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Ballmer Threatens To Pull Out of the US
theodp writes "Microsoft CEO Steve Ballmer is threatening to move Microsoft employees offshore if Congress enacts President Obama's plans to curb tax avoidance by US corporations. 'It makes US jobs more expensive,' complained billionaire Ballmer. 'We're better off taking lots of people and moving them out of the US as opposed to keeping them inside the US.' According to 2006 reports, Microsoft transferred $16 billion in assets to secretive Dublin subsidiaries to shave billions off its US tax bill. 'Corporate tax is part of the overall advantage of doing business in Ireland,' acknowledged Ballmer in 2005. 'It would be disingenuous to say otherwise.'"
Depends on the market. In the case of Microsoft software, the consumers don't pay the tax. Microsoft's main titles (Windows & Office) are both mostly market monopolies, which means that the price is set based on how much people are willing to pay for the software. The price is set based only on the contrast between number of sales and price per sale to optimize for maximum product.
In cases like this, the industry ends up paying the taxes. While the monopoly company has less funds to develop improvement in the software, users of the software receive less functionality. Software developers and domestic employees are hurt the most, having less employer competition due to work being outsourced.
"And we have seen and do testify that the Father sent the Son to be the Savior of the World"
1 John 4:14
On a more serious note, just how many employees do they think are going to pick up and leave Washington for Ireland? Was this their plan all along? I guess the climates are compatible...
IBM did it. They started laying a bunch of people off, and while they were on their way out the door, they 'suggested' that they apply to IBM India. Some employees took them up on it.
Remember that 'giant sucking sound' Ross Perot was talking about back in the 90s? Everyone was laughing at him them, but look who's laughing now.
My blog
Microsoft is having huge problems with the EU because, well they are actually interested in the public good.
Microsoft is not the only one. People who want privacy, liberty, and economic stability are also having huge problems due to the "public good".
If privacy is important then Europe is better when it comes to businesses. Europe has tougher privacy laws than the US. For instance the EU's Data Privacy Directive requires businesses to protect people's privacy.
Falcon
Should there be a Law?
If you feel that way, you should read up on it. If it's useless it's because we've allowed these egregious abuses of loopholes to go on.
The problem is that you can't cut corporate taxes far enough to stop the whining and threats. Corporations are used to being spoiled by fascists and will threaten to leave the country for absolutely any reason. Trade agreements like the WTO just make it worse since free trade undermines the ability of nations to look out for their own interests. As long as countries like China and Japan refuse to play by the same rules as everybody else, we're going to see this sort of thing. Ultimately MS cheats quite a bit and probably ought to be investigated for those fraudulent visas they've been using.
The point of corporate taxes is that if you remove it is that you lose the ability to impact how the corporation does business. You're restricted to out right bans on certain practices rather than influencing the cost curves.
Please, please, won't people on Slashdot please stop repeating this tripe? Corporate leaders have a high degree of flexibility about how their companies are operated; it is not as simple as this stupid mantra that has cropped up here to explain away all misdeeds and bad decisions.
Anyone can be sued. For anything. Doesn't mean it has merit. And there are always countervailing forces to all business decisions - does a short-term move to avoid American taxes actually have hidden long-term costs? Are there ways of considering value beyond immediate quarterly costs vs. earnings? Did you know corporations frequently count "good will" as an asset? Did you know a smart leader can see how patriotism may, in fact, be an asset? Perhaps it means a better chance at contracts with the Federal government; perhaps it simply means helping to maintain the business environment in their single largest market.
Industrialist Carnegie came from Scotland and loved the U.S., and maintained loyalty until his death. He would have never entertained the idea of moving factories to China for cheap labor.
Are you seriously going to compare Ballmer to Carnegie? How many striking workers has Ballmer had killed by Pinkerton thugs?
As for taxes, this country was founded on tax resistance. Anyone who pretends that it's unpatriotic to resist taxes today needs a remedial history course.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
To be fair, the US labor market of Carnegie's day was on par with that of most other countries, his railroad empire was largely built on the back of indentured labor (a substantial portion of which had consisted of Chinese immigrants). He maintained a private army to hedge against an armed workforce uprising, which eventually happened -- and during which he retreated to the safety of his personal Scottish castle. Afterward said labor force was promptly replaced with a force entirely composed of desperate immigrants.
It is widely believed his later philanthropic activities were entirely motivated by his damaged reputation and desire to right a fortune built on questionable ethics and ruthless business practices. What do you buy someone who already has everything? Posterity.
Microsoft's workforce is tiny, Windows licensing is a huge drain on the economy, they keep importing foreign workers, and they are very good at avoiding taxes. So, good riddance, the US economy would likely be better off without Microsoft.
Unfortunately, Ballmer knows full well that the regulatory climate in Europe is much less favorable to Microsoft than the US, so he won't follow through on his threat.
There is NO natural right to form a corporation
There is the right of free association, and the right of contract. The joint-stock corporation as we know it today is a government creation, but the same terms could be obtained through contract with any parties doing business with a corporation.
So if the government creates it, the government can tax it, destroy it or rule it as it sees fit.
Sure, but if they want people to keep their money in the USA, then it makes sense not to pile on the disincentives. If we actually want the economy to improve, we should abolish taxes on capital growth.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
A highly regarded judge agrees with you...
"Anyone may arrange his affairs so that his taxes shall be as low as
possible; he is not bound to choose that pattern which best pays the
treasury. There is not even a patriotic duty to increase one's taxes.
Over and over again the Courts have said that there is nothing sinister
in so arranging affairs as to keep taxes as low as possible. Everyone
does it, rich and poor alike and all do right, for nobody owes any
public duty to pay more than the law demands." - Judge Learned Hand
Life is hard, and the world is cruel
On the contrary, the USA has one of the higher corporate tax rates. It is minimized in peoples' minds by quoting percent of GDP, but a corporation doesn't care about GDP it cares about the tax rate.
UK: 21-28%
Spain: 25-30%
France: 33.3%
Germany: 29.8% (avg)
Italy: 31.4%
Canada: 29.5-35.5%
Australia: 30%
USA: 15-39% + 0-12% state -- 39.3 (avg)
Curiously it Barbados(40), Cameroon(38.5) and Guyana(35/45) were on the top of the list.
References:
http://en.wikipedia.org/wiki/Tax_rates_around_the_world
http://en.wikipedia.org/wiki/Taxation_in_the_United_States
As for taxes, this country was founded on tax resistance. Anyone who pretends that it's unpatriotic to resist taxes today needs a remedial history course.
Actually, this country was founded on, among other things, not paying taxes to a body with which they had no representation. You remember, that whole "no taxation without representation" thing.
Guess what. Ballmer has representation in this country as he is a citizen and has the right to vote.
I think you're the one who needs a remedial history lesson.
Everything I need to know I learned by killing smart people and eating their brains.
I believe it is YOU, sir, who needs the remedial history course. This country was founded on many ideals, but "tax resistance" was not one of them. The Boston tea party was a protest against the colonies lack of representation in parliament. Ballmer, through his corporation's lobbying efforts, has more influence in congress than 10,000 middle-class citizens.
Furthermore, Andrew Carnegie was a ruthless business man, but he would never have even dreamed of having political opponents assassinated. He also happens to be one of the most important philanthropists in the history of the US. He believed it was immoral to horde wealth or to bequeath it to descendants. He believed it was the duty of the corporate leaders to use their wealth to improve the lives of US citizens in ways which they could not have if the money were dispersed among them.
The next time you think about making a comment on these forums, please take a moment to assess your knowledge of the topic. We could do with less falsities on slashdot.
Your data does not include the fast that the USA also has a ridiculous number of corporate tax deductions.
Average company in S&P 500 had tax rate of 26% between 2002 and 2006, probably the lowest in developed world.
I suggest you read some history books on the Boston Tea Party.
The Boston Tea Party was in response to a TAX DECREASE.
- England was charging a high tarrif on all tea going to the colonies.
- The East Indian Tea Company was going bankrupt and threatening to wipe out a huge part of the british economy. (Sound familiar?)
- England decided it would impose the East Indian Tea Company as a monopoly on Tea in order to save it. Driving out a bunch of smaller Tea companies which weren't too large to fail.
- In order to 'sweaten' the deal for the colonies England decided that they would do two things.
1) Slash the tax rate on Tea.
2) Stop requiring ships to stop in London to pay their corporate taxes before continueing on to the colonies. Instead England would setup an officer in the colonies to collect the tarrif once they enter colonial ports.
- Several of these "revolutionairies" owned tea shops which would be put of business. So they inflamed a huge moral outrage over this severely reduced tarrif being collected on colonial soil instead of London (in order to save the colonies money on transportaiton costs) in order to save their own profit centers.
They weren't resisting taxes. They were resisting market consolidation and cutting out of the middle man brokers in order to offer direct to consumer bargain goods at a steep discount.
They were always paying the "Taxation without representation" in the form of foreign tarrifs. We STILL PAY THOSE KINDS OF TAXES on many goods. England just tried to get creative at the time and assess that tax at the point of delivery instead of the point of departure.
But you are right. Americans have been retarded hotheads about taxes since the begining.
^^that.
The problem here is the difference between the theoretical and actual tax rates that corporations are affected by in the US. Closing tax loopholes will bring these closer in line, and then we can have a more reasonable discussion about the issue. As things stand, those in favor of lowering taxes just point to the stated rates, and those that want to raise them point to the effective ones, and everybody just talks past each other.
Obama has to realize, though, that if these loopholes are closed, the tax rates will have to come down a bit to compensate for that, or else we really will have a tax system that's too hostile to corporations. I'm not sure if he's come to terms with that reality yet.
Here's why this is misleading:
"According to latest available figures from the Government Accountability Office, 83 of the largest 100 corporations have subsidiaries in tax havens. Collectively they earned about $700 billion in foreign active earnings, and paid 2.3 percent taxes on those earnings. That is a situation the White House seeks to correct."
So while the US has high tax rates on paper, in reality loopholes and tax havens allow large multinationals to pay a much lower rate -- averaging just 2.3% for the largest 100, according to http://www.accountingweb.com/cgi-bin/item.cgi?id=107516
As a more concrete example, if we paid only for what we used, there would be no interstate highway systems.
I-90 in MA is funded entirely by tolls, leasing, development of land and air rights, and advertising. http://www.massturnpike.com/aboutus/index.html