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

And so what?

[Flozzin]

Just because the CEO then uses the tax free environment he helped create the article questions his intentions? Of course it was going to benefit him greatly, and just because it does, doesn't make any of the prior points against the tax less valid. Its his money, he worked for it. Get over it.

Re:And so what?

[Missing.Matter]

Wow, bitter much? I can see your job sucks, but I can guarantee you Ballmer makes more billion dollar decisions before he puts his pants on in the morning than you'll make in your entire life.

Re:And so what?

[sjames]

Why replace him with a random schmuck just because they'll work for nothing?

It's common enough for people below the C level. So much so that it has a special name: "offshoring". So why not? The unemployment lines are filled with people who were ready, willing, and able to work for one company for life and who routinely went the extra distance when it was necessary.

Quite a lot of people routinely go over 8 hours a day and quite a lot of people have a much bigger impact on people's lives than Ballmer. They typically make 40-100K/year.

Odds are, there's a nuclear plant close enough to you that you are really glad the people running it have made good and timely decisions every day. Their decisions affect millions of lives. The level of impact could be described fairly as life or death. If they screw up, they could easily kill more than 90,000 and leave a fair portion of their state uninhabitable for generations to come. People in other countries could easily suffer for their mistake. They don't make even 10% of what Ballmer does.

Airline pilots work crazy hours, rarely get to sleep in their own bed, and routinely have hundreds of lives in their hands. They would work more hours except that the FAA has determined that their job is sufficiently difficult that they cannot possibly do so without endangering lives. If they screw up, those lives will be over. Screw up enough and thousands more on the ground will die as well. Likewise they don't even make 10% of what Ballmer does. Instead, they keep getting asked to take pay cuts.

Meanwhile, Ballmer is "so confident" in his own ability that he wants to diversify in case MS flames out.

There's more to it.

[Starteck81]

The biggest reason why I-1098 didn't pass has little to do with Ballmer. I believe the biggest reason was that in only two years the law makers could modify the tax to include all Washington tax payers, not just the rich. There is quite a large distrust of the spending habits of the progressive law makers here so 60% plus of voters decided not to risk it.

Microsoft's Lost Decade

[Anonymous Coward]

It is staggering to look back at the decade Ballmer has been in charge:

* Stock price has been effectively flat for an entire decade

* Lost hundreds of billions in market cap since Gates left

* The cellphone market failure

* The Xbox fiasco

* The search market failure

* The online services failure

* The portable music market failure

* IE's stagnation and market-share shrinkage

* The resurgence of OS X market-share

If Ballmer is soon to get dumped from the top spot at Microsoft it is bad news for Linux and Apple whoever replaces him can't possibly do any worse than Ballmer's disastrous decade at the helm.

The payday comment is a lie

[Anonymous Coward]

> ...a $2B state income tax-free payday for its CEO...

He is selling the stock this year. The new income tax wouldn't be retroactively applied to this year. Whether it passes or not, it has no effect on the sale. Why lie and try to make it appear that they do? Your agenda is showing.

Why I voted against WA state income tax

[XaXXon]

Right now in washington, the income tax is political suicide. In order to take more money, they're trying to get the voters to pass it. Sure, they can't adjust it for 2 years, but after that.. well, we'll just lower the threshold by 10%. It'll only affect a small number of people. The rich people will already be taxed (so why do they care), and people below $180,000 still won't be taxed, so why do they care?

Next year.. wash, rinse, repeat.

That's why I voted against it even though I wouldn't have been taxed.

Taxes are going up on your entire net worth

[roman_mir]

Don't you worry about income taxes.

I am against income and payroll taxes (that's my bias) I am also pretty much against all government.

---

Realize that taxes are going up. Not only taxes on your income, don't you worry about your income, taxes are going up on your entire net worth.

Gov't is printing money.

Fed is printing hundreds of billions of dollars.

This automatically takes away your purchasing power.

Inflation is rampant.

Fed is causing rampant inflation by printing money. By printing money they are taking away your savings in form of dilution of your purchasing power.

---

Your purchasing power is going down with every new dollar the Fed is printing.

Note, that the Fed came out (helicopter Ben) with a promise to print 600 Billion dollars more over the next 7 months.

That's just by June and it's about equal to the amount that the Federal gov't will borrow over the same amount of time. This means they are the lender of last resort to themselves. This also means that they know the US bond is on its last legs - nobody wants to buy more.

US gov't is broke. It's monetizing its debt and it's trying to cover that they are doing it, but it's not working as a cover, it's too "in your face".

Abandon ship, get rid of your US holdings, they are becoming worthless fast.

There's a lot more to this than Ballmer

[mschuyler]

I live in Washington. Here's the deal. The State has increased its spending 80% in the last ten years when inflation and population growth has been 40%. No one can see a 40% increase in services. They just spent more money. Now that the recession has reduced the state coffers the State is whining that it has a deficit. If the State went back to a 40% growth rate over the last ten years there would BE no deficit.

Now, this is like the umpteenth time the voters have said NO to s state income tax. Why? Because we know it's just the camel's nose in the tent. They're trying to get a class war going so all the people will want to tax the "rich," then when that is implemented, in two years the state legislature will reduce the threshhold so that we all pay or inflation will be so bad we'll all be in the 'rich' bracket. No one trusts the legislature.

One of the ploys was to say "it's for the children." Right. Just like the lottery was supposed to be for education, the legislature has shown its stripes so many times by raiding earmarked funds that it makes a travesty of the claim.

Voters also passed, for the third time, an initiative calling for a 2/3 vote of the legislature to raise taxes and fees. The legislature has managed to override the last two. One of the complaints was, why should 51% vote for a 2/3rds majority? OK. This time we approved the intitiative by 67%. Capiche? We don't have a revenue problem in Washington. We have a spending problem.

I don't care one whit what Ballmer & Co do with their money. I just know my money is more precious than his because I don't have anywhere near what he does. And I'm tired of having it confiscated by a state that doesn't understand it has to live within its means.

Re:No surprise

[Locutus]

Selling close to 20% of his stake in Microsoft seems rather interesting. Was the tax increase so great that his believe in the growth of Microsoft, or lack thereof, exceeded his ability to come out ahead down the road?

That's a large chunk to be selling off just because of a tax. 75 million shares when out of something like 400 million total is more than just a tax issue.

Behind the scenes, he must not have much faith in Windows Phone 7 making them much money. But he would know that Microsoft has lost billions and billions on lots of products which have been, and continue to be, money pits.

LoB

Wrong. California is no longer a jobs magnet.

[Nova Express]

You're wrong. High tech companies are fleeing California for low tax states. In fact, high earners inevitably flee high tax states for low tax states:

Examining IRS tax return data by state, E.J. McMahon, a fiscal expert at the Manhattan Institute, measured the impact of large income-tax rate increases on the rich ($200,000 income or more) in Connecticut, which raised its tax rate in 2003 to 5% from 4.5%; in New Jersey, which raised its rate in 2004 to 8.97% from 6.35%; and in New York, which raised its tax rate in 2003 to 7.7% from 6.85%. Over the period 2002-2005, in each of these states the "soak the rich" tax hike was followed by a significant reduction in the number of rich people paying taxes in these states relative to the national average. Amazingly, these three states ranked 46th, 49th and 50th among all states in the percentage increase in wealthy tax filers in the years after they tried to soak the rich.

Here's a comparison between California and Texas that explains, in great detail, how and why Texas is kicking California's ass.. This is also why more than half the new jobs created in the last twelve months were created in Texas. Another reason is strong vs. weak or no public sector unions. One thing that articles notes:

Renting a 26-foot U-Haul truck to go from Austin to San Francisco this July would cost you about $900. Renting the same truck to go from San Francisco to Austin? About $3,000. In the great balance of supply and demand, California has a large supply of people who are demanding to move to Texas.

High tech employees are fleeing California for Texas, because they can keep more of what they make, the government isn't going bankrupt, and the roads and schools are now better in Texas. Despite all the money California spends on a a bloated public sector, the actual core services delivered are worse in California than they are in Texas:

“Today, you go to Texas, the roads are no worse, the public schools are not great but are better than or equal to ours, and their universities are good. The bargain between California’s government and the middle class is constantly being renegotiated to the disadvantage of the middle class.”

Here's a slightly older analysis from 2007. Since then, of course, things have gotten better (relative to the rest of the nation) for Texas and worse for California.

Low taxes and small government create jobs. High taxes and big government destroy jobs.