Income Tax Quashed, Ballmer To Cash In Billions

theodp writes "Washington's proposed state income tax not only prompted Microsoft CEO Steve Ballmer to spend $425,000 of his own money to help crush the measure at the polls, it also inspired Microsoft to launch a FUD campaign aimed at torpedoing the initiative. 'As an employer, we're concerned that I-1098 will make it harder to attract talent and create additional jobs in Washington state,' explained Microsoft general counsel Brad Smith. 'We strongly support public education, but we're concerned by key details in I-1098. This initiative would give Washington one of the top five highest state income tax rates in the country. I-1098 would apply this tax rate to all income, including capital gains and dividends, and would not permit any deductions for charitable contributions.' Nice to see a company take a principled stand, backed by a CEO who's not afraid to put his money where his company's mouth is, right? Well, maybe not. Just three days after the measure went down in flames, Ballmer said in a statement that he plans to sell up to 75 million of his Microsoft shares by the end of the year to 'gain financial diversification and to assist in tax planning.' Based on Friday's closing price of $26.85, the 75M shares would be valued at approximately $2 billion. All of which might make a cynic question what was really important to Microsoft — public education, or a $2B state income tax-free payday for its CEO?"

Comments

No surprise

[betterunixthanunix]

A corporation is required to maximize the profits for its share holders. Ballmer is a major share holder. Of course Ballmer's profits matter more than public education.

Re:No surprise

[91degrees]

No it's not. Not exactly. The board is meant to run it in the best interests of the company, but this is not always about maximising shareholder profit. For example, an ethical farming company could quite legitimately refuse to sell a parcel of land to a developer which would use the land for purposes counter to the ethics of the company, and could probably be sued by its shareholders if it didn't no matter how much the other company was willing to pay.

He wouldn't be paying income tax on that

[zippthorne]

Income tax is on income, not capital gains. He wouldn't have been paying income tax on his share sale anyway.

And his argument was that it would hurt his ability to attract talent. Unless by talent he meant himself I fail to see how what he does with his assets has to do with this issue.

Re:He wouldn't be paying income tax on that

[Pharmboy]

I also fail to see the story. Ask any business manager and he will be against higher income taxes, in part because it makes it harder to attract new talent when your area has income tax higher than average. That means you have to PAY higher than average just to let the person break even on net bring home income. It doesn't so much matter WHAT the tax increase would be used for, as politicians have a habit of claiming that a tax increase is earmarked for a certain project, and in reality it just goes to the general fund.

Here in NC, they sold the idea of a lottery that way, the "education lottery", as "all the money will go toward education". Sure, and for each million in additional lottery money, they just cut the budget by a million, so the net effect is ZERO advantage to education and for all intent and purpose, the money goes into the general fund. But you can "feel good" about voting for the lottery, since it means you are thinking of the children. Politicians love new money, just as businessmen love low taxes.

Re:He wouldn't be paying income tax on that

[CajunArson]

Stop using logic when Slashdot is having its 2 minutes of hate for Microsoft! And for the love of There-is-no-God don't point out the fact that Ballmer will be paying more $$ to the Federal goverment in Capital Gains taxes in this one transaction than all of the collective readers of this Slashdot story will pay in any form of taxes for their entire lives combined. Ballmer is rich, and therefore must have stolen the money from the Government! Anyone who makes more money than the Slashdot poster bashing the rich is automatically an evil rich bastard!*

* (Exceptions apply to CEO's of companies we are fanboys of, and billionares who dump money on left-wing "grassroots" causes like Moveon.org, with an exception-to-the-exception being Bill Gates who is still evil even though he dumps money on causes that the group would approve of if anyone else dumped the money)

Re:He wouldn't be paying income tax on that

[cynyr]

Depends, I'd love to hand minnesota ~$300 extra this year if it would help fix the damn roads, or build a train, or make the buses work(by work, i mean have enough routes to enough useful places at enough times and not turn a 30 minute drive into a 1 hour 45 min ride.)

Re:He wouldn't be paying income tax on that

[kevinmenzel]

Yup, me. I pay pretty high taxes since most of my income is investment rather than employment income. So from an income tax perspective, I pay a fairly high rate, as my income is grossed up by some percentage, before it is taxed. I also pay sales tax on almost everything (13% HST, I live in Ontario). I'm young, healthy, I usually drive instead of taking public transportation, and when it comes to paying taxes, I'm all for it. Of course I'm a left leaning person who believes that civic and social responsibility are important features of a functioning democracy.

Re:He wouldn't be paying income tax on that

[epine]

Ask any business manager and he will be against higher income taxes, in part because it makes it harder to attract new talent when your area has income tax higher than average.

Miracle! If you frame the question as getting more than giving, everyone pipes up in full agreement. Uniform consensus is usually a dead giveaway that the question is half framed. It's also hard to attract talent if your civic structure decays until only Batman is holding the fort.

Around here people are opposed to the HST (harmonized sales tax). This raises more revenue for the province, and helps to balance the books. There are only two alternatives: increase a different tax, or cut programs (unless you count waving the magic wand of waste-free administration, as much beloved by the pumpkin pie in the sky sect). The programs large enough to achieve the necessary cost savings are most likely the usual suspects: education, health care, and pensions.

What people are really in favour of is decreasing taxes while increasing programs. You can sell that proposition any day of the week. You can even return from the political grave to mobilize heroic opposition. (Damn, I thought we had put a stake in that guy. Bill Voldemort. I dare not speak his name.)

Government is a necessary evil. Solutions proposed by the cheerleaders of polarization (no government/all government) are worse than the disease. The useful debate is on subjects such as accountability and effectiveness, not self-interested wishful thinking by sober capitalists cloaked in the gravitas of expensive suits while fixing their beady eyes on their next quarterly bonus payment.

The joy of capitalism is the pursuit of narrow self-interest. That's why it works, and that's also why you don't solicit the people involved for balanced perspectives.

Besides, fat cheques speak louder than words.

Re:He wouldn't be paying income tax on that

[drsquare]

Is the anybody that loves high taxes?

Europeans.

What amuses me is how America's system of 'trickle down economics', whereby they keep average wages down whilst all the proceeds of growth are sucked up by a largely non-producing elite, has left it in such dire economic straits that only reckless borrowing (both private and government) keeps the whole house of cards propped up, yet no-one actually questions this system. It's as if the more the system fails, the more people believe in it. The more money made by the rich at the expense of the workers, the more people think taxes on the rich are too high; the more average people struggle to stay afloat, the more people think wages are too high and unions should be crushed so people can earn even less.

After firing millions of workers, corporate profits are soaring. So what do the people do? Vote for the candidates backed by those corporations. It's almost as if the American people are committing economic suicide.

Re:He wouldn't be paying income tax on that

[TheRaven64]

It's called 'The American Dream' and is a wonderful piece of propaganda by the plutocrats. The American Dream says that one day, you too could be a plutocrat. If you believe this, then you will always vote for things that are in their interests.

Re:He wouldn't be paying income tax on that

[hedwards]

It's arrogance and ignorance. A lot of people assume that because the Democrats had majorities in both houses and that the Senate had 60 votes with the independents, that the Republicans weren't responsible for anything. The problem is that for the last 2 years, the Republican party has refused to have any involvement in pretty much anything. And with 60 votes in the Senate you need absolutely ever one on every vote, and each and every Senator is the one that made the difference.

They had their chance to contribute to the healthcare bill, for instance, and not only did they opt out, but they chose to make up outlandish lies like the death panel lie and do whatever they could to kill the bill.

Re:And so what?

[mibe]

While Ballmer may not be a corporate superhero from an Ayn Rand fairytale, I have no reason to believe that he did not work for his money, nor have you presented evidence to the contrary. If he has money that he did not inherit, where do you suppose it came from? Did he steal it? Would you mind pointing to some rich people who did work for their money? Of these, which ones deserve to keep their money and which ones deserve to have it taxed away? Or do they all, by virtue of having more money, need to have more taken away?

Re:I live in Seattle.

[LurkerXXX]

You are lying or out of your mind. A sales tax hurts low income people because they have to spend everything they make in order to live, and every cent they make is taxed. The rich can spend a tiny fraction of their income living in style, and keep the rest entirely tax free.

Anyone moderating his post as insightful is a moron.

Re:Microsoft's Lost Decade

[UnknowingFool]

What the OP means is that though popular, the Xbox is in the red for billions. All MS did was buy market share with money. Even with Xbox Live subscriptions it will take 5-8 years before the platform breaks even. Financially, it's not a success story for the company.

Re:And so what?

[Blakey Rat]

So what are you proposing? Some kind of Federal Council of Does-He-Really-Deserve-That-Paycheck? Would it say "yes" to Tiger Woods and "no" to Ballmer? How about Oprah, does she deserve her payday?

Or maybe Ballmer is the *only* one the Government should get to make that decision about? Single out a single person? That's Democratic, right?

What, in practical terms, are you proposing exactly?

Re:I live in Seattle.

[dreamchaser]

You, moron, need to read the national fairtax bill. It reduces the taxes on the poor to absolute 0. If you make below the poverty limit, you get a 100% refund of the taxes, with an increase for each dependent. If you did not work at all this year, you would get a refund of taxes up to the poverty limit, as if you had worked (the same refund, for doing nothing). So your argument is null. Under that tax system, the poor would pay absolutely nothing, and would even get paid, if they didn't work.

Now if you are rich on the other hand, the tax would apply to all kinds of luxury expenses. Buying a ferrari? Well then you are paying 23% of the purchase price in a tax. Buying a plane? The same.

By all means, keep supporting the progressive tax system. I will be more than happy to make millions I can keep shifting through tax loopholes because you are unwilling to close them. The reason a consumption tax is better, is because you can determine your tax overhead at the beginning of the year. No need to manage taxes for your employees paycheck, figure out your deductions, find tax credits, buy your car with your company, buy your vacation home as a company asset. It would no longer matter, because all of these things would become moot points. You would pay taxes on them, end of story.

It's a shame that you started an otherwise cogent retort with 'You, moron', because that typically makes people tune the rest out. Try civil debate sometime; you may find that you get better results.

I doubt 1 million people in WA make 200k

[sycomonkey]

I voted for the income tax, though I didn't expect it to pass legal challenge. Rich people can buy a lot of lawyers. And in the end, we are back where we started: An antiquated, recession-prone sales tax that hits poor people a lot harder than rich. Washington's the sort of state I thought would be daring enough to perhaps someday implement a negative income tax, but if we can't even pass a traditional income on less than 2 percent of the state, then I really don't know about that. I'm just appalled people are willing to accept the status quo. But the most interesting point here is that this also say something about certain (but not all) macroeconomic theories. Some theories rest on the idea that individuals will always make decisions based on their own personal interests. Passing that income tax would have been in the interest of any person that made less that 200k a year, that is to say, about 98% of the state. The prop lowered taxes on these people. They would have received a direct financial benefit. And yet they voted it down by something like 60%. That either means that people are incredibly concerned about the welfare of rich people, or that people are more than willing to make decisions that harm themselves if they are convinced to do so by advertising.