, MS would be little better in the eyes of US law enforcement) don't openly live in Canada and don't openly conduct their business in the U.S.? Because (1) the Canadians have treaty obligations, if not the desire, to cooperate with the USG in bringing lawbreakers to U.S. justice, including through extradition and the like, and (2) the USG has large resources devoted to tracking any "laundered" legitimate business activity they carry out in this country (and globally) and then freezing or seizing the assets involved.
MS would have a hard time operating without access to its bank accounts (and note that even the Swiss cooperate in matters like this - they only won't help other governments when the allegations are tax evasion). A company like MS must have access to the international banking system to do business -- they would have a hard time indeed if they had to rely on the Caymans to the point where they could only pay and accept money from other people with Caymans accounts.
Believe me, the USG doesn't tolerate public displays of disobediance to its laws. The more public and egregious the disobediance, the harder the government will come down on you. Often disproportionately and often to public approval (forex, witness the defiance of Elain's Miami relatives, and the subsequent force used to bring them to heel). For whatever historical reason, the U.S. federal judicary (though often not the political branches) commands an almost mystical respect from the American people. Any number of popular (at least at some level) causes have lost considerable credibility with the masses after a decision was made to defy the law, as interpreted by the courts (e.g., Elian, desegregation resistance, and to a lesser extent right-to-lifers).
MS and the DoJ both know this, and know that the full force of the U.S. government will be used to enforce whatever the final ruling turns out to be. That is why neither one of them is likely to be giving this British Columbia scheme even as much though as I just have.
Moving out of the US would in fact get MS off the breakup hook.
The US would then be limited to imposing restrictions on MS products imported to the US. I imagine this is exactly the approach the EU will adopt if they decide that MS has broken EU antitrust laws and that the US remedies do not address the issues.
I guess the US could also impose arbitrary large monetary fines on any wholly owned US subsidiary, forcing MS to either bow to US decisions or spin off the subsidiary as a separate company.
Even if MSFT was not based in the U.S. it would not prevent them from being punished for breaking U.S. antitrust law. After all MSFT was investigated by Japan for antitrust issues as well as an European Union antitrust investigation. In neither of this case was the fact that MSFT an American based company a savior.
British Columbia should investigate antitrust law before making such suggestions to MSFT.
I am a lawyer, but this isn't legal advice. If you need legal advice, see an attorney licensed in your jurisdiction.
This wouldn't stop the split. The U.S. court has already rendered judgment, and has jurisdiction. Assuming that the split stands on appeal (and the odds are strongly in the DOJ's favor), the two pieces could move.
Plain and simply, the court can block the move until the split is complete. Contempt power is an amazing thing--every executive can be jailed, fined $1M/day, etc.
It might help MS with future problems, but not the current mess.
Unfortneately, I can't reply to replies, as it's moving day and I won't see a computer again until Tuesday . . .