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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."
No state income tax. Instead, WA taxes the shit out of small business. It can be especially hard on retailers because the state B&O tax is based on gross revenue, not profit. In other words, it is totally possible to run a money losing business and owe taxes on top of that. As a small business owner in WA (profitable thankfully), this story has me totally pissed.
What changed under Obama? Nothing Good
correct; if lawmakers don't want corp entities USING the laws, then why have the bogus abusable laws in the first place?
"waaaaah! they're taking money from my state."
hey, its way worse than that; most companies in tech are sending money OFFSHORE, never to come back again, anyway. playing the 'tax and income game' left and right.
close the loopholes and stop letting corps get away with murder.
duh!
but you cannot force a company NOT to use things that are legal. I hate MS but even I can see this.
--
"It is now safe to switch off your computer."
The guy writing this article is some loony activist one man army who's been arguing this issue since at least 2004. Who knows his motivations, but let's not read into this article as though it's some sort of concerted effort that Washington Legislators are taking seriously.
Have you left yet?
I don't know about Washington, but my state, California has plenty of hits when you google "companies leaving California"...
Anecdotal information only goes so far.. personally, I know of a local printing company that has left my state, taking 28 jobs with it.
There are plenty of other stories. My brother in San Diego told me about Buck Knives leaving town a few years back, taking or losing hundreds or more California jobs.
Competition among the states was what the US Constitution once stood for - let each experiment and see what kind of environment produces the greater good. Taxes are way up there in perceived "badness", among the productive.
This issue is a bit more complicated than you think.
Washington has no income tax.. That is the point..
What is the state income tax like there?
I can't speak to any of your other questions, but Washington state has no income tax (yet).
[b.belong('us') for b in bases if b.owner() == 'you']
As the Supreme Court has made clear:
tax avoidance != tax evasion
The first is legal. The second... not so much.
They've done a lot of that, too. For example, they cut the University of Washington's budget by 13%, which resulted in a 14% increase in tuition rates, and severe cuts to many graduate departments, etc., which necessitates a reduction in the number of classes taught. So, we're accepting fewer students and depressing the graduation rates of those who are already here. That provided the state with an extra $73M for their budget.
Similarly, King County is cutting almost all of the fat. County health is getting cut, county parks are getting cut, etc. So, in the impoverished unincorporated areas, we're cutting all public service, except for courts and police. I can't recall what that cut netted us, but it was on the order of a few million, and the County is still coming up short.
And we've got a case of blatant tax evasion to the tune of $700M. Yeah -- let's stick it to the poor people and the college kids and protect our holy corporations who do no wrong...
...many companies incorporate in Delaware for the tax breaks they get, even while most of their manufacturing/business/warehouses are in other states.
This is a common misconception. Delaware was attractive not because of tax breaks (there is a DE corporate tax), but laws that shield large corporations against lawsuits from shareholders. That is the reason big corporations incorporated there. And they kept offices elsewhere to avoid the taxes :)
This has been changing though as other states (such as Nevada) have adopted similar laws.
On Washington State "thriftiness"... ... ... ... ... ... ... ... ... ...
http://www.washingtonpolicy.org/Centers/government/policybrief/08_guppy_piglet.html
Legislators work in a world of unending spending requests. When there is no countervailing pressure for tax-cuts, it is often easier for lawmakers to just say "yes" to the special interests. As The Seattle Times reports, "Since 2005, lawmakers have spent or allocated nearly $270 million on earmarks in the capital budget... That's more than the previous 15 years combined."[ii] The following chart illustrates the long-term trend.
Washington is one of the most heavily-taxed states in the nation. In all, residents pay more than 50 different kinds of taxes at the state and local level. The large number of taxes, combined with a growing economy, is why a record level of revenues is flowing into the treasury.
In historical terms, Washington's level of taxation is perhaps the highest ever. Today, Washingtonians pay more in taxes than they do for food, clothing and transportation combined.
Suquamish Inviting House, Longhouse and Museum
$2,550,000
Just one pork item, like $2.5 million to benefit the owners of a wealthy tribal casino, represents the entire yearly tax contribution of 1,059 Washington taxpayers.
The Ship Nobody Wants
$4.5 million
Battle Equipment the Army Can't Use
$6 million
Ending wasteful spending at Washington State Ferries
$9.6 million
Tacoma Narrows Bridge Lights
$1.5 million This earmark is to provide tax-funded night-time lighting decoration for the new Tacoma Narrows Bridge.
Hiawatha Artist Lofts, Seattle
$1 million
One million dollars is devoted in the state budget for 61 units of living/work spaces for artists, plus five commercial storefronts for artist-related businesses.[xix] ... ... ... ... ...
"SayWA" Tourism Campaign
$442,000
Money Stolen from the Crime Victims Fund
$431,376
Animal Massage Practitioners
$142,000
Medicaid Checks for Services to Dead People
$44,687
Pension Payments to Dead People
$254,694
Local Community Projects
$132,619,000
(long list of things like $130k for an opera house).
Governments always wave the baby in front of the budget cut gun. But the reality is, they are sitting on a rich leather $750 executive chair behind a $10,000 desk while they do it.
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
Washington has no income tax.. That is the point..
Income tax = progressive
Sales tax = regressive
There is no 40% of people who don't pay sales 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