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."

Comments

Why not make some politicians squirm?

[mortram]

If they wanted to evade $350 million in taxes, all they had to do was threaten to leave the state. It worked for Boeing. In fairness, WA state has a very, very messed up B&O tax... In fact they maintain the most regressive tax structure in the nation.

New Math

[Anonymous Coward]

From the article:

"Every time Microsoft hires someone in Washington, it creates 3.5 new jobs here. According to the company, Microsoft created an estimated 117,620 new jobs in Washington between 1990 and 2001. But while Microsoft promotes the positive impact of success, all this growth has placed a heavy burden on our schools, roads, and overall livability."

Wow - How could Microsoft be so insensitive as to create jobs.

However, this also raises the BS meter. I always love when I hear "We create xx jobs for every one we hire". Sounds good... but it doesn't add up. To even out, there has to be a job somewhere that causes -1.5 people to be hired. Other than the 435 CongressPricks, and the one in the Oval Office, there aren't too many jobs like that.

Unfortunately...

[jd]

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.

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.

So having a branch in Nevada would mean Microsoft had to pay Nevada taxes AND Washington taxes.

This isn't unusual, and is how many countries elsewhere work income tax. Those from Britain will remember the Ken Dodd trial, where the British Government successfully argued that overseas earnings - even those where he had paid tax overseas - were ALSO taxable in the UK.

Yeah, you could argue that this is unfair, but the problem is that a lot of big-name celebrities and corporations have moved to tax havens. As tax exiles, they get to keep all of their money. The consequence of that is that, in order to maintain any kind of level of service, everyone else has to pay more.

Eventually, what you end up with is the very rich being wholly and completely subsidized by the very poor. Welfare in reverse. Such a system is inherently unstable. The poor - by definition - don't have much in the way of resources, so the greater their burden, the greater the chances of the system collapsing.

Let's take an admittedly extreme example. Let's say that the economy rested virtually entirely on the shoulders of minimum wage workers. It is physically impossible to work more than 3 shifts in a day. Given all that, and given the State and Federal income taxes at that level of income, how many minimum wage workers would you need to cover the average State budget and a typical Federal budget?

If the answer exceeds the population of the US, then neither the States NOR the Federal Government can afford to support tax exiles.

(In an ironic twist, those who do live in tax exile are often the most influential in Government, inverting the age-old critisism that there should be no taxation without representation. Here, they have no taxation, but often all the representation.)