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

No way

[Kell_pt]

I must say no willing gorilla would allow its body to be used in such a photography. It's an outrage!

Re:Bananas

[kundor]

I've always thought of him as more of a chimp than a gorilla. I mean, gorillas are imposing and can appear wise, whereas chimps are little scamps who'll try to get away with anything.

Ironic

[whiteranger99x]

The cover has Gates in a gorilla suit....

As opposed to Steve Balmer who just jumps and dances around like one. :D

Re:unsubstantiated garbage

[DAldredge]

Seven years ago, Microsoft opened a small office in Reno, Nev., to collect the money it got from PC manufacturers that installed Windows and Office on the computers they sold. In the years since, Microsoft has sheltered more than $60 billion in royalty revenue in Nevada, a state with no corporate income tax, costing Washington an estimated $327 million in unrealized tax revenue.

That should be easy to verify, contact the SecState of Nevada

Microsoft is evil...

[angryflute]

And in other news, the sky is blue, and the sun rises in the East and sets in the West.

Wake up and join the Real World...

[Hangtime]

all sorts of companies incorporate in Nevada not just Microsoft for this same purpose. In fact, while Delaware is the number one state to incorporate, Nevada follows up close behind because of the lax laws. Just like I'm sure you, your friends, and your family go down to Oregon to do your Christmas shopping so you don't have to pay state sales tax. If you want to close these loopholes then every state needs to have consistent incorporation statutues and laws. The only companies that incorporate in their own state are the ones who can't afford to incorporate in another and/or follow another state's governance laws and procedures .

Re:Wake up and join the Real World...

[Hangtime]

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.

Re:Wake up and join the Real World...

[Fnkmaster]

Well, in general, there are lots of reasons to incorporate in different states other than just saving money on taxes. I don't know what the specifics in Washington state vs. Nevada are, so I won't comment on that. But in Massachusetts, a corporation doing business in the state and registered as a business entity in the state has "nexus" in the state and thus is subject to the corporate excise tax on all income apportioned to or attributable to the state. It doesn't matter where you are incorporated - I run a Delaware Corporation, and still have to pay a minimum 456 dollar excise tax to Massachusetts every year.

You generally incorporate in a different state to take advantage of their chancery courts, anonymity laws and corporate stucture statutes (allowing more flexible or customized corporate structures, like the Delaware Series LLC for example). And you want to have your corporate entities in a state that doesn't add a substantial amount of tax on top of what you'll already owe to the states where you do business and generate income (Delaware, for instance, charges only a nominal amount of tax every year based on the number of shares outstanding - but like I said, this doesn't mean I don't pay excise or corporate taxes, I still pay them in MA since that's where I do business!). Additionally Massachusetts has a foreign corporation registration fee which makes up for any money you save by registering your corporation in another state - so you literally save nothing (and we're talking about differences here of a few hundred dollars a year, not something Microsoft cares about).

If Microsoft is doing business in Nevada and attributing income to that state, then that's not really a loophole at all. If they are mis-attributing income, that's just fraud. There are tax loopholes out there, but this article doesn't really make clear what loopholes Microsoft is actually using, or if Microsoft just uses Nevada corporations for business entities and groups subsumed within Microsoft Inc. because of their flexible corporate law. Maybe Washington just isn't as anal as Massachusetts about collecting their taxes from all businesses, or just are failing to enforce the appropriate attribution of income to Washington state? This stuff is always confusing in the software world, since it's not always so clear cut to say where the work was performed and where the income came from.

Re:Wake up and join the Real World...

[killjoe]

" 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.

Re:Wake up and join the Real World...

[multimed]

Ultimately this is a major reason I think we should move to VAT or sales taxes and just get rid of everything else. The fact is major corporations always have a cadre of lawyers to find ways around taxes. And even if they didn't, it really wouldn't matter because the government really can't tax corporations, it can only use them to help collect taxes from individuals. Whatever taxes corporations actually end up paying are just another expense and get taken care of by boosting the cost of their goods and services to cover them. The rich have very high nominal tax rates but considerably lower effective tax rates. Of course I don't actually expect sales/VAT to every become a reality. Tax prepartion and advising is a billion dollar industry. Politicians wouldn't turn their backs on millions of dollars in lobbying money, and the complexity of the tax and budget system is a main source of their power.

Re:Wake up and join the Real World...

[km790816]

Sales tax = regressive taxation = hurts the poor much more than the rich

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.

Conservatives love this, too. When the Republicans took over the Iowa Legislature 10 years ago (and things were good) they cut income tax by 10% across the board (giving a massive break, in terms of real dollars to the rich).

Years later, when things weren't so good, they raised the state sales tax 1%, which had the same affect: hurting the poor in terms of both real dollars and % of income.

Let's clean up our existing tax laws first--eliminate the subsidy on SUVs, make it harder to create tax shelters in the Caribbean.

Re:Wake up and join the Real World...

[Hangtime]

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.

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.

Since the submitter forgot...

[mblase]

...here's a link to the actual article.

Didn't read the summary did you?

[maggeth]

submitter WROTE the article. you are the one who didn't read.

Amazon Loves Nevada Taxes Too

[theodp]

Check out the testimony of Paul Misener, Amazon's VP of Global Public Policy, as he reminds Nevada legislators who questioned Amazon's failure to pay sales tax that Amazon solved its Washington and Georgia tax problems by closing fulfillment centers in the two states.

Who wouldn't?

[NotQuiteReal]

No, I did NOT RTFA, but, why would anyone pay taxes they could legally avoid? I am not talking about evading taxes, but rather, using whatever loopholes are available to avoid paying more than you must. In the case of a publically held company it would be irresponsible not to.

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.

There's no loophole

[melted]

If you haven't paid sales tax while being in another state you have to pay "use" tax in your home state. This tax is equal to the amount of sales tax you'd have to pay if you made the same purchase in your home state. For someone in WA this means that if they went down to Oregon and spent $1K on merchandise taxable in WA, they owe the state $88 in taxes or whatever they pay in their county.

not as simple as that

[plasm4]

This is very easy to circumvent. You set up a company where all your employees are located. You set up another company in the tax shelter state. You have the taxed company do business with the untaxed company. Maybe the taxed company pays a consulting fee to the untaxed company. The taxed company suddenly shows no profit, therefore it pays no income tax. The untaxed company shows a huge profit but it pays no income tax anyway so it doesn't matter. There are a million other ways to legally get around paying taxes.

Re:The Article.

[TechnoPope]

So basically, Open Source is suddenly going to eat up all of MS's market share. MS will cease to be. World Hunger will end. And Peace will break out around the world.

Or...

Maybe this is the same kind of analyzing that gets done on Apple every six months saying that it will go under. Let's just be honest for a second. Microsoft isn't going to go away. They may not be THE market share holder forever, but they aren't going to go away. The beauty of software is that people have a choice. Just like you can choose to use linux (or BSD,OSX,Netware,BE, whatever floats your boat), people can, and will, choose Windows. As great as Linux is, it has quite a few shortcomings, as does Windows, as does OS X. Everybody is basically equal.

So while their desktop market share will probably go down (at 90% it's hard for it not to), this doesn't mean that Linux will automagically become world leader supreme. Let's not kid ourselves.

Re:The Article.

[gcaseye6677]

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.

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.)

Re:Unfortunately...

[Fnkmaster]

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

You effectively do. You have to pay corporation registration and filing fees in the jurisdiction your corporation is registered in, in exchange for taking advantage of their general corporate organizational laws and chancery courts. You pay corporate excise or income taxes in the state where you actually conduct business, and if you conduct business in multiple states, you essentially are supposed to divide up that income and attribute it appropriately to each state. At least, this is the way the states that I'm familiar with deal with the issue. Delaware doesn't want to charge you full excise taxes for doing business there, they make good money out of having the best, most flexible, and well tested corporate structure statutes.

In any case, a state can't really tax a corporation or individual on income that is already getting taxed at a state level elsewhere, at least not without chasing everybody out. For a national corporation, anyway, this is all particularly confusing. If you employ all your people in state A and develop your software there, then you should probably pay taxes there. But it's possible to transfer ownership of that software to a corporation in another state, for example, and have it's income attributable to a totally separate entity in that other state, making it look like operations in state A are not that profitable while the corporation as a whole is raking in lots of profits (this may be what Microsoft is doing, but it's not clear from the article at all).

Anyway, the only way to make the kind of uniform changes you describe would be to do so at the federal level and impose them on the states (not likely). What if you have a branch in Nevada, Washington and Florida? How about in every state? Well, you already have to pay taxes in all these states, but you can't expect a company to pay taxes on all their income in ALL the states they do business in, they'd owe more taxes than they have income! So you come back to the problem of attributing and assigning income - it's a sticky problem, and ultimately you have to rely on a certain degree of honesty and tools like Sarbannes-Oxley to force that honesty. Beyond that, states need to deal with corporations that are abusing tax laws when they occur - if all your employees are in Washington and the company is making 10 billion dollars a year, but only attributing a billion dollars of it to work done in Washington, they are probably abusing the definitions provided for by law and they need to be cracked down on.

Re:Unfortunately...

[Hangtime]

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.

Not Rocket Science

[Vampyre_Dark]

To keep Mircosoft happy, you give them a big blue button that says "SCREW SOMEONE OVER" in big bold letters. As long as they can keep pressing it, they'll never lose their errections.

It's an interesting point

[ebuck]

I've a father that is a CPA, but don't take tax advise from me, hire a CPA.

Tax law isn't something that is consistent and fair. It's a hodgepodge of well meaning laws all intended to do various things which will provide the goverment funding while not trying to destroy the economy at the same time.

That means a person may legally owe (depending on how he files) a whole range of taxes. If you choose to pay more, you're not a single bit more "legal" than if you pay the minimum. Add a few states into the mix, and some off-shore holdings, and I can mentally visualize the complexity of the problem growing.

As for the poor not paying enough taxes, well that's an opinion. But the lower taxing of the poor is a philosophical argument encoded in tax law. The argument is something along the lines of, well, if we tax them, then they'll never make it to middle class which is where we really make our money. Other arguements like, "big business is really what drives the economy, so they should get a tax break so they can do more business" are also philosophical in nature, but people tend to forget this.

As a result, you've got a lot of conflicting ideas on what is taxable, what is not, and how much. Just look at the relatively simple tax laws for food. There's literally cases where you can't know if an item is taxable until you lay down some sort of priority on which way you're going to interpert the laws.

Food is not taxable. Some snacks and candies are. Prepackaged food being consumed on the premises is. Beef jerky is a snack, yet it has a history of being a real food staple. Chewbacca lives on Endor. That means if the stop-and-go has a food court, then the beef jerky should be taxed, but if it lacks one, then no. It's not confusing because of political kick-backs, but because of political do-gooders who really tried to fix it on a case-by-case basis over the last 200 years.

Wake up and smell the capitalism

[vulcan_pupil]

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.

Re:Of all the things to knock MS for...

[Waffle Iron]

Why should the *government* build roads?

So I don't have to sign an EULA and a two-year service agreement to use a road to drive the store.

Why should the *government* hire teachers?

To keep everone else's kids out of trouble and off my lawn.

Why should the *government* hire firefighters?

So I don't have to find my credit card before I can get somebody to rescue my family from a burning building.

Why should the *government* give disabled people money?

So I don't have to trip over them on the sidewalk and in stairwells as if I was Charlton Heston in Soylent Green.

Since you're the one who doesn't seem to need anybody else, why don't you head for the border.

Cry Me a River of Millions. please.

[Mulletproof]

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.

Other corporations?

[DavidBrown]

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...

Nevada makes sense

[AaronW]

I was recently involved in setting up a corporation and rather than set it up in my own state, there were advantages, other than taxes, for setting it up in Nevada. You will notice, for example, that many companies are incorporated in Deleware or elsewhere, often for the better legal protection provided by that state's laws. For example, trying to sue a Nevada corporation may be more difficult than many other states.

In our case, taxes were not the intent at all. We still pay local state taxes as well, so the savings are not that significant. There is some tax savings since some of the taxes are paid to Nevada instead, but nothing significant.

Now what I do feel bad about is how some companies set up their offices offshore in places like the Caymen islands to avoid federal income taxes or other federal laws. If a US based company does this, then they should not get the benefits of being a US company. I also feel that the federal government should not be allowed to sign contracts with companies that do this. I.e. why should my tax dollars go to Haliburton when the company sets up offices (usually just a mail stop) in places like the Caymen islands or elsewhere to not only avoid paying US taxes, but to also circumvent US laws and do business in places like Iran.

common sense

[Anonymous Coward]

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.

Re:Bananas

[Afrosheen]

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.

M$ Hypocrisy

[Anonymous Coward]

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.

Zero-sum thinking

[Anonymous Coward]

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.