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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."
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.
Except they arnt. The state they are using to generate the revenue is Washington the state they are CLAIMING they use to generate the revenue is Nevada. This is pretty much a clear cut case of tax evasion. Its like I work in New York but i claim income tax in NJ because the taxes are lower. Pretty blatantly illegal. They should get their back taxes and slap them with a 100% over due fee to net them an extra billion.
Mmmmmmmmm....I don't agree, though I'm open to seeing data otherwise, if there is any.
There are a hell of a lot more options open to wealthy people than to the likes of you and me. Many of those that maintain homes in the high-tax cities have their *residence* elsewhere. One example is Ted Turner. His main business is based out of Atlanta, and he has a house or condo there. But his declared residence is the ranch in Montana, where taxes are cheaper.
Several movie stars and sports figures (John Travolta and Shaquille O'Neil come to mind) have their *residence* in income tax free Florida. Many celebrities have homes in Idaho, Washington or Florida where taxes are low, or non-existent. Texas is another haven, with no personal income tax.
Leona Helmsley once said "only little people pay taxes", and she was more correct than most people realize. The system is devised that if you have a lot of money, and know what you're doing, you don't pay a lot of taxes.
Learning HOW to think is more important than learning WHAT to think.
Who should be taxed more?
Allow me to propose better questions:
1. Who should be shot for spending the USA into a $12 trillion debt?
2. How do we start spending less?
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....
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.
sales tax is only 'regressive' if you measure the expenditure as a percentage of income, which is totally arbitrary. that phony definition plays on people's classism to sway them one way or the other. sales tax when measured against the actual tax base is not regressive and in the US is actually more 'progressive' in that some goods you need to survive have no sales tax.
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