Slashdot Mirror
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
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.
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.
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
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.
^^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.