Microsoft To Get $100M Annual Tax Cut and Amnesty

reifman writes "Despite a $2.8 billion deficit, Washington State's House Bill 3176 would provide Microsoft with an effective $100 million tax cut annually and possible amnesty on its $1.27 billion Nevada tax maneuverings. Under current law, all of Microsoft's worldwide licensing revenues of approximately $20.7 billion annually are taxable at .484 percent. Under the new law, only the portion of software licenses sold to Washington state customers would be taxable. Ironically, after slashing Microsoft's tax burden, HB3176 directs the Department of Revenue to crack down on 'abusive tax transactions' like those in Nevada — except for a loophole that may provide Microsoft amnesty on its twelve year practice. The bill's lead sponsor is Ross Hunter of Medina, home to Bill Gates and a number of current and former Microsoft billionaires and multi-millionaires, and other areas around Microsoft's corporate campus."

Comments

Re:Bill's Sponsor Also Ex-Microsoft Employee

[Attila Dimedici]

No, Clinton got involved in a war in former Yugoslavia, so nobody would pay attention to the fact that he was a serial sexual abuser of women subordinates.

Re:Bill's Sponsor Also Ex-Microsoft Employee

[ahabswhale]

ROFL...2.2 billion? are you fucking kidding me? That's chicken feed compared to what they got under Bush. Oh, and thanks for all the helpful references from conservative sources. Very unbiased, I'm sure.

Anyway, why don't you post some articles about how they moved their headquarters to Dubai after fucking the country over with all the taxpayer money they waste?

Re:Bill's Sponsor Also Ex-Microsoft Employee

[iccaros]

I worked for the Clinton White House dumb ass. but believe what you want.. its simple to say.. the sources I do not agree with are all conservative. the quotes come from the LA times for one.. but can't teach stupid..

Re:Bill's Sponsor Also Ex-Microsoft Employee

[sumdumass]

Oh... and just so we are clear on something: Boeing also does business in many states. So, pray tell me how Washington could tax them on their corporate gross revenue? No matter where the planes were sold? Please... explain that one to me. In the process of finding out, you might actually learn something.

OMG, are you that stupid? Boeing doesn't have subsidiary corporations operating solely in different states. And for the ones they do have, only the amount of business conducted within the state is taxed. Now think about this. Suppose Boeing operated in all 50 states and all 50 states have a 3% gross receipts tax and a B&O tax just like Washington does. Seriously, think about that, now at 3% (I know Washington may be a different number but your same principle applies and 3% is just illustrative) times 50 states, then 150% or gross revenue would be needed to satisfy their B&O tax obligation. How in the fuck would any company supposed to be able to do that? They can't take in more money because it's subject to the same taxes. 150% of $10 would have the same effect as 150% of $20, that is to say that no matter how much they brought in, they would be 33% short in meeting their tax obligations. And this is without even mentioning costs and so on.

Do you really think things work the way you think they do, or do you think you should take this as an opportunity to find out a little more about the situation? In your next paragraph, you do admit that it's limited to the activities within the state as with the background of the Boeing case. However, Boeing did not incorporate into a separate company when it left the state, it's the same company which is different from the MS situation.

Believe me, I understand your arguments. But I am trying to convince you that you are wrong, because you are. Microsoft might be exempt from some kinds of taxes because it is incorporated in another state... but not the B&O tax, which has nothing to do with where the business is incorporated, because of its "substantial nexus" in Washington State.

You are missing a key point here. MS is incorporated and operates in Washington, MS licensing is incorporated and operates in Nevada. They are in fact, for all legal purposed, two completely separate companies. This makes it significantly different then Boeing because Boeing remained the same entity and kept a portion of the entity within the state. MS is not the same entity as MSLI and MSLI does not operate in Washington State.

It doesn't get much more straightforward than that. Despite your claim that Washington only has jurisdiction in Washington, this very clearly says otherwise: "A state tax on interstate commerce does not violate the commerce clause so long as the tax is applied to an activity with a substantial nexus with the taxing State..." Note that phrase: "A state tax on interstate commerce..." Interstate. Get it? Commerce outside of Washington! In other words, for this kind of tax Washington does have jurisdiction.

The problem here is that you are looking at the word Microsoft in the name and assuming they are the same legal companies. They are not, they are completely separate entities and the extent of MSLI's presence in Washington equates the the equivalent of a mail order house even though Microsoft corp operates within Washington. This is further obfuscated because the product that MS sells is basically a copyrighted set of code. Now MS can sell the rights to reproduce and distribute the code to MSLI for basically nothing (Even less then the cost of producing the code because MSLI is owned by MSTF and profits from MSLI would be deposited with MSTF as a share dividend) and MSLI can in turn license the code for whatever it wants- independent of operations going on in Washington. This further decreases Washington State's jurisdiction because these abilities are granted within federal law as well as backed by the US constitution giving congress the power to make laws governing copyright.