Movable Clouds Migrate To Chase Tax Breaks

1sockchuck writes "State legislators have been offering huge tax incentives to attract data center projects from cloud-builders. But what happens if the political climate changes and the tax break disappears? If you're Microsoft, you can just take your cloud and move it someplace else. The infrastructure for the Windows Azure platform is being migrated out of a facility in central Washington after the state ruled that data centers no longer qualify for a tax exemption on equipment. Mike Manos, a key player in site selection for many major data centers, predicts that future cloud platforms will move often to chase lower taxes or cheaper power."

Comments

Corporations externalize costs

[Maxo-Texas]

It's what they do.

the Corporate structure was created to benefit society (just like copyright).

however, they have become extremely adept at hiding their true cost by externalizing costs to the rest of society.

I.e. health care for Walmart, Security for Oil Companies (if they had to pay $3 trillion to defend their oil directly-- how much would oil cost per barrel-- that true cost is hidden in our taxes), etc.

Cloud computing is doing nothing different in this regard.

We pay for the power setup, the roads, the police force-- they pay none of these costs. So whatever cloud computing's true costs are remain hidden.

Never make a deal with management or a corporation that involves cost to you today in return for profit in the future-- they will always renege at that point (be it pensions, promised future taxes or jobs, etc.).

Re:Corporations externalize costs

[XanC]

Not that I am at ALL a fan of these sweetheart deals, but isn't it the government that's reneging here, not the corporation?

Re:Corporations externalize costs

[earnest murderer]

I would only add that the weirdest part is there is a contingent of people caught under the wheel that will vociferously defend the right of the corporation/government to grind your bones to make their bread.

I suppose some people must have structure, even if it is wholly self destructive.

I'm not anti-corporation, but corruption has reversed the role of corporations as a tool of the people.

Re:Corporations externalize costs

[earnest murderer]

The courts ruled that the tax breaks did not apply to this facility. It's mostly just a case of posturing after an attempt to exploit a loophole that was opened for another project. Microsoft pays almost nothing to Washington state relative to their revenue, which is fine as Olympia has invited this kind of relationship. They employ a lot of people, and really are used to getting what they want from the state.

However, I don't think this action isn't even so much about the taxes on the site as much as letting our legislators know they're ready to leave wholesale as soon as it suits them.

Re:Corporations externalize costs

[Anonymous Coward]

The corporate structure was not created to benefit society. It was created to protect the corporate officers from liability and maximize profit.

And copyright does not benefit society, it degrades it. (A good book to read on copyrights and other IP related matters would be Boldrin and Levine's Against Intellectual Monopoly.)

Corporations pay taxes for the "services" you describe. But really, it's hard to call it a service because with any service you have a choice to subscribe to it or not, with taxation, there is no choice. If you don't pay, you get fined and possibly even receive jail time. Government services are monopolies. As with any monopoly, shortages happen, service is bad and prices are out of wack. The only difference is that, since it is government, you have no recourse.

If those services didn't exist and there were no taxes to pay for them, you'd see other corporations and individuals taking up the slacks. Security services, private arbitration courts, irrigation, power generation, distribution, etc would all be taken care of by people that see a need and fill it. The major difference would be that it would be a voluntary choice based on private contracts. Only the people that actually wanted the service would pay, those that didn't use it or didn't want it would be free of the expense. (Most can imagine water and power as private entities, but roads and security is harder because they've been raised to believe in a monopolistic government service. See Walter Block's The Privatization of Roads and Highways, for how those services would work and The Machinery of Freedom by David Friedman for how private defense agencies would work.)

As far as making deals goes, make as many as you want. For every reneged deal, there are thousands that went through just fine. The overwhelming majority of companies that exist today exist because they don't screw people. It's only a small criminal group that causes harm and gets the most press. These are the ones that commit fraud (renege on a contract) or use use government regulation to prevent competition from occurring. These are the Enrons, the Goldmans Sachs, the Blackwaters (Xee,) the GM's of the world-- true ciminals.

The cloud-builders are correct to leave. If the government is eating too much into their livelihood, people vote with their feet. History has shown this pretty regularly.

Re:Corporations externalize costs

[MightyYar]

It was created to protect the corporate officers from liability

Which in turn benefits society. Who in their right mind would make a commercial aircraft if they weren't shielded from liability?

Re:Corporations externalize costs

[aristotle-dude]

And copyright does not benefit society, it degrades it. (A good book to read on copyrights and other IP related matters would be Boldrin and Levine's Against Intellectual Monopoly.)

Are you aware the everyone has a copyright automatically when they create a creative work in certain jurisdictions? Copyright protects you and me from having our work misused or used for profit by other party without permission and compensation. From the tone of your post, you seem to be blissfully unaware that average people either have automatic copyright or can apply for copyright for a small fee for any work they created depending on where they live. This would even include slashdot posts like these. Of course, it would be difficult for an anonymous coward such as yourself to prove that you wrote it since you did not sign in with an account.

The purpose of copyright is to protect the rights of content creators which could very well be an individual for a period of time to allow them to either sell their work directly or to distributing party for financial compensation. Without this protection, there would be very little incentive to create new creative works.

Re:Corporations externalize costs

[Toonol]

Corporations can and often are corrupt, so I'm not defending them; I have all sorts of issues with the legal fictions surrounding corporate rights.

But still, it is moral clarity, not weakness or foolishness, that would lead somebody to defend the right of someone else even though it's detrimental to themselves. It's a good thing that I support the right of somebody to compete with me, even though that takes away my sales; the right of an employer to fire me, even though it might hurt me. The right of somebody to criticize me, even though that may hurt me.

It may suck that a corporation can move. But it might still be wrong to forbid it from moving.

Re:Corporations externalize costs

[Iyonesco]

"We pay for the power setup, the roads, the police force-- they pay none of these costs"

Firstly, "they" pay 40% corporation tax - the second highest in the world. What more do you want? Do you really want to see the total collapse of the US economy as corporations buckle under an even heavier tax burden?

Secondly, who are "they"? A corporation is composed of three groups of people - employees, shareholders and customers. In reality "they" is in fact you, me and everyone else here and it's us who pays the costs of higher taxes on corporations.

If you tax a corporation the money has to either come from raising prices, cutting the workforce or taking a hit and suffering a reduction in share value. In all of these situations it's the public who pays the cost, either through higher prices of goods and services, losing their job or a suffering a reduction in the value of the shares in their retirement account.

When corporations get taxed it comes out of your pocket and it's you that suffers. Quite why you'd want to see them taxed more I don't know.

Re:Corporations externalize costs

[plnix0]

Someone who is confident that the aircraft will work.

Re:Corporations externalize costs

[Timothy Brownawell]

The purpose of copyright is to protect the rights of content creators which could very well be an individual for a period of time to allow them to either sell their work directly or to distributing party for financial compensation. Without this protection, there would be very little incentive to create new creative works.

Only in theory... and that exact same theory says nobody will ever use BSD-like licenses, or the WTFPL, or such. So it's obviously incorrect, besides not accounting for the production of creative works before copyright was invented.

Re:Corporations externalize costs

[plnix0]

Copyright was not the main point of GGP, which I would guess is the reason GP did not spend more than a brief pair of sentences on it (into which you somehow read a degree of ignorance not shown by GP). I'm reasonably confident based on GP's comments that he is in fact aware of the facts you refer to. But how is this relevant? Are we supposed to support copyright out of selfishness, simply because we ourselves can partake of it, too? Nonsense. Some people, yourself apparently excluded, believe in absolute morals and contend that individual integrity is of the utmost importance in our relations with the world. If copyright is immoral (and it is), then it does not matter how much I benefit from it. Even if it made me a hundred billion dollars, I would still be a rotten, wicked, selfish bastard of a thief for violating the rights of individuals to use their real property as they would choose.

Re:Corporations externalize costs

[Anonymous Coward]

I buy insurance when I'm concerned about liability.

Re:Corporations externalize costs

[earnest murderer]

A corporation is not a person. I think you are reading a whole lot of inaccurate data into what I wrote.

I have no idea how you even get forbiddance out of what I post.

Re:Corporations externalize costs

[Anonymous Coward]

Corporations hire the employees which pay state and city taxes. The incentive was the have the company come here and develop where as they could have built it almost anywhere. The company comes and develop the area and now you have the government pull their support from the business? Now if govt were smart to use their tax dollars responsibility rather than run stupid deficits, every government runs it for some reason. I can't find a govt, city or state without massive amounts of debt. They tax us every year or businesses every quarter but they never seem to have any left over at the end of the year.

Businesses

Re:Corporations externalize costs

[Anonymous Coward]

I buy insurance when I'm concerned about liability.

That's sort of the point. If CEOs were directly liable then they would just demand that the company pay for their insurance. At least now we cut out the insurance company as the middle man: The company is liable for the officers' misdeeds, it is their insurer. Make it an insurance company instead and you haven't made any progress toward CEO accountability, but you have added a significant cost to every legitimate company's operations by requiring them to insure their officers. This adds significant costs to the upstanding companies whose officers won't commit any malfeasance while pushing off the therapeutic bankruptcies of mismanaged companies.

Re:Corporations externalize costs

[Cereal Box]

A good book to read on copyrights and other IP related matters would be Boldrin and Levine's Against Intellectual Monopoly.

Is there somewhere I can download that book for free?

Re:Corporations externalize costs

[Plunky]

A good book to read on copyrights and other IP related matters would be Boldrin and Levine's Against Intellectual Monopoly.

Is there somewhere I can download that book for free?

Yes

Re:Corporations externalize costs

[Caffinated]

Firstly, "they" pay 40% corporation tax - the second highest in the world. What more do you want?

Actually, Microsoft reported last year that they pay more like 25% and that's probably inflated since it's usually noted in the context of Ballmer threatening to move offshore, so this is their "high" number to use as a club. That they don't actually pay anywhere near the statutory rate isn't a surprise as essentially no companies actually do. In fact the effective tax rate of our corporations is a good bit lower than most industrialized nations when exemptions and manipulations to hide profit are factored in.

A good outline of effective corporate versus statutory tax rates if one is interested

"Do you really want to see the total collapse of the US economy as corporations buckle under an even heavier tax burden?"

A mentioned and noted earlier, our corporations aren't suffering higher effective taxation rates here than other industrialized nations and in many cases they're lower. Ultimately, if our infrastructure and the quality of our workforce suffer, it doesn't matter what the tax rate is, they won't locate or stay here with the skill jobs that we want. That's what taxes are for. I understand that corporations are amoral by nature and will try to externalize every cost that they're able to since their guiding force is maximizing profit. As such, they're motivated to make sure that paying for the police force, roads, education and the like is "someone else's problem".

Re:Corporations externalize costs

[OeLeWaPpErKe]

d the quality of our workforce suffer, it doesn't matter what the tax rate is, they won't locate or stay here with the skill jobs that we want. That's what taxes are for. I understand that corporations are amoral by nature and will try to externalize every cost that they're able to since their guiding force is maximizing profit. As such, they're motivated to make sure that paying for the police force, roads, education and the like is "someone else's problem".

You state this as if it's a bad thing. The profit maximizing thing. No offence, but what exactly do you think is done in a competitive environment with those "maximized profits". What do they mean in practice ?

Well, they mean, especially if the profits are split amongst large numbers of not-too-large companies, more jobs, better products, more efficiency in the rest of society (since that's what customers pay for, in the end), more stable environment (yes, really), ... In the long run it means more food, more people, less death.

Taxes, on the other hand, while necessary on some points (police, army), are a negative influence on society. They mean less efficiency, less products, less jobs, lower quality environment (ie. pollution), ... in the long run it means less food, less people. And how do you get from more people to less people ? It's called death.

Yes there are lots of side remarks to make involving monopolies, cartels, the international environment, ... lots of necessary preconditions for this system to exist that just have to be satisfied (unemployment benefits, government aid for the poor and national health care, however are not part of it). The problem I have with Obama is that he tries to solve the problem of Bush's excessive spending (and yes Bush spent excessively) by ... spending more. What total morons we all were voting for this idiot. This guy is supposed to be smart, so answer me this : why is he doing this ? Stupidity or malice. Nobody can seriously believe it will help.

Re:Corporations externalize costs

[maharb]

If we didn't pay taxes then a defense corporation, a road building corp, etc would all be established and would offer services that the government currently provides. These costs would then be passed on to the consumer and everything would end up costing the same. The only difference is the most efficient company would win the contracts so everything should end up cheaper than it currently is because we all know governments are terribly inefficient.

You forget that as a consumer of these services want them to cost less. By paying taxes you are paying to make all goods and services cost less. If companies are just swimming in mountains of profits (as it seems you are alluding to) why don't you start one and reap the benefits of all this free money. The truth is that everything is relative and that someone has to provide and pay for all the services in the society. Every day you are alive in a society you are externalizing costs as a human, why is it all the sudden bad to do it as a corporation (which by the way is just a group of people acting cooperatively to meet a goal).

Re:Corporations externalize costs

[maharb]

Corporations are groups of people. They are not mythical evil structures that are born to kill babies, they are legal entities that represent a group of real human beings just like you.

Re:Corporations externalize costs

[turbidostato]

"Someone who is confident that the aircraft will work."

And doesn't find anything with a higher short-time benefit return.

And that's exactly the point: under such circumnstances nobody would build aircrafts if they could manage mom-n-pop's stores at better short-range profits.

Re:Corporations externalize costs

[multiplexo]

Corporations pay taxes for the "services" you describe. But really, it's hard to call it a service because with any service you have a choice to subscribe to it or not, with taxation, there is no choice. If you don't pay, you get fined and possibly even receive jail time. Government services are monopolies. As with any monopoly, shortages happen, service is bad and prices are out of wack. The only difference is that, since it is government, you have no recourse.

Yes, we have no input into our government. We don't have elections, we don't vote, we can't influence representatives. Nope, it's completely and totally unresponsive.

If those services didn't exist and there were no taxes to pay for them, you'd see other corporations and individuals taking up the slacks. Security services, private arbitration courts, irrigation, power generation, distribution, etc would all be taken care of by people that see a need and fill it. The major difference would be that it would be a voluntary choice based on private contracts. Only the people that actually wanted the service would pay, those that didn't use it or didn't want it would be free of the expense. (Most can imagine water and power as private entities, but roads and security is harder because they've been raised to believe in a monopolistic government service. See Walter Block's The Privatization of Roads and Highways, for how those services would work and The Machinery of Freedom by David Friedman for how private defense agencies would work.)

Look honey, it's an anarcho-capitalist. Careful, they're shy because they don't often leave the protection of their parent's basement or that of the university computer lab. Anarcho-capitalism is such a beautiful theory, of course so is Marxism. It's just that in the real world it doesn't work. Of course if you try to point this out to anarcho-capitalists they always say, just as the Marxists do when you point out what a disaster communism has been, "Your doin it rong!". As far as private defense agencies, well take a look at Blackwater or the history of the Pinkertons or the Coal and Iron police in Pennsylvania and then come back and tell us all how thugs and armed goon squads working in the private sector are better than thugs and armed goon squads who draw a government paycheck.

Re:Corporations externalize costs

[plnix0]

Not everyone has the same time preferences. There are plenty of people who will prefer to take a lower short-term profit (or even a short-term loss) if they are convinced that it means greater long-term profit.

Re:Corporations externalize costs

[JoshHeitzman]

It was created to protect the corporate officers from liability and maximize profit.

Actually they were created to protect the corporate owners from liability. While it is true that in some jurisdictions, such as Nevada (even there is isn't a complete liability shield for corporate officers), corporate officers are also protected from liability, this is not true of all jurisdictions. What is true in all jurisdictions, which I am aware of, is that the corporate owners have no liability beyond their share in the corporation.

Re:Corporations externalize costs

[jawahar]

SEC must REGULATE the Market Capitalization of all Listed Companies to TWICE their Quarterly Revenue.
This will

• Will create NEW markets for Entrepreneurs, resulting in creation of millions of new jobs in start-ups.
• Prevent PONZI scams in Corporate Management and Stock Markets.
  
  "If it moves, tax it. If it keeps moving, REGULATE it. And if it stops moving, subsidize it."-- Unknown

Re:Corporations externalize costs

[rtb61]

Well in this case not only is it wrong but likely immoral and evil. The corporation is essential laying all of it's social burdens, those it accrues from the social benefits it gains, upon everyone else in the state. It basically blackmails state after state, continually pursuing a corrupt agenda, it's unwillingness to pay it's fair share of taxes.

It does this by specifically creating boom and bust economies in states, financial protectionism of the organised crime variety. Do give a tax holiday and they will fire thousands of workers, disrupt social and economic functions across a community and a whole state, including the devaluing of peoples homes, sending their mortgages underwater.

It is really time for the states to wake up, boom and bust is of no advantage to the state at all, it just distorts property values, builds up towns only to turn them back into ghost towns as the inevitably relocate. It disrupts communities and turns employees into migrant workers as they shift from place to place forced to follow corporate tax cheats.

All states in all countries should sit back and take a more appropriate long term and establish tax treaties to prevent this extortion and blackmail of their states economies. So there is nothing wrong with a corporation moving but it should not be able to cheat on it's taxes and push those financial burdens on every other citizen in the state. Corporations that do this are basically and publicly saying, corporate profits and executive bonuses first, last and everything in between and fuck (there really is any polite way of putting it) your schools, hospitals, roads, bridges, police, community centres, public parks, fire brigades the whole encompassing fabric of your community that your taxes pay for and of course that the additional taxes you have to pay to make up for those, that what, legally cheat out of paying.

So be happy, instead of that money paying for the public services that the corporation benefits from, it pays for first class overseas holidays, mansions, servants, luxury gas guzzling cars, yachts and for the ultimate polluter private jets, nothing quite says suck on my shit, the pollution created, like a private jet.

Re:Corporations externalize costs

[Stiletto]

If we didn't pay taxes then a defense corporation, a road building corp, etc would all be established and would offer services that the government currently provides. These costs would then be passed on to the consumer and everything would end up costing the same. The only difference is the most efficient company would win the contracts so everything should end up cheaper than it currently is because we all know governments are terribly inefficient.

HA HA HA! You owe me a new keyboard because I spit iced tea all over it when I read that.

If we didn't pay taxes (and, therefore, had no government) we wouldn't have road building corporations springing up and competing with other strapping entrepreneurs. Without taxes, you'd be paying off the local warlord so that he doesn't come in with his bandits and rape all the women in your town. Forget your Randian capitalist utopia! Without taxes/government, society would devolve into 0.5% warlords and their gang members, and 99.5% slaves. By virtue of the fact that you are posting to Slashdot, I imagine you'd get to be one of the slaves. For reference, please see... well, just about every government vacuum in history.

Re:Corporations externalize costs

[Maxo-Texas]

Copyright was created so people would create items which would enter the public domain.

Not so people who create things would get paid.

Corporations were created so people could safely run a business with limited liability-- so society would benefit by having those types of businesses exist.

Both have been corrupted.

When neither benefit society any more but only small groups of people-- it's time for society to eliminate them and create new rules.

Underlying every law is an attempt to manage hobbe's leviathan-- if you screw enough with people, they will rise up and take your stuff and kill you.

The upper class inevitably loses sight of this fact and eventually overdoes it tho it may take a long time (re: North Korea for example).

Re:Corporations externalize costs

[maharb]

So the government isn't this so called warlord, and you aren't this so called slave?

Get a grip. All government does is streamline and legitimatize the systematic distribution of society's resources. Usually to benefit those in charge.

A smart 'warlord', and thus one what would stay in power, would want society to be as productive as possible. This 'warlord'(defense company) would create incentives to generate new and powerful technology to streamline all processes of society in order to reap the maximum benefits.

Just take a look at when the US was the most powerful and where the US is now and you will see huge correlation with more government control equaling less productivity.

Re:Corporations externalize costs

[Anonymous Coward]

The "Tax Bracket", if you will, may be at 40%. But large corporations don't pay anywhere near that in reality. There are SSOOO many ways to write down / write off things. So, just to keep the math simple, if a large corp makes 100, and they pay that 40% you mention, then you would assume they paid 40. But if they make 100, then take advantage of all the breaks, write off / write downs that are only "on-paper-losses", they may only end up with 40 that is taxable. and 40% of 40 is 16. So instead of paying 40 on 100, they end up paying 16 on 100. (Possibly even less depending on how well the can make their taxable look lower.)

Re:Corporations externalize costs

[Jawn98685]

Weird indeed. I am continuously baffled by the hordes of sheep that can be so easily whipped up into a fearful frenzy that they will repeatedly act (vote) against their own best interests.
As for corruption, that's a strong word, and while it is quite often appropriate when applied to corporate behavior, let's not forget that it is the corporation's job to produce profit for it's shareholders. If a corporation can funnel money into politics to gain favorable treatment, and get away with it (legally or not), it has a fiduciary responsibility to do so. Attributing any other motivation (or likely direction) to corporate behavior is a fool's errand. It is the job of the government to ensure that corporations play by the rules, all of them. It is the electorate's job to elect representatives who will represent their interests by making appropriate rules and enforcing them. That ain't happening much these days.

Re:Corporations externalize costs

[Anonymous Coward]

No corporation in America pays a 40% tax on their profits. Thanks to all the givebacks, deductions, overseas profit shelters and the like the actual corporate tax rate averages is among the lowest in the industrial world.

Our big companies are "multi-national" when it comes to moving jobs around and "American" when they want the government's help. Since their taxes are so low, they demand more government services that individuals pay for. Raise taxes on corporations!

Re:Corporations externalize costs

[lennier]

"Who in their right mind would make a commercial aircraft if they weren't shielded from liability?"

Someone who doesn't care if they sell products that kill lots of people?

Re:Corporations externalize costs

[MightyYar]

Lol, true. But they'd also have to not care that they'd be personally ruined by lawsuits.

Re:Corporations externalize costs

[Maxo-Texas]

And the problem with corporations lately is that the officers seem to have realized that if they structure their pay so that they get several lifetime's worth of pay, then they are legally protected when the corporation fails and reneges on cleaning up toxic waste/paying pensions/taxes due on incomes, etc.

I suspect that what they are doing is a form of fraud, but they've figured out a way to phrase it so they can't be legally prosecuted for it.

Look at all the "bankrupt" financial firms-- some of whom are paying more in salary than they made in profits.

Re:Corporations externalize costs

[MightyYar]

And the problem with corporations lately is that the officers seem to have realized that if they structure their pay so that they get several lifetime's worth of pay,

If there was no such thing as a corporate structure, those "officers" would be "owners" and the entire revenue of the company would flow through their personal bank accounts. How would this improve matters?

then they are legally protected when the corporation fails and reneges on cleaning up toxic waste/paying pensions/taxes due on incomes, etc.

While I can agree that this happens more frequently than is desired, you can't ignore that the government changes the rules on these corporations. For instance, if there was no corporation structure, some guy who polluted a plot of land 70 years ago would be dead. Now, you have a corporation who did it 70 years ago and they are still around, so you at least have hope to recover the land.

Look at all the "bankrupt" financial firms-- some of whom are paying more in salary than they made in profits.

Most companies, or for that matter small businesses owned by a single person, would fit this description. Payroll is often much larger than profit. In fact, payroll has to happen even when there are no profits. In bad times, payroll can even outstrip revenue.

Re:Corporations externalize costs

[Anonymous Coward]

So there are sane Slashdot users after all... Not to mention, it seems most of those commenting on this thread have ignored the fact that states can (and should) compete with one another to create incentives which lure businesses. Businesses = jobs, and jobs = a robust state economy. Indeed, it is those running many of this country's states (most of whom have zero business experience) who do not seem to equate the fact that higher corporate taxes are ultimately a "tax" on the consumer in the form of higher prices.

Re:Corporations externalize costs

[Maxo-Texas]

No, the officers are not the owners.
The shareholders are the owners.
Often the officers who loot the companies own way less than 1% (way less) of the companies.

Most often, if the money to be recovered 70 years later is significant, the corporation simply goes bankrupt or worse, structures the liabilities to another corporate structure which then goes bankrupt.

But I agree, they do get dinged sometimes.

Small businesses are owned by the person-- if they are owned by investors, then yes- unscrupulous folks do ride them to death and then find more suckers to invest in the next company.

Responsibility to society or shareholders?

[BadAnalogyGuy]

When you decide to skirt tax laws, you are able to directly benefit from the greater net income at the end of the day. Shareholders of companies that skirt tax laws benefit greatly because of the greater net revenues. So it seems that everyone should be happy, right? More money to the private sector and we (the private sector) know how to best spend our money.

But what about social services that are necessary to protect the least among us? Rousseau described a social contract which requires each citizen to give up some rights in order to preserve order and safety. John Rawls describes a theory of social justice which demands a safety net which can protect those who are the most unfortunate, at the cost of additional taxes on those most able to pay.

Aren't these companies who take advantage of these ethically questionable tax shelters 1) not paying their fair share to support the social safety net, and 2) putting the onus on the individual citizens/employees who cannot easily move to tax-free states?

Re:Responsibility to society or shareholders?

[cellurl]

Pruett described the notion that best intentions mask guilt buried in the past. That "trying equals succeeding". Pruett also describes publicly traded companies as evil. No one wants health care. Its just a flag that some think must be planted in the ground to show that "trying equals succeeding". ------- Just tell State Farm that in order to do business in California, they have to cover 95% of the people. They will tax the fat or regulate expenses. State Farm, not the government will make health-services useful and profitable.

Re:Responsibility to society or shareholders?

[cryfreedomlove]

The best social contract is one that creates jobs for the 'least among us'.

In general, I agree with you but I have come to realize that there really is no corporate tax that is not simply passed on to consumers in the form of higher prices. I'd prefer no corporate tax at all, accompanied by the individual flat tax with no allowable deductions. Simple, clear, enough to fund the social safety net.

Re:Responsibility to society or shareholders?

[PPH]

Rousseau described a social contract which requires each citizen to give up some rights in order to preserve order and safety.

Fine. But the terms of the contract were changed. Unilaterally. The state offerd tax incentives to attract business and then withdrew them once the business is up and running. Why not just charge the going tax rates from the outset?

For every company that has the foresight to use portable infrastructure, there are hundreds that have sunk costs and can't afford to move easily. But they serve as warnings to other potential investors as to the ethics of the particular jurisdictions that they are considering. Companies avoid that state and the population suffers, not only from a lack of funding for social services, but a lack of jobs.

Re:Responsibility to society or shareholders?

[FudRucker]

RE:"there really is no corporate tax that is not simply passed on to consumers in the form of higher prices"

then in turn the higher income garnered from the higher prices should raise their taxes, you see how it can easily spiral out of control? the USA should change the state taxes to a more centralized system to level the field so the tax is the same no matter where they move their cloud to, and if they leave the country then put a tarif on them for it. why should the consumer pay extra because the top dawgs want a 30 bedroom mansion & small private navy of pleasure craft? (it has been spiraling out of control since Reaganomics turned the world in to a playground for the rich at the expense of the working classes)

Re:Responsibility to society or shareholders?

[cryfreedomlove]

Your solution is a job killer, for sure. If a corporation knows that there is a tariff for moving their data center outside the USA then they will never build it here in the first place. The data center and it's attending jobs will be built in another country.

Thanks FudRucker, thanks a lot. Welcome to the 3rd world USA.

Re:Responsibility to society or shareholders?

[BadAnalogyGuy]

Many Christians believe that those who will enter the Kingdom of Heaven are already named in the Book of Life. God is omniscient, therefore he already knows who will spend eternity in Glory and who will burn forever in the Lake of Fire. Calvinists hold this concept of preordination.

However such a concept flies in the face of a loving Creator for many Christians. So these subscribe to the concept of Free Will. The choices you make in life actually affect how you will be judged in the afterlife.

What it boils down to, though, is whether God is omnipotent and omniscient. If he is, then he knows that a vast number of people will die and enter the flames of Hades, and his refusal to do anything about it is far from the loving God caricature He is portrayed as. On the other hand, if he isn't those things, then how shall we live such that we can pass lightly through the Gates of St. Peter? Isn't the fallibility and lack of knowledge a sign of weakness in our God?

What this brings me to is your comment.

Fine. But the terms of the contract were changed. Unilaterally. The state offerd tax incentives to attract business and then withdrew them once the business is up and running. Why not just charge the going tax rates from the outset?

From the outset of what? Are laws never to be changed? No one can know the perfect formulation of taxes and services from the outset of incorporation. Laws should be allowed to change as no politician is infallible, and thus those subject to those laws should also have the ability to adapt (even to the point of leaving the neighborhood/city/state/country) if those laws become too heavy a burden.

It is a mistake to think that laws are perfect from Day 1.

Re:Responsibility to society or shareholders?

[FudRucker]

did i mention i am a communist? drink the koolaide comrade, the rest of us are and it tastes fine

Re:Responsibility to society or shareholders?

[Robin47]

Aren't these companies who take advantage of these ethically questionable tax shelters ...

I actually went back and RTA thinking I missed something. I'm still scratching my head trying to think of a way this can be characterized as "ethically questionable tax shelters". No one is doing anything ethically challenged here except maybe the government trying to change the deal to generate a new revenue stream. Yeah, Microsoft, sit there and take it.-Not! I can't blame them in the least.

Re:Responsibility to society or shareholders?

[BadAnalogyGuy]

No one is doing anything ethically challenged here except maybe the government trying to change the deal to generate a new revenue stream.

This is a common meme, but it disregards the fact that the government exists to implement the will of the citizens. Many of those Microsofties who voted in the last election voted for the winners, and those winners are now making the laws. Call it the tyranny of the majority, but it is the will of the majority.

Re:Responsibility to society or shareholders?

[cryfreedomlove]

Did Uncle Joe Stalin taste fine? How about Pol Pot?

Re:Responsibility to society or shareholders?

[Robin47]

I used to think that way but have changed my thinking to government seems to implement the will of government, no matter what they promise in the campaign.

Re:Responsibility to society or shareholders?

[FudRucker]

oops forgot the /sarcasm tag on that one, actually capitalism worked just fine for ages before Reaganomics came along, just ask anyone over 40 or 50.

Re:Responsibility to society or shareholders?

[Forbman]

Except the choice will be (or perceived to be, or lobbied TO be, by the insurance company...) "either cover 95% of the people or you can't do business in CA". Guess which option they'll take?

Re:Responsibility to society or shareholders?

[zippthorne]

Yeah, that'll really encourage businesses to establish operations in the first place.

There are a few basic principles which I wish people, especially politicians would take into account when setting up these things.

1. The Laffer Curve. It's certainly more complicated than that, but the basic argument that there is a maximum revenue possible at some optimum tax rate shouldn't be simply scoffed at and ignored. Further, the more general idea is that, for any given level of required revenue (below the maximum, wherever it may lie), if there is more than one level of taxation which would generate that revenue, it is immoral to choose the higher rate, as it needlessly restrains the activity which lifts everyone's standard of living.
2. If you want to play social games, have higher taxes on things you want to discourage and lower taxes on things you want to encourage now. If you change your mind later, don't be surprised or upset when people doing those things decide to move somewhere where the state wants those things done.
3. Don't demonize people or organizations for taking advantage of your tax structure to minimize their taxes. You had lower taxes on certain things because you wanted to encourage that behavior, didn't you?
4. No special cases. There is too much opportunity for graft if your politicians can make special deals on an individual basis and claim credit for those very visible jobs. If the deal is good for one company, it's good for every company. Make that the policy.

Your plan is every bit objectionable as the cable company's sleezy "super low introductory rate for six months, with unspecified but much higher rate for the remainder of your twenty-four month commitment." Except that when the government does it, there are guns or the threat of guns involved.

Re:Responsibility to society or shareholders?

[plnix0]

Great start, but you should have stopped after the first paragraph.

Your post includes too many fallacies to fully address in a short reply, but I'll mention a few of them.

putting the onus on the individual citizens/employees who cannot easily move to tax-free states?

Individuals can move. "Easily" is a red-herring. Economics and their individual situation determines how easy the move will be and whether a move will be worth it to them (kind of like with big companies). But believe me, moving a family across the country is a whole lot easier than moving a large company. Obviously they can't move to tax-free states, because, (due to arrogant people like you who think the world owes you something just because you were born), there are no tax-free states.

By the way, giving up rights will never gain you order and safety. The word 'safety' only has relevance in relation the thing which is to be kept safe. In has no meaning whatsoever considered apart from rights.

Re:Responsibility to society or shareholders?

[plnix0]

More like "either help us steal from 40% of people to help you pay for %20 of people or you can't do business in California".

Re:Responsibility to society or shareholders?

[plnix0]

Yes, you did. To quote you:

then in turn the higher income garnered from the higher prices should raise their taxes, you see how it can easily spiral out of control? the USA should change the state taxes to a more centralized system to level the field so the tax is the same no matter where they move their cloud to, and if they leave the country then put a tarif on them for it. why should the consumer pay extra because the top dawgs want a 30 bedroom mansion & small private navy of pleasure craft? (it has been spiraling out of control since Reaganomics turned the world in to a playground for the rich at the expense of the working classes)

Re:Responsibility to society or shareholders?

[blahplusplus]

"What it boils down to, though, is whether God is omnipotent and omniscient. If he is, then he knows that a vast number of people will die and enter the flames of Hades"

Hell of current mainstream christianity is incorrect reading of the bible, for those who are not christian and but are interested in christian history and whatnot it's wonderful that other unknown and small christian denominations have done quite a job debunking modern christianity from within their own ranks and much has been known for a long time.

http://en.wikipedia.org/wiki/Christendom_Astray_from_the_Bible

http://thechristadelphians.org/htm/books/astray/astray_mainframe.htm

Re:Responsibility to society or shareholders?

[FudRucker]

nice try but you selected the wrong comment, that one you selected to quote is the one i am serious about, the problem arises with different US states having differing tax benefits that vary depending on the whims of state government, then company A moves in and eventually the tax benefits are dissolved like the washington state example so company A looks for another state which adds to the cost of running their cloud in having to pack up and move and then set up elsewhere, which also adds to economic instability. IF it did not make a difference because all states were on the same tax level then company A would not move (neither to another state or outside the USA) its unstable because its the cost of doing business is higher and the corporates lose trust in government from the instability factor...

i am just as much of a freedom loving american as anyone = born & bred in the USA, i like capitalism just fine, it is just the struggle between the taxers & constituents and the taxed & investors that screw it up, they dont want to look at the big picture unless they have to for selfish profit motives and never even think about looking at the big picture in a way that benefits everyone = themselves & investors + the government & their constituents (some of which may or may not be employees)...

Re:Responsibility to society or shareholders?

[FudRucker]

exactly right on, thats what needs to be done, the government needs to quit playing games with taxes, set a reasonable level and keep it there, and it should be the same all across the board for all states, or else it will be the same old struggle that never really gets any long term benefits for anyone, not the companies wanting to do business, not the government needing the tax revenue and especially not the working class that need the jobs/income...

Re:Responsibility to society or shareholders?

[superwiz]

Your plan is every bit objectionable as the cable company's sleezy "super low introductory rate for six months, with unspecified but much higher rate for the remainder of your twenty-four month commitment."

Much sleazier, actually. It's more like a cable company that offers a low teaser rate but also says that if you don't buy the service, then you'll be responsible for cableman's children's starving .

Re:Responsibility to society or shareholders?

[cellurl]

Let one walk. Others will stay. Until one carrier "walks", there is money left on the table. Play hardball. They have a 85% mark, I am just saying up it.

Re:Responsibility to society or shareholders?

[FudRucker]

RE:"then in turn the higher income garnered from the higher prices should raise their taxes, you see how it can easily spiral out of control?"

i think you misunderstood the intent of my sentence, did you not see the question mark at the end of this sentence, it was to show an example, i am not sure of a flat tax would fix this or not, i have a feeling a flat tax would but i just dont know for sure, i really dont think anyone has all the answers and if anyone claims they do have all the answers they are the ones you better watch closer than the ones that admit they dont. i dont want to break capitalism i want to see it stabilized...

Re:Responsibility to society or shareholders?

[cellurl]

My problem is, I have no voice, I doubt you do either. We are kept so busy that you nor I are able to attend rallys or picket. I wish just once slashdot users would rally like AARP does.

Re:Responsibility to society or shareholders?

[aaarrrgggh]

Sorry, but it isn't about being a good citizen. When you invest $600MM-1B in any facility, sales tax becomes a huge cost, and at a different scale than consumer sales tax.

It used to be that sales tax just ht the final transaction, now it is every step in the process. This doesn't help buld the economy, the schools, or roads in an equitable relationship between payees and users. (Taxation without representation?)

For a project in California, the state actually takes in more cash from a major construction project than the contractor's profit margin.

A better solution needs to be found.

Re:Responsibility to society or shareholders?

[Anonymous Coward]

The state offerd tax incentives to attract business and then withdrew them once the business is up and running.

Is that really so?
Don't know about USA, but in France this happens all the time: tax breaks are meant as a help to start new businesses. They're not meant to be lifelong subventions. It's only for a couple of years. It's explicit from the very start.

Re:Responsibility to society or shareholders?

[Bartab]

the problem arises with different US states having differing tax benefits that vary depending on the whims of state government

Federalism. Not just a good idea, but constitutional law!

Re:Responsibility to society or shareholders?

[Anonymous Coward]

in the USA we have corporate welfare, where the rich fatcats get tax breaks but if a little person is just late with his taxes for a little while they threaten them with heavy fines and prison...

Re:Responsibility to society or shareholders?

[budgenator]

I've aways thought that corporate income tax rates are less than individual income tax rates; effectively a corporation paying taxes reduces the individual stockholders income taxes! Corporates income taxes are much more flat than individual and so more regressive, one would think that Liberals would be against corporate income taxes.

Re:Responsibility to society or shareholders?

[Anonymous Coward]

Heading way off topic here:

Many Christians believe that those who will enter the Kingdom of Heaven are already named in the Book of Life. God is omniscient, therefore he already knows who will spend eternity in Glory and who will burn forever in the Lake of Fire.

So, if I'm already in The Book, I might as well just do hookers and blow to my heart's content. Or if I'm not, then no amount of good works is going to change that.

Screw it. I'm tearing my contracts up and moving my business to which ever politician gives me the biggest kickback. (Whew. Back on topic.)

Re:Responsibility to society or shareholders?

[Anonymous Coward]

Good points, PPH. I agree with you and want to add the state just lost a bunch of jobs and local vendor contracts (potentially more jobs) and didn't increase their tax revenue in one "fail" swoop. That's assuming they were targeting Microsoft and/or other data centers are going to move out as well. All data centers won't need to move to make the new legislation counterproductive, just enough to offset the tax increase.

Apparently they have too many jobs in that state.

Re:Responsibility to society or shareholders?

[plnix0]

that one you selected to quote is the one i am serious about

That's my point.

the problem arises with different US states having differing tax benefits that vary depending on the whims of state government, then company A moves in and eventually the tax benefits are dissolved like the washington state example so company A looks for another state which adds to the cost of running their cloud in having to pack up and move and then set up elsewhere, which also adds to economic instability. IF it did not make a difference because all states were on the same tax level then company A would not move (neither to another state or outside the USA) its unstable because its the cost of doing business is higher and the corporates lose trust in government from the instability factor...

If company A moves out, it's because the people running the company have calculated that the company can make more money if it moves somewhere else. Thus, while the increase in taxation adds to the cost of running the business, moving elsewhere actually decreases the cost of doing business, which decreases economic instability. If all states had the same tax level, that level would be higher than the average state's tax level when the levels are different. The cost of doing business would be higher everywhere. Thus lower overall economic productivity and stability.

When you say "[if] all states were on the same tax level then company would not move ... outside the USA", I assume by state you mean government, not just US state. Clearly you can see that if all US states had high tax levels and other countries had lower taxes, there would be an incentive to leave the US.

Europe is a powerful example of this. Look at all the countries like France and Germany complaining about "tax havens" like Monaco, Liechtenstein, and Andorra. They're not complaining because Monaco etc. are "unstable". They're complaining because they want to have extremely high taxes and countries like Monaco and Andorra provide a competitive reason for people to move there and conduct business there. They want high taxes world-wide and world-governmental powers strong enough to enforce them, and that is the logical conclusion of your arguments. If you consider yourself a "freedom loving american", you'd better re-consider how you look at this issue.

looking at the big picture in a way that benefits everyone = themselves & investors + the government & their constituents (some of which may or may not be employees)...

Have you ever considered that maybe it's impossible to do things in a way that benefits everyone? Even aside from a practical perspective, maybe certain groups of people actually genuinely hold positions that are antithetical to the best interests of others? That perhaps the nature of government itself is defined by such a position?

Re:Responsibility to society or shareholders?

[Anonymous Coward]

So the New Deal was capitalism?

Re:Responsibility to society or shareholders?

[JoshHeitzman]

Call it the tyranny of the majority, but it is the will of the majority.

It's only the will of the majority if was passed as proposition that actually have >50% of eligible voters vote in favor of it. Anything else is the will a minority, and usually a very, very small minority since most states only have a few hundred law makers.

Re:Responsibility to society or shareholders?

[zippthorne]

Yeah, yours wasn't the comment I'd intended to post under. Either slashdot messed up or I hit the wrong reply button.

  I can't find the comment I intended to post under, but it was from someone who saw no problem with luring business in with low tax rates then bumping them up after the businesses are established, and having some kind of law to "recover" the "tax break" if the businesses decide to leave when they change the law.

Re:Responsibility to society or shareholders?

[HanzoSpam]

oops forgot the /sarcasm tag on that one, actually capitalism worked just fine for ages before Reaganomics came along, just ask anyone over 40 or 50.

I'm over 50, and I can tell you for sure the reason Reagan got elected was because under Carter capitalism had stopped working. Assuming you want to call what we had under Carter capitalism, that is.

You might want to remember the economic boom that started in the late 80's and ran right through the 90's. Would you call that "not working"?

Re:Responsibility to society or shareholders?

[Anonymous Coward]

Many Christians believe that those who will enter the Kingdom of Heaven are already named in the Book of Life. God is omniscient, therefore he already knows who will spend eternity in Glory and who will burn forever in the Lake of Fire. Calvinists hold this concept of preordination.

However such a concept flies in the face of a loving Creator for many Christians. So these subscribe to the concept of Free Will. The choices you make in life actually affect how you will be judged in the afterlife.

What it boils down to, though, is whether God is omnipotent and omniscient. If he is, then he knows that a vast number of people will die and enter the flames of Hades, and his refusal to do anything about it is far from the loving God caricature He is portrayed as. On the other hand, if he isn't those things, then how shall we live such that we can pass lightly through the Gates of St. Peter? Isn't the fallibility and lack of knowledge a sign of weakness in our God?

What this brings me to is your comment.

Fine. But the terms of the contract were changed. Unilaterally. The state offerd tax incentives to attract business and then withdrew them once the business is up and running. Why not just charge the going tax rates from the outset?

From the outset of what? Are laws never to be changed? No one can know the perfect formulation of taxes and services from the outset of incorporation. Laws should be allowed to change as no politician is infallible, and thus those subject to those laws should also have the ability to adapt (even to the point of leaving the neighborhood/city/state/country) if those laws become too heavy a burden.

It is a mistake to think that laws are perfect from Day 1.

I don't know what the first part of your reply really had to do with the discussion but I will bite. You left out Omnipresent in your list with Omnipotent and Omniscient. His omnipresent attribute is unchanging holiness, if that could change he could no longer be God. God would be less holy and not worthy of praise if it was forced praise so it has to be free will. Also this means that he cannot stop someone from making the choice to reject salvation because that would mean that being was no longer free and would turn God in to something he is not.

by the by this brings me to why I hate most laws such as prohibitions on drugs, sex, or societal restrictions or any other personal behavior and don't identify myself publicly as a Christian very often. God gave me free will, who the Fuck are you to come in and say 'no you can't smoke that joint, no you can't make Laudanam in your own home from the Poppies you grew in your garden'. Who the fuck died and made them God? The God I know gave me true Freedom to fuck up and commit sin.

Re:Responsibility to society or shareholders?

[Anonymous Coward]

That us a terrible analogy. Well done sir.

Re:Responsibility to society or shareholders?

[ConceptJunkie]

Capitalism still works great for me. I just hope the current President and Congress don't do any more damage since they seem to be opposed to it.

Nice going states!

[Anonymous Coward]

Give away millions in subsidies to create a few thousand jobs.

Migrating clouds are a good thing if it teaches you spendthrifts a lesson. Besides, in a few years I'll have so much computing power available to me at the consumer level I won't need somebody else's cloud; I'll have my own. Try thinking beyond the next election will you? Be a Statesman, and not just a Pol.

Data Clouds become more like real clouds

[Kotoku]

First data moves up into the massive cloud from all over. Then the cloud moves. Then somebody does a dance of sorts. All our data crashes to the ground. (Erm..this step is reserved for Microsoft's clouds)

A new threat?

[olborer]

The first thing on my mind after reading the topic was a government run development of stealth flying apparatus chasing innocent citizens for not paying taxes.

Basic economics

[Hawthorne01]

Businesses treat taxation as damage and go around it. Or something like that.

Re:Basic economics

[DaveGod]

Businesses treat taxation as cost and minimise it.

That's how I'd rephrase your point (while still saying roughly the same thing).

In Microsoft's case this is quite literal, as the tax adds 7.9% to the cost of their equipment.

Companies exist to maximise shareholder wealth. This is done by increased share price and through dividends. Tax reduces shareholder wealth, it is the company's duty to it's shareholders to minimise it - but legally. Three usual terms divide up the spectrum of minimising tax:
- tax planning, which is simply as described to be tax-efficient by design and is perfectly bona-fide.
- tax avoidance, which is using the system to your advantage (i.e. going out of your way to reduce tax). Legal but has a wide scale of moral grey.
- tax evasion which is cheating.

To a company tax is just another cost. A society offers it certain things and extracts a price in return. Taxation can be high (relative to other areas) provided there are compensating advantages. Once the cost of taxation exceeds those advantages, that place is no longer best and the company is failing in its duty towards it's shareholders if it does not move. Complaining that a company moved to minimise tax is hypocritical - you also put a large emphasis on price every time you buy something.

The problems are generally that some companies evade tax, legislators are fallable (leading to undesirable avoidance), and governments are always mucking around with tax. That last point is often understated. Differences in taxation distorts the market: a company may choose to avoid a tax area that has a natural competitive advantage because that country has higher taxes - TFA is a good example, Quincy has hydro power. Texas is therefore suboptimal and on balance society has a net loss.

Tax is also changed over time, so a company may do good planning which then backfires because the tax is changed. This is obviously means those plans are now inefficient, and again we have a net loss.

So we see that taxation is both a direct cost to a company and also poor implementation of taxation has a cost from inefficiency. Both of these pass on to society.

None of the above is any comment for/against high taxation, but rather to show the importance of how it is implemented.

Tax entities will get wise to this

[davidwr]

Taxing entities will continue to give tax breaks, but there will be strings attached. Instead of "10 years with favorable tax status if you keep $x in local payroll during those 10 years" it will be "10 years with favorable tax status if you keep $3x in local payroll during the following 30 years, adjusted for inflation, with penalties and the ability to recapture the taxes if you default."

Re:Tax entities will get wise to this

[bjourne]

Hopefully they will realize that tax breaks is a futile race to the bottom. For every state that gives a rebate there is another one that can undercut you. In the long run it is not sustainable and just wastes tax payer money for everyone.

Re:Tax entities will get wise to this

[Anonymous Coward]

Taxing entities will continue to give tax breaks, but there will be strings attached. Instead of "10 years with favorable tax status if you keep $x in local payroll during those 10 years" it will be "10 years with favorable tax status if you keep $3x in local payroll during the following 30 years, adjusted for inflation, with penalties and the ability to recapture the taxes if you default."

Taxing entities will continue to give tax breaks, but there will be strings attached. Instead of "10 years with favorable tax status if you keep $x in local payroll during those 10 years" it will be "10 years with favorable tax status if you keep $3x in local payroll during the following 30 years, adjusted for inflation, with penalties and the ability to recapture the taxes if you default."

Taxing entities will continue to give tax breaks, but there will be strings attached. Instead of "10 years with favorable tax status if you keep $x in local payroll during those 10 years" it will be "10 years with favorable tax status if you keep $3x in local payroll during the following 30 years, adjusted for inflation, with penalties and the ability to recapture the taxes if you default."

And the businesses will not take the bait.

hmmmm.....

[Anonymous Coward]

Oh snap!

Who'd of thought they could do something like that... it's not like there aren't already datacenters in shipping crates... oh wait.

What does this have to do with "the cloud"?

[argent]

It's the equipment that's being taxed... or not... not the data on them. Moving servers around doesn't get cheaper or more expensive because they're serving Azure or Halo... you still have to move the physical boxes and the people maintaining them.

Unless by "the cloud" you mean "anything you can run in a colo". But that's kind of diluting the term to the point of meaninglessness, isn't it?

Re:What does this have to do with "the cloud"?

[ahabswhale]

It's meaningless regardless because companies that aren't running clouds are already playing this game. And by non-cloud businesses, I mean manufacturing. Talk to any Irishman and I'm sure they would be happy to give you a dissertation on how this game works. Then in about two years ask the same question to a Polish man.

Re:What does this have to do with "the cloud"?

[Attila Dimedici]

Unless by "the cloud" you mean "anything you can run in a colo". But that's kind of diluting the term to the point of meaninglessness, isn't it?

That is what is meant by "the cloud". "Cloud" computing is just another way of saying client/server, except that "cloud" computing usually means that the Internet is involved somehow. The only difference between "cloud computing" and client/server architecture is that in "cloud" you don't pay any attention to where the server actually is (whereas in traditional client/server you might, although not necessarily).

Re:What does this have to do with "the cloud"?

[argent]

"Cloud" computing is just another way of saying client/server, except that "cloud" computing usually means that the Internet is involved somehow.

Then I was doing "cloud computing" in the '80s. Oh, hmmm, maybe I was doing "cloud computing" in 1972. Oh, it wasn't "the internet", it was a TDM multiplexed line between Sydney and Minneapolis.

Re:What does this have to do with "the cloud"?

[Attila Dimedici]

"Cloud" computing is just another way of saying client/server, except that "cloud" computing usually means that the Internet is involved somehow.

Then I was doing "cloud computing" in the '80s. Oh, hmmm, maybe I was doing "cloud computing" in 1972. Oh, it wasn't "the internet", it was a TDM multiplexed line between Sydney and Minneapolis.

Yes, you were.

Re:What does this have to do with "the cloud"?

[HereIAmJH]

"Cloud" computing is just another way of saying client/server, except that "cloud" computing usually means that the Internet is involved somehow.

Cloud computing is much more than just client/server or throwing your servers on the internet. Cloud computing is about scaling the services to meet the demand of the clients. In client server (or even n-tier), you handled load by distributing clients across a pool of servers. You could use various means; certain clients to certain servers, DNS round robin, load balancers, etc. You needed enough server capacity to handle your peak load, and the rest of the time any extra capacity was idle. Cloud computing is much more like time sharing used on mainframes decades ago. You pay for the computing you need, and what you aren't using would be assigned to other cloud customers.

Cloud computing

Re:What does this have to do with "the cloud"?

[Attila Dimedici]

Right, cloud computing is client/server where someone else owns the server and only charges you for how much server time you use. The problem with the "You pay for the computing you need, and what you aren't using would be assigned to other cloud customers" is that if you track the computing needs of most businesses, they all tend to follow similar patterns of need for computing power. That is, when Business A needs more computing power is often the same time that Business B needs more computing power.

Re:What does this have to do with "the cloud"?

[IamTheRealMike]

Except that apparently Azure customers do have to pay attention to where their data is stored?! The article made it sound like there'll be some manual work involved by Microsofts customers for migrating their apps to the San Antonio datacenter. Doesn't sound very cloudlike to me ...

Nothing new here

[Robert1]

This is a basic business fact, has been known for decades, and is one of the big reasons why people are justifiably against increased taxes.

It happens on every level of government - city, county, state and finally country. Tax increases at any of these levels tend to drive away businesses, lower taxes and incentives draw them in. The only thing that makes this news-worthy is that cloud-computing is a fairly new industry. Surprise, surprise they react to taxes like any other business.

Of course, every level of government NEEDS taxes, but tax increases to pay for various social services ultimately have to be finely balanced between driving away business with the need for those services. Heavily taxing business to provide for such services helps the community in the short term, but drives away the business and hurts the community through job loss in the mid to long term. Did the social service help the community greater than the loss of the jobs hurt it? There-in lies the delicate balance that is illustrated by the issue of taxes and business migration. Again, nothing new.

Re:Nothing new here

[UnknowingFool]

And businesses will do whatever they need to do to lower their taxes even if that means exploiting a loophole. MS is not alone here. By the way, MS while its headquarters is in Seattle, all sales are recorded for their office in Utah where there are no corporate taxes. It is estimated that since 1997 MS has earned some $92 billion in profits and avoided $528 million in taxes.

Re:Nothing new here

[jcr]

It is estimated that since 1997 MS has earned some $92 billion in profits and avoided $528 million in taxes.

So, they've got better accountants and lawyers than software developers, it would seem. Not surprising, really.

-jcr

Sure, clouds move ...

[maxwell demon]

Everyone who has ever looked at the sky know that clouds move, and change their movement if the wind changes. And if the cloud gets too big, it starts to lose water by dropping it on the ground, while small clouds tend to evaporate away completely. It's only natural that computing clouds behave the same. Just wait for the first digital thunderstorm in the cloud. And don't be too upset about the data losses.

Buzzword comes back to bite you.

[SilverHatHacker]

Yes, clouds move. In the upper atmosphere, air cools and sinks, causing wind currents, which blow the clouds around.
Wait, what's that you say?
Oops, my mistake.

I'm amazed someone hasn't mentioned it yet...

[cpt_drewbie]

"Mike Manos, and his Hands of Fate, predicts that future cloud platforms will move often to chase lower taxes or cheaper power."

Slightly edited, bolded for effect.

Microsoft's Tax Snit Jeopardizes Azure Users

[theodp]

Microsoft has put its Azure customers on notice that 'all applications and storage accounts in the 'USA - Northwest' region will need to move to another region in the next few months, or they will be deleted'. So much for not diverting you from your core duties). BTW, Microsoft seems to think it's entitled to a 100% sales tax exemption.

Re:Microsoft's Tax Snit Jeopardizes Azure Users

[nurb432]

Why couldn't they do the migration for the users? Other data providers would do that in the event of a data center move.. Sure might be some downtime, but its not put on the user to figure out what to do to keep their business alive..

Re:Microsoft's Tax Snit Jeopardizes Azure Users

[budgenator]

BTW, Microsoft seems to think it's entitled to a 100% sales tax exemption [seattlepi.com].

Actually it's not that outrageous, A manufacturer gets a sales tax exemption on goods and materials used in an industrial process, Micro$oft's "industrial process" is holding, moving and processing data, seems not too distant an analogy. There is still plenty for property and income taxes. If it were for a development center then, then no sale tax exemptions should apply; a newspaper pays sales tax on office paper, doesn't on newsprint paper.

Re:Microsoft's Tax Snit Jeopardizes Azure Users

[Anonymous Coward]

Hmm, how not to run a cloud. It should be transparent to users where their applications and data physically/geographically reside in the cloud. And it should be seemless and unknowing to users when their objects need to be moved.

Re:Microsoft's Tax Snit Jeopardizes Azure Users

[Anonymous Coward]

The data center was built in Washington as a result of a promised tax exemption. The government then took the exemption away. One important thing to note here is that -- across the border in Oregon -- there is no sales tax. If the exemption hadn't originally been promised, the data center would have been built in Oregon.

Re:Microsoft's Tax Snit Jeopardizes Azure Users

[Anonymous Coward]

During our current Community Technology Preview (CTP), the options available to users are âoeUSA - Northwest,â âoeUSA - Southwest,â and âoeUSA - Anywhere.â
 
Azure is still in CTP. It isn't being used by live customers. RTFA.

Data Truckers!

[SEWilco]

We're moving the clouds, rolling down the highway, got to keep that data moving, 'cause we're data truckers in our Bit Rigs!
We're sucking up diesel, cause we'll suck up the tax cuts, when we park the data, 'cause we're data truckers in our Bit Rigs!
We're moving to greener fields, and Joe's rig is greener, with his nuclear-powered drivetrain, 'cause we're data truckers in our Bit Rigs!

What, you expect rhyming with moderation that only goes up to 5?

Just another storm on the horizon...

[bschorr]

So while Cloud providers are moving their clouds around for the best deal...what restricts them to hosting in the USA at all? And therein lies one of the fundamental problems with cloud computing for company data. I can think of a number of countries in the world where I would *NOT* want my confidential company data stored and some of those countries might be pretty attractive to hosting providers.

Their sales guys can talk all they want about how wonderfully secure the whole thing is, but if my data physically resides on servers in unfriendly or unstable countries that's all just a lot of hot, moist, air, moving in from the northwest ahead of a low pressure system...

Re:Just another storm on the horizon...

[StreetChip]

Unfortunately, nothing restricts them from moving your intellectual property overseas. A US Congressman once tried to raise a fuss about this very issue but nothing was ever done about it. See "Your data in a cloud over India": http://techclub.mypctechs.com/?p=364 and this article: http://news.cnet.com/Congressman-raises-offshore-ID-theft-concerns/2100-1028_3-5165248.html

Re:Just another storm on the horizon...

[bschorr]

Exactly right and that's a potentially very big issue that a lot of companies are turning a blind eye to in the pursuit of cost cutting.

Re:Just another storm on the horizon...

[HereIAmJH]

So while Cloud providers are moving their clouds around for the best deal...what restricts them to hosting in the USA at all?

Their customers. If US customers say they want their data kept within the US, the companies will either keep their data centers here or lose their customers. It's the same thing that drives companies to go 'green'. Sometimes it's better to pay higher costs to keep the customer happy. Another example, how many people like dealing with off-shored customer support. Some companies have pulled their support staff back to the US because they were losing customers.

Re:Just another storm on the horizon...

[Anonymous Coward]

So while Cloud providers are moving their clouds around for the best deal...what restricts them to hosting in the USA at all? And therein lies one of the fundamental problems with cloud computing for company data. I can think of a number of countries in the world where I would *NOT* want my confidential company data stored and some of those countries might be pretty attractive to hosting providers.

In practice, 3 things keep clouds in the US:

1. High bandwidth connectivity with low latency to the users.
2. Cheap, plentiful electricity.
3. Reliable regulatory regimes. (Tax structure, low or at least deterministic levels of corruption, etc.)

The idea of a cloud provider in China serving anyone but the domestic Chinese market is laughable to anyone who's actually built a datacenter in China out of necessity. Power is a mess, connectivity is worse, and you never know when your whole venture will be sunk or rendered unprofitable by a local bureaucrat.

Where there are perturbations in the status quo related to any or all of these three points, decisions get revisited. That's business.

It only works for so long

[BitZtream]

It only works until every state taxes them the same, once everyone taxes them normally they'll stay where they are or move to where it makes sense for real reasons.

Or we can just nationalize all taxes and this sort of bullshit will end. We'll have a bunch of new problems, but this sort of moving and wastefulness because they don't want to support their local services will end.

Re:It only works for so long

[merlin3000]

Actually after the prices are lower and kind of stable between all the major cloud services/storage providers, doing so would probably force them to move their servers to other countries where the taxes are lower. The other option is to increase the prices. A mix of both will probably happen. Anywhere will become global and those who want it localized in USA will have to pay premium. I'm not criticising either side, the companies or the government. But when doing taxes one has to have in mind how will people react and act acoordingly, possibly achieving some middle ground.

Re:It only works for so long

[Anonymous Coward]

Not really. There are plenty of states that don't demonize corporations for doing their job, and they are happy to give them a tax break in exchange for ... taxes ... and jobs ...

Some politicians as of late have been feeling a bit pinched in their revenue stream, so rather than suck it up (they want to get reelected after all), they figure they can just pass the pain onto their non-voting constituents.

Ahh, but it's the corporations that are greedy, right?

There is an interesting correlation between the states that have been hardest hit in this recession and those that have the highest tax rates (CA, NY).

The states that businesses move to still have money for those "social services". The states that lose that business (and tax base) are appropriately rewarded for their greed - as well as the citizens that voted in those politicians.

That is why you should beware of tax breaks

[Anonymous Coward]

A locality that needs to give you a sweetheart deal to relocate probably is screwing over their local homeowners and businesses and otherwise sucks as a place to start a business.

They are also the kind of places that will reneg on a deal if you do decide to relocate.

Also beware of places that have to constantly advertise as being good places to start a business as they are propably just the opposite.

We need more Americans floating like clouds and voting with their federalist feet to keep crap governments more honest. Crap governments will take more and more of your money to get more and more crap, not progress.

Race to the bottom!

[paiute]

Last one there makes slightly less of a profit in the next quarter!

just like this guy!

[Anonymous Coward]

http://media.photobucket.com/image/super%20mario%20bros.%203%20cloud/KupoNH/renders/NewSuperMarioBros-CloudKoopa.png

Your data in a cloud over India

[StreetChip]

Considering the track record of tech companies and their quest to save a few bucks at the expense of American jobs, it's just a matter of time before all of your data in the cloud winds up overseas. Who has access to read through your sensitive documents when that time comes? The article shows how easy it us for one cloud provider to uproot the collective data of thousands of companies and move it anywhere they please. Where will they move the data next? Read this article, "Your data in a cloud over India": http://techclub.mypctechs.com/?p=364

Re:Your data in a cloud over India

[jawahar]

Who has access to read through your sensitive documents when that time comes?

There is no need to be cynical if we follow standards.

Re:Your data in a cloud over India

[Anonymous Coward]

How is cloud data any safer in the US? I dont think any small business owner who has fully read the Google EULA would use Google docs. It doesnt matter where these companies keep the data, once you have handed it over. Its on the interwebs. Besides, US government has access to everything and many times without checks and balances. (Dont give me crap abt how business secrets are safe with US goverment.. yea right).

Your post got highlighted because you said "India" and everyone crapped their pants collectively. I am sure people would react differently if you said Ireland. I know its abt the brown folks..

I dont think anyone in their right mind would move a data center to India in the near future. Power supply in US is far cheaper than it is in India (SHOCKER!!!) and you would need loads of power to cool your data centers in most of India. The power supply in India is far outstripped by demand and rolling brownouts and blackouts are common. Securing land is also a pain in the ass. The lawsuits will run for several decades before they are resolved.

"Corporation follows cost minimization strategy"

[clyde_cadiddlehopper]

Nothing to see here. Move along.

Movable customers chase low prices

[ewg]

Just as movable customers chase low prices. And movable investors chase high returns.

Re:Movable customers chase low prices

[Sponge Bath]

Good point. Just checking, does everyone here claiming MS is unethical for doing this report all internet purchases to your state and local government and pay sales taxes on those purchases? That is required in many states, so if you don't it is unethical and probably illegal.

I don't, of course, but that's because I'm a right bastard.

The genius of shipping container datacenters

[Anonymous Coward]

This is why I continue to maintain that shipping container datacenters (or houses even) are a brilliant idea. It totally screws with the concept of real estate being, well, permanent. But more importantly, it allows you to do things that were otherwise impossible to do.

Don't like the political climate? Unplug, drop them on trucks and within a week, you could LITERALLY move and reestablish a full data center from start to finish, assuming the infrastructure was in place at the destination (power, cooling, flat land). Mostly just power.

It's no wonder Google and Microsoft (and many others) embrace the concept of cheap equipment that is housed in a high density and highly mobile setup.

It's no longer a bluff when you can LITERALLY truck an entire 400,000 sq ft facility in a weeks time and for a cost that would be far less than the expected increase in taxes/regulation/etc. You could even stage it such that downtime would be minimal at best. Rolling restarts, literally!

Was it just me...

[Anonymous Coward]

... or did anyone imagine big, white clouds in the air floating from tax break to tax break? Like the clouds Care Bears ride?

Hypocrits

[Anonymous Coward]

I find it ironic that corporations like Microsoft are being criticised for openly lobbying State governments for tax exemptions by a community of people who are extraordinarily likely to buy things off of the internet and simultaneously claim that they have never heard of a "use tax" (or simply refuse to pay it). Bravo to the 95% of you who are tax cheats. Apologies to the 5% who actually paid.

you are too

[plnix0]

BTW, Microsoft seems to think it's entitled to a 100% sales tax exemption.

In fact, it is. So are you.

Terminology

[michaelmalak]

Here's hoping that this "cloud" terminology goes the way of "mashup". "Server farm" and "data center" refer to specific concrete entities. Labeling a data center as a "cloud" does not give it magical capabilities. "Cloud" used to refer to the peer-to-peer nature of the Internet. Now it's being applied to servers from the old client/server days. Talk about complete perversion.

Re:Terminology

[TechyImmigrant]

Can we go back to calling it timeshare instead?

Before long, companies will start adding up their 'cloud' costs and conclude that a few rackmount PCs in an air conditioned room would be cheaper, clouds will go out of fashion for a few years, then a bunch of other companies will have a great idea to be an outsourcer for compute time, give it a stupid name like 'cyberether' or some such nonsense and the cycle will start again.

Re:Terminology

[nometacognition]

Or a novel use could spring up just out of the sheer accidental luck of being alive. Like Nobel and his prizes versus making weapons with his money. LSD...

editors,

[superwiz]

can you please mark nonsense like this article under politics as well as "the internet"? the whole anti-humanist-under-guise-of-being-anti-corporate crowd makes it sooooooo not worth reading. i'd like to have an opportunity to block this type of drivel.

just think if the government

[FudRucker]

taxed microsoft the same way microsoft sold windows & office licenses?

IT Gypsy

[stabiesoft]

So tech people are going to be gypsy/circus people moving town to town with their semi's chocked full of servers. They'll summer in alaska and winter in florida or texas.

Re:IT Gypsy

[rdebath]

Google have been thinking about doing this; their data centres are built out of lots of standard containers after all ...

Hey YOU!

[Newer Guy]

Get off of my Cloud...

Metaglobalization

[nometacognition]

The data about globalization is globalizing. Information is sinking to the lowest priced real estate. All monetary costs to generate value are depreciating while the value increases. As soon as it is cheaper to build on the Moon, it will be done. I can't wait till the cloud is actually rival to the combined human intelligence. Its core neural network dispersed across all our available processor cores. Wasn't Sony's use of the CPU in the PS3 supposed to dedicate one core to network processing of shared CPU cycles?

Heavy Industry sans taxing?

[veranikon]

I'm amazed that data centers have yet to acknowledged (as regulated) as heavy industry, what with their power consumption, size, and even pollution via hot air expelled from massive cooling plants. It was rarely surprising when GM, Ford and Chrysler would relocate their plants to capitalize on laxer environmental regulation, cheaper labor, or lower taxes. Somehow it's surprising when Microsoft feels similar motivations to move its massive plants?

Re:Heavy Industry sans taxing?

[freedom_india]

Heavy industry == large factories,thousands of unionized workers, slamming machines, polluted lakes and land, mountains of waste, grinding, chopping, mincing, steel-on-steel action, a few deaths every year due to "accidents", a corrupt, evil corporation that evades responsibility and criminal punishment by buying off state senators and donating to Republicans, etc.
Corporate Data Centers== Mid-sized, ultra-clean, very quiet, tens of employees each owning a condo and a TransAm, employed by a corporation whose motto is "Do not be Evil", and whose only waste is flushed in the toilets...
Got it?

Wrong type of cloud...

[marciot]

I expected an article on artificial weather modification. I was disappointed.

Rolling Stones already sung about this

[siriuskase]

And they did it 40 years ago. http://www.lyricsfreak.com/r/rolling+stones/get+off+of+my+cloud_20118086.html

And

[jawahar]

I pay taxes. With them I buy civilization.

And

[jawahar]

• Socialism = Preventing Race to the Bottom (http://tr.im/vL0j)
• Capitalism = Promoting Race to the Top (http://tr.im/q6Q1)
  
  We need BOTH Socialism and Capitalism (either implicitly or indirectly) to build and sustain a great Nation.

Good

[davidwr]

If a project is not viable without a tax break, maybe the money should be better spent elsewhere, saved as cash for a future project, or returned to stockholders. Sure, THAT project won't get funded, but the money will be spent by the next viable project that comes along. It may not be spent HERE, but it will be spent somewhere on or near Planet Earth, and that money circulates back around eventually.

If it is viable without a tax break, then giving the company a tax break is just a gift/bribe/blackmail from the taxpayer to the stockholders.

Tax breaks are good when the project you are incentivizing does more overall public good than the next use. If the company is thinking "we will open a 1,000-employee plant somewhere, maybe Shanghai, maybe near our headquarters in California, or maybe, if you can make it worthwhile, here" then the best public good is probably to open it where the long-term poverty level is highest, which is probably the place least likely to afford government subsidies. However, it may also be the place with the lowest corporate tax rates, so subsidies may not be necessary.

If the company is thinking "we are toying with the idea of expansion, but right now it doesn't make economic sense, especially with the startup costs of a new plant." In this case, a city approached with a "please give us a tax break" proposal should weight the overall public good of additional jobs now, or additional jobs later plus all that money sitting around in corporate coffers, probably invested in short-term instruments or the money market, until the project is viable without a tax break. There is also the slight risk that the company will unexpectedly fail due to not having enough manufacturing capacity of its own, and nobody will have any jobs and the company will lay off existing employees.

The only surprising thing here is...

[Johnny Mnemonic]

...that Washington State could think that they'd call Microsoft's bluff and hit them with an extra 8% on a multi-several-hundred million dollar facility, and not have Microsoft simply move their cloud services elsewhere.

At the end of the day, what does WA State think they they offer for that 8% that can't be found elsewhere? I can guarantee you that Microsoft did that cost calculation and WA state came up short. WA should have done it too before pushing their argument.

nb: "Waving forests of green" and other like worker lifestyle benefits played almost no part in Microsoft's calculation. If WA State believed that Microsoft wouldn't move their facility because their state offers a nice lifestyle for workers, they are fools.

PS: Now that Microsoft is gearing up to run Yahoo's DCs too, what's going to happen to the Yahoo facility in Quincy? I'm sure glad I'm not a spec homebuilder who has unsold real estate in that part of WA state.

Ah ha!

[rnturn]

Now we finally see the real reason Sun and HP (and probably others by now) have been coming up with those "data-center-in-a-trailer" products. To allow cloud providers to push for tax breaks. If the local politicians don't give you what you want, just fire up the trucks and tow the data center to some other city or state that'll give you what you want. Heck, all it would most likely take for the pols to fall all over themselves offering up more tax breaks would be the appearance of trucks at the data center site; you probably wouldn't even have to back 'em up to the trailers.

And the customers' data? I'm thinking that every time some cloud provider decides to relocate their data centers, a lot of customer data will be at risk or being lost.