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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."
The bill's lead sponsor is Ross Hunter of Medina ...
The article's update notes:
Update: Rep. Hunter is a former Microsoft general manager.
As does his bio:
PROFESSIONAL EXPERIENCE:
I retired from Microsoft in 2000 after 17 years of service ranging from program manager for Microsoft Access to general manager of the Microsoft Commercial Internet System.
At this point apathy consumes the rage that would normally well up inside me ... Halliburten got contract after contract with a former employee as vice president of the United States ... should this sponsorship surprise me? I guess it doesn't fall under conflict of interest though a large part of me feels it should ...
My work here is dung.
I see the authors are using the phrase "Microsoft to get" to mean the less-common "Microsoft may get if a bill proposed by one Representative is passed by both Congressional bodies in its current form which is not going to happen."
Scintillating!
Politicians get into power by getting corporate sponsorship, once they are there they quite naturally pay back the favour. Really, the Politicians are not much more than Corporate Representatives in Government. There is the minor formality of convincing the public to vote for the company candidate but you just throw money at that and hire good advertising companies.
The US has the best politicians the corporations can buy.
Sadly up here in Canada, its no different as far as I can see. I still believe in democracy, but I am no longer sure we still have it :(
"The first time I got drunk, I got married. The second time I bought a chimpanzee, after that I stayed sober" Arian Seid
To play devil's advocate, giving tax breaks to attract/keep major businesses is a normal thing for state governments. After all, these businesses bring in major direct (income taxes) and indrect revenue (local employees' property taxes, sales taxes etc) to the state. Nine years ago, Boeing ditched Seattle and moved to Chicago partly because of tax breaks offered by Chicago.
Democracy is a compromise, not something that requires or benefits from belief.
"I used to believe in forcing my neighbors to do things, but then they started forcing me to do things."
Nerd rage is the funniest rage.
Even Mozilla dodges taxes because they are a "non profit" and get PAID millions of dollars from google as part of a business deal. But I guess if you pay a tiny percentage of that money to pay for nerds to work on open source, you're immune from criticism on Slashdot.
Right. Because the income dealings of a non-profit corporation are really just so shrouded in secrecy, loopholes and backroom deals.
In the time it took me to respond, Microsoft just wrote off more in taxes than the Mozilla Foundation is worth.
http://www.mozilla.org/foundation/documents/mf-2008-audited-financial-statement.pdf
Blow me.
Pathological kinda promises Path + Logical - but instead, you get stuck with pathetic.
The problem isn't whether companies will make smart business decisions (e.g. moving to friendlier tax areas), it's that this is a highly visible example of "he who has the gold makes the rules".
Everybody knows that wealthy people receive preferential treatment in our society, but nobody likes having their nose rubbed in it. A situation like this one with MS, coming at tax time, just feels like a big middle finger.
Literalism isn't a form of humor, it's you being irritating.
Individuals get taxed on their gross income so why is it so absurd that the poor starving corporations be taxed the same way? As things are now, individuals don't get to deduct anywhere near what corporations do.
Sigs are too short to say anything truly profound so read the above post instead.
If enough people do not believe the system is fair, it will end violently.
It absolutely depends on belief-- partially belief that was brainwashed into us from the time we were in 1st grade and partially belief from propaganda constantly delivered by all the media sources ( "liberal", "conservative" -- no real difference- all are owned by extremely wealthy individuals and corporations and serve the same brainwashing crap).
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
You obviously know nothing about business. Taxing revenue instead of profit is idiotic; this means that a company that has a very high profit margin because their operating expenses are low has a big advantage over a company that has high operating expenses.
For instance, look at Boeing, a big WA state employer. They build big, expensive planes. These planes aren't expensive just because Boeing decides to set the price on them at $250 million. They're expensive because it costs a lot to build a big plane: parts, materials, labor, safety testing, etc. That plane might cost a quarter-billion dollars, but only a small portion of that is profit, the rest is money they have to pay out for labor expenses, for raw materials costs, for parts from their suppliers, etc. Why should they pay taxes on all of that? You get to deduct your student loan and home loan interest from your taxes, as well as other things like medical expenses, and other unavoidable things.
Whereas some company that just does, for instance, motivational speeches, is almost pure profit (except for the rent for conference rooms or wherever).
Only a moron would think it's OK to tax companies on gross income. The effect of this is that companies will do whatever they can to reduce operational expenses, including cutting labor costs, outsourcing, cheapening their parts and materials (leading to poor quality), eliminating testing (leading to people dying when airplanes crash), etc. Every decent governmental entity does not tax on expenses; in fact, companies don't even normally pay sales tax for anything which will be used for resale.
Illinois is set to become the next California. This post points out that Cali gave huge breaks to tech companies.
Giving 'tax breaks' doesn't seem to be sustainable long term for states.
Seriously, this entire state is one huge cluster fuck dictated by a single geographical area. It needs to be roped off, along with Gary, and made its own state.
They should then be required to where corporate logos on their suits just like they do in NASCAR...
I have no problem with this.
OK - so Microsoft employs how many people in Washington?
Around 40,000, as I recall. Let's give about 30,000 as the number of children and another 20,000 for spouses and significant others. Let's devote around 1300 teachers for those kids, and about 400 administrators for those teachers (up to the state level, and I think I'm being conservative). Let's factor in the infrastructure businesses that exist in Washington whose entire existence is centered around Microsoft.
So, between the load on the roads, the educational system, firefighters, police and other essential services, you're entirely satisfied that Microsoft is giving at least as much as it takes from your state? And that the rank and file employee state taxes fairly offset those for the MS cream of the crop?
You live in Washington, have considered these factors, and still believe that Microsoft is a good corporate neighbor?
Okay, so I'm a Microsoft employee, so factor that in however you want. I'm also a citizen of Washington, and it seems like your argument ignores that. I pay 9.5% sales tax on everything I buy, I sort of pay property taxes (I pay apartment rent, but the landlord takes some of my money and pays property taxes). I pay gas taxes, I pay to register my car, I pay stupidly high liquor taxes. There's no state income tax, so I don't pay that, but a lot of Microsoft employees have pretty expensive houses, so they pay a ton in property tax. Sure, there are more/bigger roads in Redmond than would exist without Microsoft, but as a citizen those are the roads that are most useful to me - isn't that why I pay my gas & vehicle registration taxes?
I don't know anything about this specific tax, and don't want to comment on it. But I'm always confused when I see the argument that Microsoft takes from the state, and that we'd be better off without it. I spend a lot of money in the local economy, pay quite a bit in taxes, etc. If Microsoft left, it'd be a disaster for the economy on the Eastside, and probably all of Seattle.
Your argument about the roads, schools, firefights, police, etc. just doesn't make much sense to me. Microsoft employees are citizens like any other (but since they tend to be pretty well paid, they're going to pay more in taxes), so of course they're going to use state/local resources. I am going to live somewhere, and I'll need roads, firefighters, police, etc, so some state and local government is going to tax me and be responsible for providing those services - because Microsoft employs me here, it's Washington/King Co./Redmond. I don't use the schools, I don't cause a burden to the police, I don't get any assistance from the state. I use the roads, parks and libraries. Like a lot of Microsoft employees, I'm young and have no kids, so I'm not using the schools, but I'm paying for them. I have to think that I pay way more into the system than I get out of it. That's fine, but if Microsoft left I'd probably leave too (I'm not a native Washingtonian, and can't imagine I would have moved to Seattle if not for this job), and from the perspective of state finances I think that'd be a loss for Washington.
Maybe we should kick all employers out of the state. If no one lived here, we wouldn't need any schools/police/firefighters/roads at all. The state budget problems would be solved!
Parent marries two flawed ideas that don't belong together and then somehow calls this a justification.
1. Local Government is somehow a spendthrift. This is a Sarah Palin explanation. The people with little comprehension of what their government does whip this explanation out to beat down their enemies. My civics class from grammar school taught me that local government provides public services and infrastructure. You know those awful spendthrifts just wasting our taxes on roads, and sewage systems... Let's do away with law enforcement. Courts too. People that use this kind of thinking have one goal, a return of the truck system. http://en.wikipedia.org/wiki/Truck_system
2. Parent makes the leap that a high-tax environment is somehow hostile to business. The goal of the comment is to make the Corporate Welfare State as big as possible. Shift the entire tax burden away from the corporation to the employee. (not the Owner of the business, the employee)
It is much more expensive, and almost impossible for Microsoft to leave. This is true with any giant-sized super-mega corp. facility. I'm not saying it doesn't happen. I'm saying it happens nowhere near the level of fear the remark generates. The goal behind the fear mongering is to complete the Corporate Welfare State.
http://www.maxineudall.com/2010/02/should-economists-be-sued-for-malpractice.html
Um, the parent was asking why its okay to tax people on gross income, but not companies? Either I should be taxed on Profit too, Or a company should be taxed on Gross income. Cause its just as easy to invent all sorts of crap to never have a profit. Go Google Hollywood accounting.
I mean with my income, I have to purchase a ton of expenses that eat at the total too. I have rent, food, medical care, etc. Just like Boeing has to pay for expenses to assemble their big shiny planes! And you can't get away with the "Well, they hire people and then they pay taxes" argument, cause I give income to the Landlord. I give income to Blue Cross, I provide income to farmers, sales clerks, hell, even the lady that cuts my hair. The economy is a network of economic networks..
but I guess its easier to insult their (the GP's) intelligence in the matter. Hooray, you took basic Economics in High School
What are we going to do tonight Brain?