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Microsoft Freeloading In Washington State Courts
reifman writes "For tax purposes, Microsoft reports that it's earned its estimated $143 billion in software licensing revenue in Nevada, where there is no licensing tax, as we discussed a few weeks ago. However, for legal purposes, Microsoft relies on Washington law and its underfunded courts to defend its contracts as it did in Microsoft Licensing GP vs. TSR Silicon. Application of common legal doctrines such as nexus, the step doctrine, and alter ego theory may lead to findings that Microsoft owes the state more than $1 billion in taxes, interest, and penalties."
It's not that anyone cares that MSFT booked the revenue in Nevada.
BUT, That means the Laws of Nevada are dominant, not Washington. Microsoft needed to make one choice, but they seem to want the best of both worlds.
Technology -- No Place For Wimps! Grateful Dead and Jerry Garcia Chatroom -- http://www.wemissjerry.org
I don't have an axe to grind with Microsoft, and I like and use many of their products every day.
That said, I hope they do get nailed to the wall. The Slashdot community often rails against patent trolls venue shopping for their stupid lawsuits, because it's the best chance for a settlement in their favor.
Microsoft is doing nothing different; venue shopping to lessen their tax liability. It's dishonest, immoral, and it should be stopped. If Nevada is such a nice place to operate, then maybe they should have more of their operations there. As it stand, any corporation in the US could open a branch office there, then report whatever in that state, and whatever funds their actual home state would have received vanish.
This looks like a pretty transparent shell game, and I hope the regulators take steps to make sure it won't happen again.
Further there is no down side to moving HQ offshore, to avoid taxes. Becoming a Panama flag flying ship or any such thing. When Somali pirates pirate ships, it is the US Navy that does the rescue even if the ship is registered in Panama. When there is no down side all the corporations will just go where the taxes are low.
Now that we have brain washed most Americans to vicereally hate taxes, whether it makes sense or not, the corporations have no down side at all. And we wonder why there are 40 million Americans without healthcare, why our infrastructure is crumbling and why there is no real wage growth in USA.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
Do you go out of your way to find the way in which you can legally give the government the most possible tax revenue?
It is absurd to suggest that any public company not do the maximum they can to minimize their tax liability. You obviously have an ax to grind with MS, and that's fine, but digging up this kind of garbage is ridiculous. The same statements that you have made about MS can probably be made about 95% of the Fortune 500.
I think the point here was that the system is broken. Not that MS takes advantage of it.
I am the lawn!
Really? I'll best most people in Washington (state) do.
If you don't mind having your OS in Chinese, I am sure it is ok.
It's not that anyone cares that MSFT booked the revenue in Nevada.
BUT, That means the Laws of Nevada are dominant, not Washington. Microsoft needed to make one choice, but they seem to want the best of both worlds.
I know. Unfortunately, a law passed in 2004 bars companies from going offshore to get around the most Byzantine tax system in the World that we have here in the US. Does it cross anyone's mind to change our tax system? Nope. We just keep piling shit on shit, causing this jockeying.
Hate MS all you want, but what they're doing is nothing.
It's NOT me! It's the meds! I'm on 1000mg of Fukitol.
They buy stuff in Washington so they pay sales tax. They buy homes in Washington so they pay property taxes.
They buy stuff so people have jobs selling stuff and those people buy more stuff paying sales and property taxes....
If a state doesn't have personal income tax then they make the money from sales and property taxes. a lack of a personal income tax doesn't mean tax free.
Then you have the other companies that are in Washington because Microsoft was there. If Microsoft pulled out of Washington it would cost the state a lot more than that one billion dollars in additional taxes they may or may not manage to get from Microsoft.
See my blog http://ilovecookes.blogspot.com/ for light hearted technical information.
Well, you make profits here in America? Pay taxes in America. Take the factories anywhere you want. But pay tariff when you bring your goodies here.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
The tax system should be pretty simple. Whenever you earn money you pay a percentage to the government. The reason it is so complex almost everywhere is precisely because companies like Microsoft lobby to get little exceptions. Look at the percentage mentioned in this article. 1Billion in 143Billion? You try to find a civilised place (where anybody sane wants to live; I'm looking at you Bridge to Nowhere Land) where you can pay 0.6% tax.
Why do you think Nevada has such strange taxes? Because they want to attract companies like Microsoft who only do anything at all there because of this. Large amounts of the "intellectual property" "economy" are basically a tax dodge to shift earnings from places where people do work to offshore companies which own trademarks. Again; who's lobbying for "intellectual property" protection and why?
=~ s,(.*),<sarcasm>$1</sarcasm>,g if any_point_you_wish();
Microsoft doesn't owe Washington jack crap, because what's it's doing with this Nevada thing is entirely legal. If Washington wants a piece of the pie then they need to change their state law to prohibit this practice by entities incorporated in Washington.
There are a couple of phrases that are pet peeves of mine because people throw them around without really understanding them.
"Correlation does not imply causation" is, strictly speaking, true, but is often used to refute an argument rather than point out a possible questionable premise of an argument (if you don't understand the difference, don't use this phrase). Correlation by itself does not imply causation, but if the correlation is not a statistical anomaly, it implies either (a) causation or (b) common cause. Therefore it does not refute the argument so much as it says that "maybe the conclusion is wrong, but I can't say for sure without further information".
My other pet peeve phrase is "Absence of evidence is not evidence of absence" which is misleading at best. A more correct statement would be "Absence of evidence before reasonable investigation is not evidence of absence". Once a reasonable search for evidence has been made, especially if said evidence should be reasonably detectable by currently available methods, then an absence of evidence IS evidence of absence.
I've given up being peeved by "begs the question". People are going to use that phrase wrong and no amount of education will help this.
*sigh* back to work...
Do you go out of your way to find the way in which you can legally give the government the most possible tax revenue?
No... I don't make much money, and I've got a couple dependents... So I'm not really trying very hard to pay more than they ask me to... But I also don't put much time and effort into paying less than they ask me to either. I know most people try to find as many loopholes and deductions as they can, which is maybe what you're aiming for... But I don't think most people report their income in an entirely different state to avoid paying taxes.
It is absurd to suggest that any public company not do the maximum they can to minimize their tax liability.
Ehhh... I guess it is true that a public company's first responsibility is to maximize the investment of its stockholders... Which minimizing tax liability will help accomplish... But you really think it is absurd to be surprised that a company would go this far?
The court system is funded by tax dollars. Microsoft uses the court system in Washington. But they don't like the prices that Washington courts charge (their taxes) so they decide to pay the courts in Nevada instead. Fine, maybe you can find enough loopholes and technicalities to make that legal... But how does that make sense?
You know, I like Apple's OS upgrade pricing much better than Microsoft's... When I upgrade to Windows 7 I'm going to pay Apple instead.
You obviously have an ax to grind with MS, and that's fine, but digging up this kind of garbage is ridiculous.
I don't personally have an axe to grind with Microsoft. I use their products every day and am reasonably happy with them. They get the job done, at least. And their products keep me employed. So, no, no axe to grind.
The same statements that you have made about MS can probably be made about 95% of the Fortune 500.
And if your friends jumped off a bridge, would you jump too?
Since when is everybody else does it an acceptable argument?
The problem is that the system is being abused - not that Microsoft is committing the abuse. Of course if Fisher Price were dodging taxes we probably wouldn't see the story here on Slashdot, but that wouldn't make it a non-story or an ok thing to do.
"Work is the curse of the drinking classes." -Oscar Wilde
It is absurd to suggest that any public company should be permitted to evade the law.
So? One criminal at a time.
Tom Swiss | the infamous tms | my blog
You cannot wash away blood with blood
It is absurd to suggest that any public company not do the maximum they can to minimize their tax liability.
It is absurd to suggest that I, the alternative taxpayer, should not castigate them leaving the tax burden to me. If we're all just rationally self-interested parties, then I should be doing everything I can to get Microsoft to pay as much of the tax burden as possible, for exactly the same reasons that you assert that they should attempt to shift the burden onto me.
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Exactly.
Nobody thinks picking a good meal over a bad one is unethical.
But most people agree that picking the best parts off a buffet is at least questionable. Yes, it is economically rational, but it violates basic senses of fairness and cooperation that humans (as social animals) have. Corporations do not have such instincts, and that's why they constantly violate what us humans "feel" is right.
This is just one example. Picking up the best parts, maximizing your own profit. Most of us humans somehow "feel" that you have an obligation with a choice. Yet rational argument will lead us to "it's legal, they're a profit-oriented entity, so they should do it". And yet we can't shake the feeling that it's not ok.
Because it isn't. We've just not managed to write good laws that really express what we think society should be about. That's mostly because we let lawyers write laws, but that's a different discussion for a different time.
Assorted stuff I do sometimes: Lemuria.org
Trying to minimize their tax liability in a grotesquely complex and arbitrary system. Quit being righteously indignant. You do it too. Taxes are not voluntary. Everybody pays what they have to and no more.
Warning: this article may contain humor, sarcasm, parody, and perhaps even irony. Read at your own risk.
I'm not a corporation, so I have to claim the income as being earned right here in the US.
And there's the problem. You hear the claim that a corporation is legally a "person" and therefore needs all the rights and privileges we guarantee to people, but really they're not treated like people. They're not bound by the same rules as people. They don't have the responsibilities people have. They have more rights and more freedoms than people have. And if a corporation gets itself into enough trouble, the people running it can essentially close up shop and walk away without consequences.
Exactly.
But most people agree that picking the best parts off a buffet is at least questionable.
I think "most people" would agree that the whole idea of a buffet is picking the bits you like best.