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Microsoft Tax Dodge At Issue In Washington State
newscloud writes "With Washington State facing a billion-dollar biennial budget deficit, the spotlight again shifts to Microsoft's software licensing office in Reno, Nevada. 'Although the majority of its software development is performed in Washington State, Microsoft records its estimated $18 billion in licensing revenue per year through a corporate office in Reno, Nevada where there is no licensing tax. Just by enforcing the state's existing tax law from 2008 onwards, we could reduce Washington's revenue shortfall by more than 70 percent. Alternately, we could pursue the entire $707 million from Microsoft's thirteen years of tax dodging and cover most of the expected deficit going forward.' We have discussed Microsoft's creative capitalism in the past."
Way to blame microsoft for the state deficit.
I'm sure there are plenty of other states that would be happy if Microsoft relocated.
...I can't see how anyone could expect Microsoft to act differently.
There appears to be a legal loophole that has allowed Microsoft to hang onto $707 million over the years. Until a judge rules otherwise, they're going to exploit that loophole. When the loophole is closed, Microsoft is going to look for a new one. Can you say you'd act any differently?
What's that? You do act differently? You pay your taxes, you say? Well then... it sounds as though Washington would have better luck recouping its money if it simply raised the state income tax. Presumably all of the employees at Microsoft's Redmond campus file taxes in the state, yes?
Breakfast served all day!
... and threaten to move out. If MSFT leaves or even reduces force, greater Seattle's retail and real estate would be crippled, not to mention sales tax and property tax revenues. I'd like to see those taxes paid too, but unfortunately MSFT has the greater bargaining chip here.
Among my favorite are "but Microsoft will just move outside of the U.S." Like hell they will. You think all those C-levels, VPs and billionaire executives will want to move? And the interruption of process? The huge shift in culture? And the public opinion of Microsoft will surely enable any Microsoft competitors. And finally, if they moved out of the U.S., they wouldn't stop selling to the U.S. and you can bet there would be LARGE tariffs imposed on the import of Microsoft Software and could you imagine the new problems they would have to face being a "foreign business" selling critical systems software and infrastructure products to sensitive areas of government? Bad enough they are local, but a foreign company selling the US government crappy software?
The various problems and changes that would result are too many to imagine.
Probably best that Microsoft pay their damned taxes like everyone else.
Well, I guess the Washington government could try to pass a law that taxes a company for a subsidiary whose primary location is in a tax-free zone. If it stood up to the inevitable legal challenge, I have no idea what the unintended consequences would be for the tax landscape.
I wonder what it would cost Washington if MS decided to completely relocate to another state?
Generally when Governments go after companies hard enough for tax and regulation, it becomes a financial incentive for the company to move on.
I'm sure there would be plenty of other states interesting in garnering the juggernaut a MS head office would bring to their state.
Everyone knows that when a state raises taxes, business leaves the state. This isn't a frickin mystery, its simple economics. At least they aren't moving it and its software development to India. This is a first hand example of WHY liberals tax and spend policies FAIL.
2. I single out Microsoft because it's, by far, one of the biggest offenders, but I would like to see the uniform enforcement of state tax law to all corporations using out of state facilities to minimize tax payments.
I definitely agree. Would be great. But as someone stated above, you can't expect one company (in this case Microsoft) to be forced to follow a rule and then not force the rest of the companies. Well, I suppose you could, but in all fairness, should Washington, or any other state, be able to single out one offender, leaving others to get away with the same? Uniformality in this would be best.
They're just looking for an easy way out, to make Microsoft pay for the state's own economic blunders. Surely Washington has known about this for a while but chose to ignore it. They can close the "loophole" now, but I don't see why it is fair for them to make it retroactively illegal. I actually thought such ex-post-facto laws were illegal themselves.
Don't confuse liberal with democrat. A liberal would say "if you're not breaking the law, have fun". And while this is a major loophole in the law, they're still not breaking it outright.
As you said, if they start screwing Microsoft over just to help people make a quick buck or a million(helllo European Union? I'm looking at you!), Microsoft will just move, and then they can kiss goodbye to the income task (which is most likely VERY significant)
I don't think the guy who writes this article really understands tax law. Neither do I really, but atleast I'll admit it. It seems to me that I remember Tax Avoidance being perfectly legal and accepted. I really think he misunderstands the idea that there's some existing tax law to be enforced that applies to Microsoft's actions. The software is licensed out of NV, hence, NV law applies. There are major jurisdictional issues inherent in taxation law and so far as I can tell as a layman, there's nothing afoul of any regulation going on here.
If there were, you can be sure Washington State would have their hands in Microsoft's pockets already.
That's kind of why most corporations are incorporated in Delaware, too. There's jurisdictional issues being blatantly ignored by this person in order to make a point and that is not justified.
That all said, I did some more reading and it looks like this guy has barked up this tree before.
http://crosscut.com/2008/02/02/microsoft/11167/
which was posted to Slashdot back then
http://slashdot.org/article.pl?sid=08/02/04/1520219
and a followup with his anti-arguments to the posts from Slashdot back then.
http://www.idealog.us/2008/02/top-reader-excu.html
Oh and 2004 too:
http://slashdot.org/article.pl?sid=04/10/01/2137228&tid=109
You'll notice, a year ago, he supposedly already addressed all the issues everyone here could possibly present. Unfortunately, he's also completely ignored the one about the constitutionality of taxation and jurisdiction and focuses more on wishy washy sort of justification arguments made that appeal more to a sense of right or wrong, rather than the case law regarding jurisdictional tax issues.
Career campaigner on this issue, hey Jeff? Too bad you've wasted 5 YEARS on this subject and you're never going to get anywhere because Microsoft is DOING NOTHING WRONG.
I hate it when corporations pull this sort of crap - but most of them do it because the law allows them to. Besides, as a fellow Washingtonian, I am reasonably sure that the state government would have cut some sort of tax deal with Microsoft if the company ever threatened to move. We HAVE seen it before, remember.
If you want to stop companies from doing this sort of thing, you have to change the law. And changing it in one state will just make things worse (for that state), since there are always other states with depressed economies that are willing to drop trou' and bend over in hopes that that handsome, rich corporation might just decide to stay more than one night if they show them a good enough time.
#DeleteChrome
...why don't you just do so?
Warning: this article may contain humor, sarcasm, parody, and perhaps even irony. Read at your own risk.
How about we start leasing our Windows and Office licenses from an office here in Moldavistan (fictional, but there are bound to be some real ones), where there is no copyright law whatsoever. Pay $1 per seat, comes with official receipts from Moldalicensing Ltd. with added waivers regarding any EULAs that might pop up being not valid.
Here we have yet another example of the Evil coming out of Microsoft. The State of Washington and its taxpayers have spent a pretty bit of coin providing an educated workforce for Microsoft, by creating all the infrastructure such as the electric utilities, the roads, the police, fire and the rest. Without all of these public services, companies like Microsoft would be much, much less profitable.
If these companies are so hell bent not to pay taxes--then why don't they move to Russia? When I lived there, zero taxes were taken from my pay. Companies paid hardly any taxes. Oh yeah, they had to pay the Russian Mafia because the tax-starved government had no power.
So, we see the most anti-American behavior imaginable is some hugely wealthy company like Microsoft scamming the taxpayer. I hope that the state of Washington hits M$ for their entire back taxes. Microsoft could pay it out of petty cash.
actually, liberals reserve the right to JUDGE the law, itself.
dems and repubs are stuck in the 'its a law, that's all there is to it, follow it' idea. but liberals want to think for themselves, at every turn. a Good Thing(tm) as it raises us from robots to thinking human beings.
while I'm at it, I'll put in a plug for jury nullification (fija.org). another concept that 'law abiding citizens' mostly don't know about or think is 'wrong' somehow.
--
"It is now safe to switch off your computer."
I know this post will be modded for flamebait, but I think the original article reeks of flamebait.
Although I disagree with several points in your topic, it's worth the debate. There's no reason for you to play that cliche.
If taxes are so high that tax dodging becomes a way of life for big business to thrive, raising taxes will not fix the problem.
Quick Google on corporate tax rates over time
If what you are predicting is true, how you you account for the increase in business growth (not counting depressions) over the last 50 years? Effective tax rates have dropped by a rate of 50%
There is this line in the article: "Just by enforcing the state's existing tax law from 2008 onwards, we could reduce Washington's revenue shortfall by more than 70 percent." What? The law that says Washington state can tax business transacted in another state? They want to CHANGE THE LAW, not enforce existing law. Maybe if the state were to partner with MS and not view it as their own personal ATM, they could close a bit of their defecit. Is the Washington State economy really based on anything more than Software, Airliners, "The World's Largest Store" and over-priced coffee?
Ken
I know this post will be modded for flamebait, but I think the original article reeks of flamebait.
Stop your damn complaining. If you had taken out the political skewering and generalization then you wouldn't have to whine about flamebait modding in the first place. What you said is Insightful, but your crying makes you look anything but.
The state of Washington actually has no income tax.
This is exactly the kind of thing tax raisers refuse to understand. When taxes are too high, people will change the way they do business. It's perfectly legal to do this.
The term "Tax Dodger" is thrown around like it's a bad thing, it's not. It's smart to dodge taxes. In fact, many people do it. We use online retailers to avoid state sales tax. People who live near state lines will drive to the other state to make big purchases if there is a sales tax savings to be realized. I have cousin who travels from MD to DE to do just that.
If they make the tax too burdensome, we can watch Microsoft pick up and move from Washington to some other state that's not so arrogant as to assume that all money is theirs.
LK
"Hi. This is my friend, Jack Shit, and you don't know him." - Lord Kano
Simply deem the licenses created in WA and sent to NV where they were sold. A license is sort of fictional anyway. Tax the exported licenses.
What changed under Obama? Nothing Good
Basic economics. Corps don't pay taxes. Taxes are a cost. Costs get passed on to customers, shareholders and employees. They get passed on to you. You who buy any products made by corporations. You who has money in a 401K, Roth or any form of interest bearing account. You you work for a corporation.
There is no one else. Get over it.
"It is better to die on one's feet than to live on one's knees." - Albert Camus
Soak the rich.
We need to quit being assholes. Tie taxes to consumption and be done with it. Quit trying to rob the successful to pay for your shitty entitlement programs.
I just modded him flamebait. I always mod when people say things like "I know I will be modded down" If they know that they should not post it. If they do they can expect me to down mod them for being assholes.
Anon for mods...
Is the Washington State economy really based on anything more than Software, Airliners, "The World's Largest Store" and over-priced coffee?
No, it isn't.
because the law allows them to
Ok, I have to substitute poultry here, to make the analogy work, but would the Goose who lays the golden eggs nest somewhere where the law is unfavorable in the first place?
At the end of the day, there is always a price that is too high, if there is an alternative. For MSFT to up and move is expensive. But still, how hard do you squeeze the goose?
This issue is a bit more complicated than you think.
I guess you missed Boeing moving their head office to Chicago. Tax reasons and kickbacks from the state there.
Maybe Microsoft should do the same?
Whoops. That kind of puts a big dent in my argument now, doesn't it?
Well, thats embarassing, but thats what I get for not doing my research.
See, I'm military, so I don't have the option, but I don't pay state sales tax, and my car is titled in the great state of Texas (yes, it's expensive, but it's my state of residence). My wife, seeing the taxes here, decided that it was financially a better option to not teach here after considering the tax implications. So no, we didn't leave, but we sure as hell are staying as far away as we can. Fuck California
#1. Sales taxes are the most regressive form of taxation.
#2. The state does not get a cut of the money that you spend out of state. Which is an issue when you're talking a large number of millionaires or better.
How much of Microsoft's software did the state of Washington write?
There are plenty of places to do business where you don't have to pay a huge tribute to satisfy the greed of the local warlords. Some of them are even in the United States.
The State of Washington should try being less greedy. They should do less and ask the dependent class to do more for themselves.
As always, my first suggestion is for anyone on government housing assistance to be required to live with a roommate to share housing expenses. It's good enough for college students, it should be good enough for welfare recipients.
in a state with no income tax and get out of paying state taxes?
Sweet!
Thanks MS, your lying cheating ways have shown me the light.
So help me understand this:
1. Microsoft is the 3rd largest employer in your state
2. You are in a recession
3. You have a 9.2% unemployment rate
4. You want to raise taxes on business.
So that your government has more money to redistribute to people who are not working, who lost their jobs because companies like Microsoft couldn't afford to keep them on in the first place.
Let me propose an alternative.
Reduce your spending and reduce taxes so that you can afford to pay your bills, and Microsoft can afford to rehire your residents.
Like our sales tax, this license tax is actually a use tax. Its collected by the vendor at the point of sale, but its based upon the jurisdiction where the product is to be used. So the only revenue WA state is going to collect is that on the sales to WA state residents and businesses. Businesses in the state are subject to audits and must show where the appropriate use tax has been paid, either in the form of a sales tax, or via their WA State dept of revenue tax returns. Anyone buying goods or services who can document a residence or business outside of WA state are exempt from the tax anyway (their home state may have similar taxes that apply). Boeing does the same thing with its airplanes (even before it became an Illinois based corporation).
Microsoft (and other companies) often sell through offices in states with no taxes. Not to avoid paying them, which they don't have to anyway. But to avoid having to document sales to exempt individuals and companies in 49 other states. Since its the duty of the end user to see to it that use taxes have been paid, the state would be better off chasing after its businesses (which it already does, to a point) and residents (which it typically lets slide) for the taxes owed.
Have gnu, will travel.
From Kerry Packer, Australian media billionaire before the Print Media Inquiry (1991)
"I am not evading tax in any way, shape or form.
Now of course I am minimizing my tax and if anybody in this country doesn't minimize their tax they want their heads read because as a government I can tell you you're not spending it that well that we should be donating extra."
I've already given you the answer on this subject, I have told you that I pay whatever tax I am required to pay under the law, not a penny more, not a penny less, and the suggestion that I am trying to evade tax, which is what you're putting forward, I find highly offensive and I don't intend to cooperate with you in the blackening of my character.
Domestic spying is now "Benign Information Gathering"
A tax on profit != a cost of production.
Products and services are already priced to maximize revenue. If Microsoft (or any other company on the planet) can charge customers more money without consequences to their bottom line - they'll go ahead and charge their customers more.
I don't blame MS for being creative with their world-wide operation taxes. If Washington State is stupid and attempts to steal payment, then MS will move their headquarters off-shore, not just to another state.
Barbados, here comes Microsoft. Congratulations.
I know this isn't a popular stance, but what happens to all the USA government use of an OS that isn't built here? .... Washington, tax the HELL out of MS ASAP! That will help Linux, when the USA Federal Government mandates use and requires all providers to support Linux.
If you live in Washington, you have to pay more taxes because Microsoft is avoiding theirs. Your attitude only makes sense if you're a Microsoft exec or major shareholder. If you're not, you're cutting of your nose to spite your face.
And the Gates' too. Why think of all the construction wages and taxes they must have paid on the new Gates Foundation Campus. This lavish facility, costing $2 Billion - a mere 5% of the foundation's capital - will be a magnet to the great humanitarians of our time. They'll fly in from all over the world on their private jets to this quiet 12 acre parklike sanctuary in the heart of Seattle where they can serenely contemplate how to best relieve the plight of the world's poor while their needs are supported by 1,200 employees. In between spa treatments and lavish dining they'll confer with other great minds, and hopefully the breakthrough thinking that has evaded us all these centuries can finally occur! At their leisure they can view the historic 15,000 square foot museum that tells of the Foundation's work. Naturally armed guards will discreetly keep them free of distraction caused by the 7,000 homeless people living only a few blocks away.
Why, look at this vision:
Sinclair said the two intersecting, light-filled, V-shaped buildings with a private, landscaped courtyard symbolize the organization's connection to Seattle and its efforts to reach out to the people around the world.
"When I look at the building I think they're like boomerangs that you throw out and they come back," she said.
The nearly transparent structure -- including glass interior walls and fixtures -- is supposed to elicit confidence in the foundation's mission, by making the enterprise inside clear to the outside world, as well as connect the people who work at the foundation, said Steve McConnell, design partner at NBBJ, the Seattle-based architects for the project.
Doesn't it just make you aspire to lend your hands to their noble cause?
Help stamp out iliturcy.
They thought the same about Boeing. It's now in Chicago.
You want to keep the seat of leadership where you have some hope of seeing a benefit. (Consider Bentonville, AR.) They can move anywhere, anytime they want to. And they have the fiduciary responsibility to do so, or will be sued into oblivion by their own shareholders.
If taxes are so high that tax dodging becomes a way of life for big business to thrive, raising taxes will not fix the problem.
Tax dodging is only a problem if someone does it. For example, take two company's, company A and company B. Company A does some shady accounting/business practices and while remaining barely legal is not viewed as a responsible member of society. Company B doesn't do anything extraordinary, but does follow the intent of the laws rather than their lawyer's interpretations. Company A will have lower costs and put company B out of business. If both companies operated like company B neither would have a problem. True, company A would have less market share but they would both co-exist. So the current system rewards questionable behavior. Hence why we have so many corporate scandals such as Enron. Either the regulations/laws should be relaxed to the lowest common denominator or those that abuse loopholes brought into compliance with the intent of laws (by fixing the laws.)
Oh my god a ballmer chair throwing joke! So funnay!
Thanks for the thoughtfull post. I knew the author of the article was full of shit, just didn't know how. Gracias for saving me mucho time!
Let me know how that 0% tax goes for you. http://dor.wa.gov/content/FindTaxesAndRates/IncomeTax/
93rd rule of Slashdot: No matter how obvious my sarcasm is, my comment will be taken seriously by someone.
If we all used Apple or Linux then Washington would not be saddled with this problem.
Prove anything by multiplying Huge Number times Tiny Number
Washington Real Estate taxes are low compared to Oregon--and some economically viable states like New Hampshire-so those taxes could easily be raised.
Whenever you see land appreciating in value, that is a sign there is a potential revenue source the government is ignoring. Perhaps we ought to have real estate taxes with a high exemption of say $1 Million per family. I think Bill Gates and Paul Allen could pay a LOT more property tax than they do now before they would consider moving to another state.
Marijuana could be easily legalized-and appropriately taxed.
The taxes I'd like to eliminate are the B and O tax and sales tax.
I've lived in WA for 13 years.
If Washington wants Microsoft to book their sales in their state, then they should remove the disincentives in their tax code that make it worthwhile for a company to maintain a subsidiary in another state. As it is, the state of washington makes hundreds of millions of dollars from other taxes paid by microsoft and their employees.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
Washington cannot tax interstate commerce.
http://slashdot.org/comments.pl?sid=1378413&cid=29511019
What's interesting (to me, anyway) is that on a recent trip to Seattle I noticed that their over-priced coffee is half the price of our over-priced coffee (NYC). I guess it pays to be in the home town!
---- Den ene knappen er powerknapp, den andre er Bender voice knapp "Bite My Shiny Metal Ass"
"Other states will see this and, if they manage to grow a pair, will also tax them"
They won't. Delaware has been a haven to corporations forever. Florida and Delaware are considered low tax states and thus they benefit by attracting lots of people who pay a little bit of taxes.
We can argue this all day long, but the results are there in front of you. It's already happened.
You were mistaken. Which is odd, since memory shouldn't be a problem for you
What, don't post because your opinion does not conform to the groupthink? Fuck that.
"I know I'll be modded down" doesn't mean they're an asshole, it means that they know they have an opinion that does not conform (i.e. they aren't sheep). If anything, modding them down for being an asshole makes you an asshole.
For a site about things like basic rights, Slashdot users sure do like to censor "dissent".
Microsoft is paying $17.5 million - about half the cost of the bridge. Critics slam Microsoft bridge as waste of stimulus money [March 31]
Redmond may not be strictly speaking a company town -
but 30,000 high-skilled. high-paying, jobs and 8 million square feet of taxable office space is worth something to city of 49,000.
Specifically, it translates to a median family income of $95,000.
If you want to complain about the bridge, you might more usefully ask why the city needed stimulus fund to build it.Redmond, Washington
lets examine his claim about post dating 13 years of taxes. if this has been law for 13 years why haven't they gone after MS before now, if MS is cause why weren't we in deficet 13 years ago?
If you mod me down, I will become more powerful than you can imagine....
I will post in the best slashdot etiquette possible. hmm... two evil empires, the State gov. or MS. In a landslide I would choose MS every time in this situation. I don't have to pay the so called MS tax if I don't want. I don't get that choice at all when it comes to the State. The States (not just WA) spend WAAAY more then the take from us. Yes all you liberal do gooders, I said take. Add up the taxes you pay sometime. Don't forget to include all the 'extra' taxes you pay with your post tax wages. WA crying like a little bitch is the ultimate 'no personal responsibility" claim I have heard.
They, meaning all the States, must stop spending more then they have. Take a hard look at bloated employment roles, excessive pension/health care plans, failed social programs and tighten the belt like everyone else must.
If I were MS, I would tell WA to pound f'ing sand and move my entire operation to Nevada. Then let's see how big their deficit would be.
http://www.seattlepi.com/business/22433_chicago10.shtml Lots of reasons for the move, but tax breaks was a major consideration for Boeing deciding to move. Sure they still build planes in Seattle, but their corporation is now located in Chicago. No reason at all that Microsoft could not do the same. This article is trying to make something illegal that is clearly not.
The problem with the "Well they are using resources," argument is that you should be getting money for those resources through your taxes on the things they use. Yes, I agree that they need to help pay for thing in the state. That is why you tax their property, tax the electricity they buy, tax their payroll, etc. You tax the things that actually represent their usage. If they have a 100,000 sq ft plant, they should pay property tax on that. It clearly uses resources, land not being the least of those, so you tax them for owning it, much like all of us who own houses pay property tax.
The only reason Washington is bitching is because they have a big budget shortfall. Part of that might be because they don't have an income tax. Ok well I'm sure that is popular with your voters, but it isn't a good way of running things. A state income tax is a reasonable way of making sure that people who use state resources pay for them. You earn money living in that state, you pay out some of that money in tax.
I really don't see they have any room to bitch about this. You don't like that a multi-national does business in different places? Well too bad, that's how it works. They can always leave, and then you'll get nothing.
The trick is to find a good way to tax people and companies such that they pay for the things they use in the state, will not making it too onerous to any group, so that they are tempted to leave. However it seems legislatures sometimes look at big employers as just massive money pits. "Oh we'll just charge them more, they can afford it." Well, maybe they'll leave if you do that.
Rainbird did that to California. They had their headquarters there but it was getting prohibitively expensive. So they relocated to Arizona (where they had a big manufacturing plant). Their employees were generally happy too since cost of living was less.
I don't have a lot of sympathy if a state does something like eliminates an income tax to panders to voters, and then tries to make it up with company taxes. If the companies then leave, well that's what you get. Have to try and make taxes fair to everyone, because in a free country, they always have the option of packing up and moving somewhere else.
As another poster said already, tie taxes to consumption. Doesn't matter where they sell the plane, what state the bill software thru, etc, when they finally get the money, they're going to spend it. Or, they're going to use it to pay the salaries and wages of other people who will spend it. Their software geniuses at Redmond, when they go out and buy the 119" rear-projection Mitsubishi Laserview for $40,000, a built-in tax on that consumption can run the state and/or run the whole country. See www.fairtax.org for the answer to our economic problems.
The federal government would step in as states may not tax each other. I'm quite sure MS could prove that the people that handle licensing (they have a whole division for it, it is rather complicated) do their work in Nevada. The state can bitch all it likes, you can't tax other states, the Constitution is quite explicit on that.
Good point.
Don't take life so seriously. No one makes it out alive.
Blatant exploits and obviously deliberate attempts to sidestep our systems in place is a slap in the face of every other business and taxpayer that obeys our laws.
I think the repercussions should be more serious than a fine or retaking of tax dollars. There's a difference between accidentally or ignorantly not paying your share like everyone else in the system; and deliberately making sure you don't.
Don't just shake them down for cash; get justice. If I stole or snuck away from my people's government *millions of dollars*; I would be in prison. If we will treat corporations like persons but there is no person to hold accountable, we need to produce specific laws or definitions to translate the punishments a person would receive to the punishments the corporation ought receive. The wrongs of corporations are not fixable with checks and balances like justice and laws the rest of us can be subject to.
It doesn't seem like it's "at issue" - someone is just trying to make it a newsworthy item.
You can be fairly certain Microsoft's accountants and lawyers have this well figured out already.
Rarely do sales taxes cover things like rent, utilities, and food. Since these are most of the 'base load' for the poor, they are effectively only taxed on their bad habits, EG booze and ciggs, for which a strong argument can be made that they should be discouraged anyway.
Rich people buy fancy cars, boats, buy lots of gas, etc. that DO get taxed.
I have no problem with your religion until you decide it's reason to deprive others of the truth.
More likely, Microsoft will move to India. Wanna keep your job? Move with us, and we'll pay you $29K a year.
These are the end times, folks. Eventually all the corporations that can move out of the country will have done so, and there will be nowhere near enough good-paying jobs left in the country to tax those workers in order to balance the budget. The country will go bankrupt, the dollar will plummet, the oil will rise to 100's of dollars a barrel and maybe $7 - $10 a gallon, and our goose will be cooked.
We absolutely have to quit killing our industry, or we're toast. That's the long and short of it.
They could just cut spending. No one needs to pay more because someone pays less. Just cut spending.
Taxes are taken from people against their will. The people who receive the money can just accept less.
since there is no physical product delivered.
Although WA may want to have a chunk of this pie, shouldn't they have to prove that ALL the product creation and development work is done in the state? Otherwise any MSofties working in other locations should have thier input in the project prorated. MS would quickly have a lot of telecommuters from low tax states and calculating the proportion of input would be a nightmare.
And when the mexicans run across the boarder and have babies in the closest ER, they pay taxes on almost everything they buy, except basic food, on the way there. If our tax was income based, the state wouldn't get a penny out of them.
I understand the arguments against a sales tax, but it sure is fair in that almost everyone pays them, not just those in the middle, because with an income tax, the rich and the poor get out of paying them.
About the only way I know people get out of sales tax is to buy only food (not realistic), order things from out of state (legit, but you can't order everything), or have some type of home/small business and lie about things you are buying to "resale" (and that does happen, but not on a large scale).
transporter_ii
Doctors destroy health, lawyers destroy justice, universities destroy knowledge, religion destroys spirituality
Taxes aren't capitalism, they're statism. And the taxes in the USA are to the extent that it's more like socialism.
What else would the come up next? Tax on taxes?
Don't think it hasn't been seriously considered.
Power does not corrupt - power attracts the corrupt.
Made in China.
New Economic Perspectives
Why shouldn't they tax licensing? You think it's not a product? Get real.
I also hope they stick it to Microsoft good. With their huge campus in Washington there's no way they should be able to dodge taxes by "selling" out of Nevada, period.
Comment removed based on user account deletion
Its not uncommon for corporations to make adjustments to their corporation so that they pay as little tax as possible (tax is considered an expense, and its common to look at expenses). They do this sort of thing (spending maybe $20,000 - $50,000 per year to save $200,000,000.00 is usually considered worth it) to obviously save money. The state is being cheated, but the law is not being broken. There is a loophole. The state needs to close the loophole. There are a lot of ways to do this, but the state needs to bill the company according to where the workers are employed. Microsoft may consider moving to Nevada, but pulling up might be really expensive. It would likely be cheaper to pay. I don't give a crap for microsoft apologists saying 'they need more millions for some reason than any other corporation and deserve a free ride because, because, I use them on my 'pewter". Fuck that! Change the law, get them to pay bills, end the free loading, and get on with it.
"Just by enforcing the state's existing tax law..."
What law is that? Does Washington actually have a law that allows it to tax sales in other states? I might be willing to listen to this dude's rant if he actually states what MS is doing wrong. But he just seems to be saying "Look at all those sales in Nevada! We should totally get all that tax money!"
Good thing OSS doesn't make any money.
I know you hate MS, well, I dislike MS too, but I let my dislike of MS to affect what is right
A tax on licensing, no matter which party is being taxed, is still plain wrong !
Muchas Gracias, Señor Edward Snowden !
Just by enforcing the state's existing tax law from 2008 onwards, we could reduce Washington's revenue shortfall by more than 70 percent. Alternately, we could pursue the entire $707 million from Microsoft's thirteen years of tax dodging and cover most of the expected deficit going forward.
Oh, and by doing so, also fully convince Microsoft that being headquartered in Washington may not be in their long-term interest?
Down with the career politician! SUPPORT TERM LIMITS
I thought this article was about something else...
http://en.wikipedia.org/wiki/Microsoft_tax#Licensing_agreements
It is rather sad to see when a slave of the state laments that another slave did not work enough or pay enough to the master - that's to all of you who really think that anybody owes anything to some politicians. If you want to get a real clean and clear look at what needs to be done about tax-dodges take a look at freedomainradio.com, which I just discovered and which make me like my commute because it gives me time to listen to the audio books there.
A good portion of jobs that could have been moved offshore, have. Yes, they might move some others, but there would be other issues beyond the "none of the CEO's want to move to India"
There *are* plenty of skilled workers/programmers/etc in the US. Moving to another country would lose a lot of talent, likely ending up with delay or lower-quality products, not to mention the potential security issues.This isn't to say that all workers in $foreign_country are unskilled, but rather that there are plenty of other considerations, and you would still need to *find* the skilled workers (and not just those padding their resumes) overseas to replace the ones you've lost from the local pool. I'd imagine the PR damage could be pretty bad too what with the "Buy American" focus lately, which would lose additional revenues.
Seriously, if MS could save big bucks by moving their labor pool outside the US, they would already have done so even not considering the tax issues.
You want to keep the seat of leadership where you have some hope of seeing a benefit. (Consider Bentonville, AR.) They can move anywhere, anytime they want to. And they have the fiduciary responsibility to do so, or will be sued into oblivion by their own shareholders.
Such a case would probably be a complete non-starter. Read up on the business judgment rule. Courts do not like to put businessmen in fear of having their every action be grounds for a potential lawsuit by shareholders who disagree. (IANAL.)
If it's for-profit but free, you're not the customer -- you're the product (e.g., the Slashdot Beta's "audience").
And its also ok, to have your US business with corporate headquarters in the caymans, because that isn't cheating the system, either.
You want to show us how patriotic you are, corporate America? Pay your fucking taxes like you are supposed to.
HA! I just wasted some of your bandwidth with a frivolous sig!
I already pay a tax on tax. Our gasoline taxes include multiple taxes, at least one of which is applied to the price of gas plus one of the other taxes.
Anarchists never rule
Begin the feed!
Washington should do a lot of road work on all the road going to Microsoft (basically destroying the road until Microsoft is paying their taxes). I am pretty sure that Microsoft will pay their taxes as they should.
Basic economics. People don't pay taxes. Taxes are a cost. Costs get passed on to employers who are corporations who (apparently) pay no taxes as they pass the cost onto customers, shareholders and employees who then pass the cost on to their employers who then (GOTO 1).
Irrational logic at its finest.
Meanwhile in the real world if a corporation has 1 billion dollars in a bank account named Stanleys Widgets, and that corp then has to pay the government 100 million in tax. Then yes the corporation has indeed just paid tax. And in a competitive market place what corp can jack up prices of its widgets purely based on its tax load??
Besides a monopoly that is.
This is not Atlas Shrugged. There in no "class" of amazing industrialists that us peons must give thanks too for bestowing the fruits of their labour upon us. Life would be nice if were that simple. We are the wealth creators and if the legal entity know as Stanleys Widgets disappeared that wouldn't instantly mean that the world will forever be without the particular widgets that they created. Just like if GM disappeared doesn't mean the world will be without cars...
Actually, in my experience most "liberals" are as much the mindless robots you describe democrats and republicans as. Oh, and most liberals are democrats so I don't see how you can consder them to be a separate group. Also, I hear people from all over the political spectrum talk about changing bad laws all the time. They don't say to just follow it and suck it up. I can't believe you got mod'd Informative. You're post is one of the least informed, knee-jerk, predictable, "liberal" reactions in the entire thread. You have no idea what you're talking about. Just because people think differently than you does not mean they don't think. You're statments represnt some of the absolute worst of the fucked up "liberal" arrogance I have to put up with every day. I wish you people would stop thinking you are better and smarter than everyone else...because you're not.
Sorry, China has already cooked your goose and canned it. Photos, so it's true: http://farm2.static.flickr.com/1309/1203124928_12566d8af1.jpg
bullshit taxes drive business away go figure
Washington state doesn't have an income tax, but they certainly have other taxes, like an above average sales tax, property tax, etc. Microsoft and its employees definitely pay into the state coffers, just not via income tax.
Since a lot of commenters on my blog misunderstand Wa. State Tax Law, I've posted text of the statue there under Notes for commenters at the bottom. http://blog.reifman.org/2009/09/road-balanced-budget-leads-to-microsoft.html * The law does not distinguish between license sales intrastate, interstate or international * By transferring it's software to Reno for sale from Nevada, Microsoft is accomplishing a "sleight of hand" which probably would not pass muster in Washington State court. I also addressed a lot of common arguments people make against Microsoft paying its taxes here - back in 2008: Top Reader Excuses for Microsoft's Tax Avoidance (Idealog) http://www.idealog.us/2008/02/top-reader-excu.html
OMG, it's happening !!!!
Muchas Gracias, Señor Edward Snowden !
Seems Microsoft has been doing this for 15 years or more. Isn't it a little late for Washington to start whining about it now?
This would explain Apple's pricing if they pay their corporate taxes through California...
"They confiscated everything, even the stuff we didn't steal!"
Since capitalism is based on economic competition, and Microsoft does every thing possible to avoid competition, including flouting international law against monopolies. Microsoft is ANTI-capitalistic, it is more of a form of corporate Marxism, where the company rather than the state is GOD. China is more Capitalistic than Microsoft by far. IMO
And I have less money because you aren't giving me yours.
You shouldn't let your greed cloud your judgement: licensing taxes *are* stupid, and if Microsoft found a way to get off them, good for them.
No problem is insoluble in all conceivable circumstances.
There are (unsurprisingly) a couple of ones in France that can be considered as such, as they are applied on the "before taxes" revenue (Hence, you pay a tax on money you never had). Sorry for the links in French...
Now it's official: kdawson is the new jonkatz - only more annoying and more to the extreme left!
Catalin Braescu
Ofaly.com
Oh no !!!
Canada does that, so is France
Where else????
How come we, the people, can't do anything about it????
Muchas Gracias, Señor Edward Snowden !
Huh? How is that any more or less 'wrong' than a tax on anything else? Tax is always an artificial way for governments to get revenue, supposedly because that money goes to create and maintain the economic and social environment in which the company being taxed is able to flourish. Governments will always want to get a cut whenever money changes hands between companies, whether it's the sale of physical goods, services, or licenses and other rights.
Only a govt would see sense to spend $50, to try to hunt down $5 of tax evasion.
Btw shouldnt the federal income taxes be zero, because they arent legal, and it has already paid for the wars.
Liberty freedom are no1, not dicks in suits.
"I mean, corporations do this all the time...many companies incorporate in Delaware for the tax breaks they get, even while most of their manufacturing/business/warehouses are in other states."
That's not strictly true. While it is true that you avoid some state taxes (e.g. franchise taxes) if you incorporate in Deleware, that is not the reason most firms incorporate in DE.
The main reason companies incorporate in DE is to take advantage of favorable corporate law regarding how corporations may be governed. Things like poison pill statues, how boards are elected, limits on management liability, relaxed rules on board composition, etc. Tax avoidance is pretty minor since, you can't use your DE status to avoid any income, property, sales, or use tax.
- Rob
Traffic tickets on the Interstates. One of the dangers of not having an Income Tax is you don't have as much money as other states. As a WA resident, I would not mind a 1% Income Tax. Problem is once there IS an Income Tax it can be raised and raised....
Think about it. Every dollar someone makes is taxed with income taxes (and sales taxes for a lot of them). That same dollar, keep your eye on it, gets spent, someone else gets it, for producing a good or service that it is exchanged for. They in turn are taxed on it. And again, and again, and again. And it just keeps going like that. Dollars get taxed on themselves several times over what they are worth, and they start as private bank debt notes to begin with and are loaned into existence. And because this is an exchange of debt instruments for debt instruments, the original "fee" that the lender charged can never be "paid off".
It's the biggest complicated ongoing set of economic frauds out there, since they switched from money being representations of past produced wealth (or intrinsic wealth directly), with a natural scarcity that more reflected the real market, to representations of poof created "credit" by some anointed private contractor to the government, which is all the "Federal" reserve is, a private contractor that took over which was legally supposed to be Congress's job on setting the value of the officially recognized and accepted currency.
And that's why we have such an economic mess today, one of the main reasons, they opened up the legal possibility of unlimited future calls on your labor to the banking establishment, "just because", with *no way possible even theoretically* to ever "pay them off".
Damn commies always run out of money eventually and try to tax businesses more and more :(
Do they want to Microsoft and other businesses to move their operations elsewhere and lose taxes completely?
How is this different than companies incorporating in, say, Delaware which has the most favorable laws for incorporation and then doing business in some other state?
There is no "-1 offended" or "-1 you don't agree with me" mod options for a reason.
The real problem here is companies that have more size and power than governments, and governments not hanging together (although some of us are glad of that one).
We see what microsoft did in the antitrust suits they lost -- "we'll just see who the government is here" and won the war without having to win the battle at all.
Much as I now dislike them (I did get rich writing software to fix their problems after all), they are far from alone in this, and any company over a certain size has the governments of the world at their feet.
One of the issues here is corporate rights -- we give them the same rights as people, without some of the responsibilities. For one thing, they don't have to die like we do, and some are "too big to fail" and so don't die even when they make mistakes that would kill any person or small business.
and they still screw you? Amerika What a Country!!
Si vis pacem, para bellum! For evil to succeed good men need only do nothing!
Jees,
Most of you f#*kers act like "the state" is the be all end all and must be preserved in its current size forever. Freaking sad man. Just what percentage of all our incomes do you think "the state" deserves, 80%??? Eat s*#t and die.
The type of accounting treatment used by MS is extremely common and is practiced by almost every major corporation. I highly doubt WA State will prevail, but if it does, that is more than enough money to cause MS to relocate its headquarters elsewhere. MS provides huge numbers of top quality jobs that drive the region's economy, and the entire state would be devastated without them. There are plenty of states that would offer any concession required to get MS's headquarters.
My advice to WA State liberals is to stop taking MS for granted.
Actually, as a bone-deep conservative, my philosophy is, "Follow the law, unless you find it to be a morally unacceptable one. If that's the case, break the law. But in any situation, whether legal or illegal, be prepared to take responsibility for the consequences of your actions." The main problem I have with the liberal philosophy (as used in the United States) is that they lose the last sentence. They want to be able to cause damage to themselves or others without consequence, and have a nanny-state pick up the pieces. It's the philosophy of childhood -- stretch the rules to the breaking point, and then mommy and daddy will come clean up afterward. The Democrat party has simply replaced mommy and daddy with an overarching federal government instead.
The real problem with our current government (and by "current" I mean at least the last 30+ years so no Obama/Bush snarking, please) is that they think they're actually important people. Somehow our nation has become enamored of the idea that something a Senator says is in any way more important or more informed than something the guy who slops the pigs on a farm says. At least the pig farmer is doing an honest day's work.
Life, the Universe, and Everything... in my image.
The revenue from a tax should be proportional to the amount of services that are needed from the person/thing generating the tax. I mean that's what tax revenues are for: So the government can provide us with services. The government isn't for profit or anything, they collect money to provide public services. Ok, well that means that you should try and collect money from areas that use the services. Don't charge a huge sales tax not only because residents won't want to shop locally, but because it'll turn away tourists too. The burden would be in excess of the benefits. However don't charge no sales tax either. After all, even though you want to attract tourists, they use services too and thus should have to pay some for them.
Unfortunately, many governments just seem to see companies as big money pits.
I used to work for a large biotech company. As we worked to develop new products and raise our profit, a new CFO came in. The first thing they did was restructure the company into subcompanies to reduce the overall tax rate. We also moved manufacturing, over a few years, to Puerto Rico. Why? Because the amount of tax savings to the company was the equivalent of A BLOCKBUSTER PRODUCT, with NO development risk! Why WOULDN'T a rational company do this? The laws and rules are set up by governments. Corporations work within those laws to maximize their profits. As long as MSFT is not breaking any laws, you as a shareholder would demand and expect they work to maximize their profits. Why do you think so many US companies have subsidiaries in Bermuda, the Cayman Islands, Ireland, Singapore, etc.? Because those are low-tax locations. It is all perfectly legal. It also helps keep state governments honest, because any state or country competes for business on a world scale against others. I live in California. I'm thinking of retiring. I may leave the state due to the onerous taxes here. That's my right! If I want to give CA the finger then let them suffer the consequences of their tax policies.
"Maybe if the state were to partner with MS and not view it as their own personal ATM, they could close a bit of their defecit."
That's new, a "free magical market" advocate who is promoting reverse socialism.
How about Microsoft "partner" with the government and pay taxes on revenue earned by the activities in the state? They might as well get a post office box in Bermuda -- I've heard that trick works for Haliburton.
>>"ad space available -- low rates!!!"
So washington see's a cash cow. Icn't i don't want microsoft to take in the rear and pay up. but nevada advertises that running a business from there is tax free.
Microsft has only done what was offerd to them and any other business lookinh to save money.
On the other hand. if washington really wants this so bad and feels they are due. Then the employee's should do a protest and walkout.
This still either way might hurt washington. in the past i witnessed Dole canned goods. makers of such things as dole pinapple. move its entire offices 5 miles down th road to change counties due to local tax laws. The county they were in pulled a tunt like this and lost everything. murdock said "it cost lss to move then the tax yo wanted me to pay."
"2. YOU made it a Bush point."
From YOUR post
"Or do you really believe "the last 8 years" haven't been completely dysfunctional, too?"
Seems you're a liar.
Unemployment benefits are taxed as income, hence taxes on taxes.
There are a huge number of yeast infections in this county. Probably because we're downriver from the bread factory.
> "With Washington State facing a billion-dollar biennial budget deficit... ...Although the majority of its software development is performed in Washington State..."
>
"That can change," said Microsoft.
That nearby article about the Congograss spread ends with the note that it could spread all the way to Michigan. Michigan is in a protracted, 8+ year recession since 2001. The only businesses that open here are ones that get massive, multi-decade tax breaks from the government.
Washington should consider itself lucky that it has those jobs to begin with. To pretend that, since the software was developed there (i.e. paid for there) that therefore that state gets to tax its sales, is the usual grab fantasy of politicians who spend too much.
Like many large companies, it's a worldwide company. My own has engineering and manufacturing on all three big continents. Local government has strict laws against laying off workers, as Germany does? "Well, next time we open factories or engineering facilities, guess where it won't be?"
, Microsoft records its estimated $18 billion in licensing revenue per year through a corporate office in Reno, Nevada where there is no licensing tax. Just by enforcing the state's existing tax law from 2008 onwards, we could reduce Washington's revenue shortfall by more than 70 percent. Alternately, we could pursue the entire $707 million from Microsoft's thirteen years of tax dodging and cover most of the expected deficit going forward.' We have discussed Microsoft's creative capitalism in the past." In such ways do the pontifications of the local power-hungry get a reality check.
(-1: Post disagrees with my already-settled worldview) is not a valid mod option.
You didn't deserve the Troll mod.
- T
At some point you have to stop asking why companies are choosing to pay less tax and start asking why they are being invited to. States are basically competing with each other, taking tax from one state in order to receive a lesser amount of tax or even simply to create jobs - at the expense of the other state. A degree of competition may be healthy and there should be room for some variation, but where the difference is great someone is losing out more than the other is gaining.
Very nice summary. I would add that a key Keynesian fallacy is that "aggregate demand" is a meaningful term, so hiring people to dig holes and fill them in again is good for the economy. It's where the myth about war production ending the first great depression came from.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
Walmart freeloads off our our basic health care plan and Medicare/Medicaid too.
Microsoft is just avoiding taxes another way.
Hope they get sued.
-- Tigger warning: This post may contain tiggers! --
Even anti-tax economists like Milton Friedman admit that not all taxes are equally bad. The question is how much the tax tends to distort consumer prices. Pollution taxes actually make consumer taxes more reflective of social costs.; Land and Monopoly taxes are the least destructive general taxes capable of obtaining a lot of revenue.
The federal government is the entity most capable of regulating really large business entities, but a corporate/concentrated land tax(say a land tax with substantial household exemption) could be raised up until the point it crashed land values. The thing is, if that land tax increased was accompanied by a reduction in more destructive taxes like the B and O tax and sales tax, the climate for most businesses in WA would improve. Sure, Bill Gates might pay $1/Million year for that huge $30 million house and Microsoft might find its corporate taxes going up quite a bit, but can they really find a location like WA for less money?
This could put the State of Delaware out of business. There's a reason so many US companies are incorprated there. What't next? The Cayman Islands?
And I have less money because you aren't giving me yours.
Yawn.
You shouldn't let your greed cloud your judgement:
There's that projection again.
licensing taxes *are* stupid
Why.
if Microsoft found a way to get off them, good for them.
Which goes back to the fact that you pay more taxes because other people are cheating on theirs.