Slashdot Mirror
Keeping Microsoft Happy
Jeff writes "In Citizen Microsoft, I report on Microsoft's use of Nevada corporations to avoid approximately $327 million in Washington state taxes while telling voters they need to pay more to fund education. I also contrast Microsoft's attacks on the open source community with its in-state lobbying efforts and its recent promise to get more involved in local politics. The cover has Gates in a gorilla suit."
This is not one of them. Giving money to governments is like giving whiskey and car keys to adolescents.
Ohhh! Ohhh! I got an idea too. What if the majority of my revenue comes from another state since were are talking about state INCOME tax and where my LABOR comes from can have nothing to do where I make my money. But wait, what if I have multiple businesses, all of whom who have labor in every state, and I need one jurisdiction to deal with all possible legal challenges to contracts. That's when I incorporate in Deleware because the Delware Chancery Courts are the default Supreme Court for business law in the country. No, you cannot expect anyone to incorporate in just any state based upon the parameter that suits your purpose at the time. You have to either create consistentcy in US law or you have to deal with situations such as this.
This is more an indictment of the various tax laws and the shenanigans of the legislative bodies that enact them than of any company or individual that might take "advantage" of them.
Legislators, state and federal, have no incentive to make straight-forward, logical, honest tax laws. They get too much gain from making the laws obstuse and full of holes, for special friends.
Oh, and if you look at any statistics, poor people don't pay enough taxes.
This issue is a bit more complicated than you think.
Playing tax evasion games is just another way for Microsoft to maximize the money they can collect before their bubble bursts. The $75 billion stock divided is the start of Microsofts decline. They realized that in the next few years their monopoly on the desk top will start to slip away. So they are now starting the process of pulling as much money out of the company as they can. By the time they deliver the next version of their OS there will be a lot of companies that will decide to move to something other than Microsoft. Then the real decline will start. It will take many years but it will happen.
Would this get posted to Slashdot? I highly doubt it. Seriously, who can blame MS for this one? Raise your hand if you enjoy paying taxes. Hell, the majority of you guys probably wouldn't support piracy if it wasn't a way to skive out of spending your hard earned cash.
Give the microsoft bashing a break already, it's beyond despicable.
" all sorts of companies incorporate in Nevada not just Microsoft for this same purpose"
Of course they do. It's just that if you are incorporated in Nevada and are not paying WA taxes then maybe you ought to keep your mouth shut about how WA spends the taxes it collects from other people.
evil is as evil does
Sounds to me like Seattle/Washington State's real problem is politicians who are all too willing to give corporations tax breaks. I'm not naive enough to believe that these politicians are not receiving rewards for doing this. Maybe they'll eventually get a clue and realize that having corporations set up shop in the state is not going to generate much revenue for the state unless they are actually required to pay taxes. There is no reason Microsoft is not required to pay Washington taxes, other than the fact that the state government doesn't have the backbone to make them pay.
Microsoft represents the very worst, most pathological elements of corporations in general.
Microsoft takes standard coporate psychopathy, and amplifies it.
This situation is a perfect case in point. They ask for more from more from governments, pay less, and rationalize this greedy behaviour by arguing they "create jobs".
This is the same kind of arrogance demonstrated by companies that outsource IT jobs. Corporations are mere guests of the jurisdictions in which they operate. If they no longer make their fair contribution to society, then they should be forced to pony up their share.
We have to pay our share of taxes, despite the skills and labour we offer society. Why shouldn't corporations be held to the same standards and given the same societal responsibilities as individuals?
This space left intentionally blank.
IMHO, Microsoft is doing exactly what they are supposed to do as a corporation: limit costs, and increase profit. That's what capitalism is all about. Unless I misunderstood that part of economics.
Hmm, maybe that's why their software sucks so bad. They don't care about making good software, they only care about making good money.
Americans aren't all that good about being consistant, even within a single State. (Not that any other country is much better.) To expect all fifty States to unify around a single optimised set of laws is hopeful at best. Most Americans would even argue that such a concept is "bad" as the present system gives individuals the ability to "customize" where they live, to a degree.
That's why AG's for the states get together in order to draft legislation that will create some consistency in the laws across the country. I would agree with the second statement. Many people choose to establish residency in Florida before declaring bankruptcy because of the laws put into place to protect the individual declaring bankruptcy.
Probably a more realistic system would be to require a corporation to state its "home turf" (much as a ship states its home nationality). The corporation would then have to obey the laws (including tax laws) of its home turf AS WELL AS the laws of wherever any outposts were.
Before putting forth this analogy go see where the majority of ships nationalities are registered. It isn't here in the US its actually Panama and the Bahamas because once again they are avoiding tax liability.
Unfortunately you are correct many companies are moving off-shore, Tyco and Dewalt come to mind off the top of my head as two recent examples, but the only way to prevent those things from happening (and retain our jobs here at home) is to become consistent and competitive.
Taking your argument to the extreme is very Kant'ish of you but in no way resolves the issue at hand. Not everyone can skip the country and if everyone did the laws would be changed. BTW, according to the Congressional Budget Office the top 20% of all taxpayers shoulder 82%~ of the tax burden of the country. The minimum wage worker does not even contribute to the tax burden because they receive payments back from the government.
I think it's time to point out Super Obvious Tax Fact #1-- 99% of tax loopholes AREN'T. They are specifically written into law in order to promote free enterprise health, the backbone of this country lest everybody have a lobotomy at the mention of Microsoft. I find it amazing how the submitter portrays this story as MS being above the law and commiting tax evasion when they are doing no such thing. Infact, the submitter (and half yas out there) should be looking at Nevada, who specifically wrote their tax code to encourage companies to set up shop in their state. Companies like -gasp- Mircrosoft. I'm sure you'll be seeing huge crocodile tears shed by the Nevada state government for having to host one of the richest companies in the world.
Looks like those 'loopholes' worked out pretty well for them.
You need a FREE iPod Nano
I agree with a national sales tax but as you said it will never happen. Its the same reason we will not have a flat tax either. Gotta keep those tax advisors and the people at Turbo Tax's Intuit unit employed. There is another reason income taxes will not be replaced by either one of these. Income taxes give governments the ability to both reward and punish certain behaviors. For instance, you get a break for giving money to chairity, purchasing an electic car, or putting a child through school. You do not have the ability to reward and punish such behaviors when everyone is just paying a flat rate or paying a tax on goods.
Also, I would not sign on to a VAT until there was specific language in the law that declared an income tax and VAT could not exist at the same time.
Having dug up some info on the California Secretary of State's website at http://kepler.ss.ca.gov/, I discovered the following:
1. Apple Computer is incorporated in California, but owns subsidiaries, such as "Apple Computer Peripherals, Inc." that are incorporated in Delaware. Apple even owned "Apple Computer Domestic Subsidiary No. 4", incorporated in Delaware - I guess that ACDS No's 1-3 were too old to be on the Sec. of State's online records.
2. Sun Microsystems: Almost entirely Californian, but there was a Delaware corporation, Sun Microsystems, Inc. that was created in 1987.
3. HP? Well, there is a Hewlett Packard Retiree's Club incorporated in California. Agilent? Delaware. The old HP was in California. The new one? I couldn't find it.
4. Novell? Incorporated in Delaware.
5. eMachines? Delaware.
6. IBM? Seems to be in Delaware, but there's a "IBM Global Services India Private Limited" in India. Wonder how much IBM phone support comes from there? (Seriously - I don't know).
I'm tired and I'm going to sleep, so I leave additional research as an exercise for the interested. The point here is that most of the big corporations seem to be incorporated in "friendly" states like Delaware, or at least have subsidiaries in Delaware the way Apple Computer seems to have, apparently for the purpose of minimizing tax liability and taking advantage of other laws benefiting corporations.
So is MS ripping off the good people of the State of Washington? Sure. But it's only par for the course, and it's what the other corporations are doing and will keep doing until we amend the constitution, repeal dual soverignty, and eliminate the states as entities with the power to legislate (ie, it ain't going to happen). It's the same thing as "forum shopping" (filing lawsuits in the jurisdiction with the most favorable law, if you can), or even some advanced estate planning techinques (some states have completely repealed the Rule Against Perpetutities, which allows people to create trusts domiciled in those states that can, literally, last forever).
Hell, want to know the biggest corporate scam?
1. Buy an asset owned by a municipality - a bus, subway car, sewer system, for an example.
2. Lease it back to the municipality for an amount roughly equivalent for what you paid for it amortized over a few years.
3. Depreciate the hell out of it and pay little or no corporate taxes, ever.
4. Once you've milked the depreciation, sell the asset back to the municipality for a nominal value.
5. Lather, rinse, and repeat.
6. ??? (couldn't resist)
7. Profit.
The loopholes exist, and corporations (and people) take advantage of them. And when they don't exist, lobbyists convince legislatures to create them. Are we doomed? Not really. Washington may be whining over a few hundred million bucks, but it's not as if the state government has collapsed. Yet...
144l. ph34r my 133t l3g4l 5k1lz!
Since when has it been illegal to legally make money?
Just because, in the opinions of other /. posters, every other corporation is slanted and corrupt does not make the crimes of Microsoft any more legal.
Genius? That's a dubious title for Bill Gates. He's a sharp businessman, nothing more, nothing less. He saw opportunities to steal IP before IP was a big deal, and he took them.
Look at it this way. If it wasn't him, it would be someone else in his spot. The market wanted personal computers, with an operating system that was readily available and ran on commodity hardware. He provided half of that equation. Meanwhile, niche computing and heavyweight stuff was reserved for Unix, Irix, Sun and other players. His real genius was releasing bug ridden software that ran just well enough to let you get some work done, but not well enough to convince you that you didn't need the latest upgrade release.
Ask any Windows 95 user why they would want 98. Is there a long list of features that are new? Not really. Instead, it promised what every other Microsoft upgrade promised and continue to promise: greater stability, speed, performance, and compatibility. For those of you that refuse to get on the upgrade conveyor belt, you'll be left ass-out in the cold when MS declares end-of-life for your OS and stops releasing patches for it. Upgrade or get owned.
There are those of us that prefer choice and we generally use MacOS or Linux. So what if we don't have 1000 crap games and 3 good ones. So what if we can't download heaps of junk freeware. So what if we don't need virus protection software and commercial firewalls. We get along just fine without MS.
Actually I can't throw too many stones, because every call I get from an end user that has 215 pieces of spyware and adware clogging up their pc is money in the bank for me. The sad thing is, they think what they use is all that can be used without taking out a second mortgage to buy a G5 tower. One customer actually asked me about Linux, especially after he saw how beautiful it was running on my Dell laptop. Converted.
For all you brainless posters who are sarcastically dismissing M$'s actions as acceptable corporate strategy - you are missing the whole *POINT* of the article!
The problem is not ONLY with M$ avoiding taxes, but their HYPOCRISY, since at the same time they are spouting out of their backend about how the residents are not paying enough and trying to get the people to pay even MORE taxes.
What a bunch of BS! If I were a resident of WA, I'd want to kick them out.
Poor Boy buys a $20,000 car pays $1000 or 5.0% of his income.
Rich Boy buys a $60,000 car pays $3000 or 1.0% of his income.
I don't see the problem here. It's fair. The word fair means that everyone plays by the same rules.
If they both buy a $20,000 car, then they both pay $21,000 total. If Poor Boy thinks that $21,000 is too much, then he shouldn't buy the car.
Is Poor Boy at a disadvantage compared to Rich Boy, who can afford $21,000 for a car? Yes, he is. That's because he's poor. If you want to remedy that, the proper solution is to give him money, rather than make the laws unfair.
I am having trouble understanding the moral framework here...
i'd hit it so hard, if you pulled me out you'd be the king of britain [bash.org]
Yeah, it's almost as if MS is acting like a greedy American corporation bent on increasing profits at any cost. For shame.
"I also feel that the federal government should not be allowed to sign contracts with companies that do this. "
This needs to be carried further. In this example if MS is setting up shop in Arizona because they want to pay less taxes and shirk more responsibility then the state of WA should not do business with them.
The same concept just one little step further.
evil is as evil does
Yea, I absolutly want the Federal Govt. to have more power than it already does. The Federal Govt. that uses it's police powers to force me to pay for people that refuse to pay for themselves. The same Federal Govt. that has made a fiasco of the social security system.
This is one of the major problems with the US today. People that are uneducated on our form of goverenment. The Federal Goverenment IS NOT supposed to have even the amount of control it currently enjoys. Our forefathers founded this country with the vision of a very minimalistic Federal government. Over the course of history States rights have gradually been eroded to the point that the very concept of States rights is laughable.
More over the current income tax we are forced to pay at gunpoint was rule unconstitutional by the Supream Court in 1895. So the Congress passed the 16th amendment, and income tax was here to stay.
Regardless of political affiliation, I think both Dems and GOPs will both agree that the last thing the Fed needs is more power and influence over us.
To even out, there has to be a job somewhere that causes -1.5 people to be hired.
Wrong! Wrong! WRONG!
That's zero-sum thinking, and life isn't really a zero-sum game. If Bill Gates gets richer, that doesn't actually mean that poor people get poorer. If you are well-fed, that doesn't actually mean that someone else has to be hungry.
Microsoft is claiming that for each person they hire in Washington state, the state gets extra jobs. This is because that extra MS employee gets paid, and spends money in the state (at Starbucks, for example, as some other posters said). The money can come from all over.
And guess what -- we are all richer than anyone was 50 years ago. What do I mean? For $200 I can buy a cool pocket computer on eBay, with colour display and everything. How much would that cost 50 years ago? Oh, they didn't have colour pocket computers, or eBay for that matter. Our health care is better, so our life expectancy is higher. And while pop music sucks now, the cool music from then is still available now, and we can buy cool TV shows on DVD.
What is the point of the above ramble? It's just this: when someone discovers something cool or invents something cool, the whole world gets a bit richer (at least if that person shares the discovery or the world at least finds out). There is no part of the world that has to get poorer when the rest of the world gets richer. We use money to keep score, sort of, but don't forget that even a billionaire 50 years ago couldn't buy an iPod, or modern health care.
People think there is a finite amount of good stuff, and the rich people hoard it somehow. That's not how it works.
If you are writing new tax laws, write them to maximize the benefit to society, not to punish the richest guys. If cutting the tax rate would encourage more spending and make more tax revenues, then do that. But some people will cry that it's unfair because it lets the rich keep more of their money. Because they are using zero-sum thinking to look at the world.
I really HATE zero-sum thinking.
gross profits = total sales
Actually, gross profits doesn't exist. It's referred to as gross sales, gross revenue, or just revenue. Profit is always and only income-expenses. I'm being pedantic, I realize.
you would actually wind up pushing a lot of businesses right out of the country
You have no evidence of that.
You also have no evidence your hare-brained scheme will actually work. Sue me for thinking critically and analyzing your proposal, and also considering how many companies have moved from state to state or chosen to setup in specific states or other countries entirely because of tax laws involved. It's a historic and economic fact that overtaxing a group of people will drive them out of the area. A revolution was conducted in this country over that exact issue. Evidence I don't need. Not when all you need to understand what I said is a basic history lesson, a leven of education I achieved in the third grade. Don't know about you, though.
and generally do a lot more harm than good.
Nor of that.
Aha, lack of reading comprehension. I stated how it would cause more harm than good in my first post, but it appears you may not have read it. Since you managed to quote my post, that's solid evidence you did read it, so lack of reading comprehension is the obvious conclusion.
See? that's called "power of reason". Analytical reasoning and problem solving our the purposes of studying math in school. Both of those are usually skills that are established pretty early in school at least to a minimum level to understand what I said.
Aha, so I attacked you. Why would I do that? I provided a thoughtful response to your statement and received curt baseless responses. I expected meaningful dialog, and I got, well, double-standard. You ask me for evidence to criticize your proposal, but you don't provide evidence to back it up. That brings the assumption that your proposal is good. So let's pursue every single proposal anybody dreams up under the assumption it's good, without thinking about it.
Keywords: without thinking about it.
Like what I said? You might like my music
Here are some excerpts from the piece:
How can anyone call those things "facts"? Their opinion. Now, I don't mind op/ed pieces. But this is reported under the title of "News". If you want to express your opinions, that's fine. Just don't tell me you're trying to express fact when you're expressing opinions.
If we in the OSS world, want to beat Microsoft, we can't accuse them of FUD at the same time that we're practicing it.
$.02
Key to financial independence: Spend less than you earn. Save and invest the difference. Do it for a long time.
Education. I personally would rather be educated than have a job. I would rather have my kids (I don't have any yet) be able to get the best education available than me having a job.
I can always eventually find a job. Times might suck for a while, but I'll get through it. But I cannot get through it without knowledge. I would be disgusted if I saw someone screw over my kid's education just to get some money.
At the end of the day knowledge is the most important thing. If you have a good education, you can go out and do just about anything you want.
Ultimatly that is why I'm not concerned about my job. If I lose it for whatever reason, I know that I won't be too hard pressed to find a new one. Yes, I might be unemployed for a while. Yes times might get a little tough. But I know that it will only be temperary.
Knowledge IS indeed power. And with that power, you can lift yourself above and accomplish anything...assuming you have the determination to do so. And to a point, I think those two things go hand in hand.
-Mark
Dovie'andi se tovya sagain.
If the fine citizens of Washington state don't want evil ol' Microsoft around anymore, we'd be happy to have them move here. Of course so would 48 other states.
You pointed out that you're a hard worker...well good for you, we need more like you!!! BUT...that thinking also makes you a shmuck! If you want real equality of taxes, realize that "income tax" taxes the over all money you make, while sales tax taxes what you MUST buy to a certian extent. The percentage of your income you MUST spend being poor is drastically higher than the rich guy... to put it another way how many hours did you have to work to pay the sales tax on the same $20 shirt...a minimum wage guy would have to work 4 hours just to pay for the shirt plus another hour for the sales tax...the rich guy might work 1 hour for the whole $100 trip to the mall... see the difference? oh, and the rich guy doesn't pay "medical bills" because somebody else [insurance] pays them...so while you work to pay debt, they get compound interest...basically from you!!
When you start talking about the "top 20%" there's a large spread there as well...after all, 10 families at $100k pay far more real taxes than 1 family with $1m! After all, that's 10 pairs of soccer shoes, 10 Xboxes, 10 pairs of braces...versus only 1 for the guy making a $1m. While the income tax would be close to the same, the "extras" like sales, telcom, etc could be 10x higher part of income for the 'poorer' folk.
I don't see the problem here. It's fair. The word fair means that everyone plays by the same rules.
:)
Errr, what part of "1.0% is different from 5.0%" is hard to understand? Phrasing the "same rules" in flat dollar values is "unfair". Using a percentage automatically scales to every situation, and is therefore the completely fair way.
Now _should_ things be fair in this way? I'll leave that for someone else.
If given a choice, I would take Bill Gates over Steve Jobs anyday. Ever watch that TV special with those two in the 80s. Gates was a complete geek, but Jobs was a geek with serious attitude problems toward his own engineers.
They portrayed him as this abusive chief with absolutely zero respect toward everyone who worked for him. Ego trip every day and made his engineers pushed to an unhealthy limit.
Bill Gates made bad software acceptable in the market. Steve Jobs would have made bad corporate culture acceptable.
I'm not sure which is worse: the fact that you base your opinion of Bill Gates and Steve Jobs on a made-for-TV movie, or the fact that people were dumb enough to rate your post +4, Interesting.
Next time, try to base your opinions of people on something a little more substantial, will you please?
If the proper solution is, quote, to give him money, endquote, then wouldn't reducing his tax be the way to do it?
No wonder you're having trouble understanding your moral framework.
--
Don't like it? Respond with words, not karma.
Myself, I'm having trouble understanding who would moderated up this self-confessed idiocy. The money you "give" "Poor Boy" has to come from somewhere, which means, in this example, it must come from "Rich Boy". If you're going to do that, you might as well just adjust the tax rates to start with and avoid the inefficiency of a separate program.
Incidentally, the fact that one Boy is Poor and the other Rich implies that they aren't playing the same game, so the parent post's definition of "fair" doesn't apply.
I don't see the problem here. It's fair. The word fair means that everyone plays by the same rules.
Right, and fair means at the same cost, or burden to everyone, not the same relative dollar value. Ten percent of a lower middle class income is a huge burden which directly affects their quality of life. Ten percent on an upper middle class income, while more dollars, is hardly any burden. Progressive tax systems allow for a fair burden on everyone, regardless of class.
There is no longer anything that can be done with computers that is nontrivial and clearly legal. -- Paul Phillips