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Not Just Apple, How Microsoft Sidestepped Billions In State Taxes
reifman writes "Apple's not the only company to save billions in taxes through Nevada as The New York Times reported yesterday. Here's how Microsoft's saved $4.37 billion in tax payments to Washington State and how it's led indirectly to $4 billion in K-12 and Higher Education cuts since 2008. 18% of University of Washington freshman are now foreigners (because they pay more) up from 2% six years ago. Washington State ranks 47th nationally in 18-24 yo college enrollment and 48th in K-12 class size. This hasn't stopped the architect of the company's Nevada tax dodge from writing in The Seattle Times: 'it's [Washington] state's paramount duty to provide for the public education of all children. Unfortunately, steady declines in public resources now threaten our ability to live up to that commitment.' Yes, indeed."
Does geeknet, Inc. pay accountants to minimize their tax burden?
Do you even lift?
These aren't the 'roids you're looking for.
While I oppose the kind of tax dodges that Apple and Microsoft are up to ... I cannot say that any of the problems in this state would be that much better if Microsoft paid all the taxes possible here.
Our local government seems amazingly incompetent.
Since we're taking on the tech giants, here's Google.
Google 2.4% Rate Shows How $60 Billion Lost to Tax Loopholes
http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-shows-how-60-billion-u-s-revenue-lost-to-tax-loopholes.html
It seems to me all the states are in a race to the bottom to make big companies come to their state. The end game is nobody pays taxes, because states are too afraid of losing companies in their jurisdiction. The only way out is for all the states to gather together and put an end to these races to the bottom.
If the courts are going to treat corporations as legal persons, so should the IRS, State, and local tax collectors.
I'm shocked....shocked, I say! Billion dollar companies hiring lawyers to create, and then exploit tax loopholes for their own (and their shareholders') benefit? There ought to be a law...oh wait!
Why is it that when CEOs are payed ridiculous compensation packages people say that "to attract the best talent you have to pay," but when it comes to teachers people say "they should be doing it for the love of it, not the money."
http://www.rootstrikers.org/
They're using the infrastructure in Washington aren't they?
I wonder how much tax revenue Washington State will get if Microsoft just up and leaves the state if Washington State 'punishes' Microsoft. What's 100% of zero again? I'm not good at math but I think it's zero...
"Don't be stupid. Don't drive these companies away."
But is the alternative to let these companies be the de facto rulers, dictating their own terms?
http://www.rootstrikers.org/
As someone who has physically visited Microsoft's "Nevada Tax Dodge", I can tell you that they have hundreds of people employed across three office buildings, doing real work. Here's a street view: http://maps.google.com/maps?q=microsoft+licensing,+GP&hl=en&ll=39.466978,-119.777091&spn=0.014196,0.027874&oe=utf-8&client=firefox-a&hq=microsoft+licensing,+GP&radius=15000&t=m&z=16&layer=c&cbll=39.465765,-119.778911&panoid=SCavTRVJLjF335ijk_l6-w&cbp=12,0,,0,0 The white buildings to the left and right of the frame are wholly occupied by MS while the brown building in the center has one whole floor occupied by MS employees. Declaring that MS has no right to do business in states where taxes are lower is...well, disgusting.
What do you think Microsoft owes you, and why?
-jcr
Because MS uses the infrastructure and expects the rest of us including its workers to pay for the right to work. Where I come from that is slavery when you work for free. True the student should pay for some of it, but MS is the benefactor in recruiting CS students from U of Washington. Infact, U of Washington is cutting its computer science program from lack of funding.
Who gets hurt now? Not the students but Microsoft. It is also not fair for Microsoft to soley pay either as its a public good that benefits other employers in the area and a level tax keeps it fair that everyone pays and benefits.
Businesses use roads to ship products, uses the military to keep the world safe to do business, businesses benefit the most from IP laws, and free trade. I would even say they benefit a lot more than you nor I. IP laws and free trade hurt us more than anything. It is there to benefit employers who do not pay for it but expect it others to pay for it then go in a right wing circle jerk about the evils of welfare moms when they are the worst ones.
MS did the right thing by avoiding taxes as an individual corporation. However, the loopholes need to be closed. Austerity will come to the US soon and you and I will end up paying for things your employer uses through forced higher taxes.
http://saveie6.com/
They're not defacto rulers. They just pay an internationally competitive tax rate.
Forget what you think the tax rate should be... what is the most you can charge before the companies leave the country.
Not only do companies need to offer competitive prices to make sales... countries need to offer competitive tax rates.
That doesn't make the companies the rulers. It merely forces you to be reasonable. If doing business in your country costs the company more money then other places then it isn't reasonable.
Companies will take a zero sum of the whole thing. So if you want higher wages, that's fine... it just gets added to the total cost of doing business. You want to offer healthcare to people? Again, it just get added.
Every time you add something it reduces the amount you can take in taxes before you cross the line and it becomes cheaper to do business elsewhere.
So be careful with it. If you want the tax money, you'll probably have to make doing business cheaper by skimping on something else. Maybe loosening regulations. Maybe making labor cheaper. Whatever. But if you make it too expensive to do business in the US, they'll leave.
Game over. Then you get ZERO in taxes. They are out of your jurisdiction so the regulation is irrelevant. And labor policies are also irrelevant because everyone is unemployed.
It's a balancing act. Don't cross the line.
I've decided to stop wasting my time responding to AC trolls/sockpuppets... so if you want a response from me... login.
Because those people are ignorant, either naturally or deliberately, and think that somehow their own upbringing wasn't just as subsidized by the nanny state they bitch about as anyone else that grew up in a first-world country.
They were all raised by wolves in the forest and had to fight to the death for every bit of sustenance in their lives, didn't ya know? Remember the movie 300? They grew up like those guys, except for without the helots that made it all fucking possible.
In other words, they're full of shit and just don't want to pay it forward now that it's their turn to do like their parents and everyone before them did.
College is for the unmotivated or those who have to be spoonfed their information.
Yeah, you're right.
Let's all hope all the medical staff you ever meet isn't self-taught.
Or that building you live in isn't designed and made by a self-taught architects and builders.
Or that your car, computer, mobile phone, blender, pace-maker etc. are not products someone who's self-taught banged together in their garage out of bubblegum and lint.
Mit der Dummheit kämpfen Götter selbst vergebens
Yes, better to continue prostituting ourselves and our future. Dignity costs far too much, nay?
The U.S. is the largest consumer market in the world and these guys all depend on being able to sell their shit here to continue making their immense fortunes. Think not? Tell them to pack up their shit and take their products with them. Watch how fast they back the fuck down and start paying taxes.
We have the highest corporate rates, not the highest corporate taxes. After all the deductions, credits, loopholes, etc., our corporations do not generally pay more than in other developed countries. GE and Seimens have pretty similar businesses.
From GE's last annual report:
"Income taxes (benefit) on consolidated earnings from continuing operations were 28.5% in 2011 compared with 7.3% in 2010 and (11.6)% in 2009."
From Seimen's last annual report:
"The effective tax rate was 24% in fiscal 2011 and benefited from the income tax treatment of the Areva disposal gain, which was mainly tax-free. For comparison, the effective tax rate of 29% in the prior year was adversely affected by the goodwill impairment charges at the Diagnostics Division, the majority of which was not deductible for tax purposes."
Make tax payable at the same rate everywhere. Simple.
Jonathanjk.com
For the most part they're just greedy assholes who think they've found an ideology that can justify what is nothing more than pure, unadulterated selfishness.
The world's burning. Moped Jesus spotted on I50. Details at 11.
Even if I believed you (and claims like these are a dime a dozen on the Internet), it's at best an isolated case. Teaching yourself PHP is hardly brilliance. Anybody can do it. Teaching yourself to code well, that's a whole other ballgame. The mere fact that you didn't say "I taught myself C++" or "I taught myself Java", but in fact, picked out a language that could best be described as the BASIC for the 21st century suggests to me that your proof of why higher education is needed, not why it isn't.
I'll wager you're the kind of talentless hack that I have to clean up after. I was paid by the hour by a friend of mine's company to fix up a PHP catastrophe coded by some assholes who actually got away with $40,000 for a site that violated every notion of security and best practices. I made $20,000 on it, so by your calculation I'm the talentless chump, but by any reasonable standard, the assholes who ripped off a company for $40,000 for a product that wasn't worth taking a shit on would have been the talentless ones.
The world's burning. Moped Jesus spotted on I50. Details at 11.
Psst, they profit off of my labors, or else I wouldn't have the fucking job in the first place. So clearly, they're getting a little something out of the arrangement, too.
Oh, sorry, is that not properly deferential? Or are we going to suspend all logic and pretend that these guys hire us out of civic virtue alone?
The guy is bragging himself up as a self-taught PHP programmer. That ought to tell you all you need to know. Belief that he actual makes $150k per year is optional.
The world's burning. Moped Jesus spotted on I50. Details at 11.
Didn't Gm pay almost all of it back.
It is not confiscation if its shares are purchased. Its called capitalism. They asked if they needed a bailout and said yes. Obama said fine and purchased the stocks and then became the new owner. As the largest shareholder he fired the CEO for being incompetent. Now they paid nearly all of it back and the new board is fairly independent.
http://saveie6.com/
I am appalled that Microsoft is to blame for the current state of our university.
Oh come off it.
Why not take a few government and economics classes while you are there, and actually learn something about how society and business works.
Microsoft does what EVERY company does, and they are far from the worst offenders. Take a look at Boeing some day with regard to all the special concessions they have extracted from Washington state over the years merely by raising the threat of moving to Kansas. When those threats didn't seem to be working, they actually moved their corporate headquarters to Chicago, and the State caved in on more tax breaks.
It should come as no surprise that Nevada has found ways to attract business with similar offerings. And its no surprise that companies take advantage of it, they would be foolish not to do so.
Washington state has been living beyond its means for decades, based on the steadily increasing tax revenue from employment. When the economy turned down, they tap was turned off, and the over spending became very obvious. Its Not Microsoft's fault. Its not Boeing's fault. Its an overgrown state government, almost always incompetent, often corrupt, and far too long Democrat run.
Sig Battery depleted. Reverting to safe mode.
A Nevada C corporation costs about $475 a year including renewal fee, resident agent, PO box, and business license.
So, everyone everywhere in the USA should incorporate themselves and their family, register themselves as a business in Nevada and the playing field is level again?
I'm not sure that it would work QUITE like that, nor that the IRS would simply shrug their shoulders "We are powerless, alas!" and just let it slide.
I mean... with all due respect, somehow I doubt that you're the first person who came up with that idea and yet it does not seem as if everyone is using it.
I'm guessing that it's cause they are all dirty commie pinko socialist tax-paying bastards.
Mit der Dummheit kämpfen Götter selbst vergebens
Since I really don't have a leg to stand on so I'll try to compare apples and oranges and hope that my shameless whoring for the wealthy will eventually tinkle down upon myself.
The only ones to blame, are not Microsoft who followed the tax laws, but the poltiicians who failed to REWRITE the tax laws such that MS and other corporations would have to pay on all their income (since they reside in washington).
Failed to REWRITE the tax laws?
I see you are totally unfamiliar with Washington State tax policy.
The state has bent over backwards giving concession after concession to Boeing, Microsoft, Starbucks, Amazon, to keep them from moving out of state lock stock and barrel. Not only have the rewritten the tax laws, they have done so repeatedly and done so in a manor that these companies qualify for special exemptions, carefully worded so as not to call attention, but exemptions that realistically can only be taken advantage of by these big companies.
See http://dor.wa.gov/content/findtaxesandrates/taxincentives/incentiveprograms.aspx for a partial list of highly preferential tax dodges.
Once passed, these tax breaks are never subjected to a vote again.
Sig Battery depleted. Reverting to safe mode.
As long as teachers are paid with tax and/or fake inflation money, the people who pay these taxes should be against them.
"us" vs "them" ? Like it is a war, against them, the teachers, nurses, firemen, policemen, soldier, politician ? ... and all the big and not so big companies get boatload of money from the government either directly through contract or indirectly through customised regulation. It also us vs them, the employee of the top-500 companies including their CEO.
...) to them.
Wait, Microsoft, IBM, Boeing,
And the bailout ? Add all the bankers and all their support people (it, pa, cleaner,
It starts to be pretty crowded on the "them" side.
The US has the highest corporate rates of the G7
Sure, highest supposed rates and 3rd lowest effective rate in the G7, thanks to loopholes you can sail a cruise ship though.
upon the advice of my lawyer, i have no sig at this time
Because it's quite hard to do truly objectively. Looking at some numbers doesn't cut it, but the bureaucrats don't see past that. That's all there's to it. If you want to evaluate a teacher, and do it well, it will cost you real money in time of people who will do the evaluation. And it's not something you can do in an hour, nor even in a day.
A successful API design takes a mixture of software design and pedagogy.
Perhaps it's because there aren't any pervasive CEO unions that make it nearly impossible to fire them. (That I know of.)
Not to say that there isn't a real problem with golden parachutes, etc., but there's a difference between a CEO negotiating that with an employer and teacher's unions making it nearly impossible to fire incompetent teachers, and far more difficult for talented, motivated teachers to find work.
You're describing a race to the bottom. It ends in the death of the first world lifestyle. Fuck that. We should charge corporations what we think is reasonable, and if they don't like it, then strip their executives of citizenship and kick them out. If Ballmer had to choose between living in Somalia or helping pay for the civilization he enjoys living in, I suspect he'd suddenly come to a very different conclusion about what level of taxes is acceptable.
And, those states that choose not to tax Microsoft, Apple, and others reap indirect benefits from having big business conducted in their state.
And what are these "indirect" benefits? From TFA -
The company decided to open a small Reno, Nevada office to dodge the tax completely.
And from the Apple article a few days back -
Yet, with a handful of employees in a small office here in Reno, Apple has done something central to its corporate strategy: it has avoided millions of dollars in taxes in California and 20 other states
So it's not job creation - there are only a handful of employees in each office. There's no taxes to collect from the corp. and a relatively small amount from income tax from the employees. It looks like MS and Apple are just using Nevada and really giving little back.
This thread is not about federal taxes. It's about state-level taxes. Incorporating in a state allows principles in an enterprise to protect their own assets against litigation and other liabilities while still operating the business. If they have a good accountant, it can also be a way to legitimately reduce federal income taxes, however it can open up the company to considerably higher state and local tax liabilities in some jurisdictions.
Incorporating in a DIFFERENT state that does not have corporate income taxes, B&O taxes, or other impediments to business is a way to minimize the costs of running the enterprise by legally doing an end run around location-based taxes.
Incidentally, MS has physical facilities all over the state of WA, not just in Redmond. They pay more in property taxes ever year than most people here will ever see in a lifetime. Public Education in WA is primarily financed by property taxes and to a small extent, by the state lottery. The parent article is just alarmist election-year bullshit. There are a million legitimate reasons to be pissed at Microsoft. This isn't one of them.
Nothing worthwhile ever happens before noon
I have to pay for the degree with debt because MS wanted a higher margin.
No, you're going into debt because government-backed loan programs removed the market pressure to hold down costs. If anyone can go to college just by taking out a loan, the colleges have no reason to limit what they charge.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
State and local governments are responsible for the actions of Microsoft and Apple because they passed the laws making such tax avoidance possible. It's unreasonable to think that any company or individual would not try to pay the lowest legal amount.
But the lengths to which Apple, Microsoft, and the other tech giants have gone to influence these laws is what offends me. The tech lobby's biggest priority is to allow high-tech firms to bring back profits from overseas operations that were established precisely to avoid taxes in the first place. http://www.bloomberg.com/news/2011-03-18/technology-companies-lobby-u-s-lawmakers-for-lower-corporate-taxe-rates.html
Companies download software from countries with lower tax burdens, claim their profits there, and now are pushing hard to be allowed to bring that money home free from U.S. tax. It's nice that Apple and Microsoft help Ireland pay for its schools, but not while Cupertino's and Seattle's are cutting educational spending to the bone and beyond.
And if the tiny city of Cupertino has the temerity to ask Apple for something as modest as citywide free wireless, Apple threatens to move out of town, neglecting to point out that, to a large extent, it already has.
Please vote.
I'm going into teaching. I just finished student teaching, I'll have my certificate for Secondary Ed within a month or two. The *minimum* salary I will be paid is clearly posted and easy to find. There's really no excuse to complain about your pay when going in you know what you're getting into. Schools are free to pay teachers whatever they want above the minimum and many do. Teachers are paid middle class income. If you don't want to earn middle class income, then find a different profession.
And yes, teachers actually have to like their job because if the teacher isn't enthusiastic about what they are teaching, the students aren't going to be enthusiastic about what they're learning. I've been living on 30K for the last few years with a nice house, a decent car, etc. The minimum teacher's salary with my credentials is actually a raise so no, I'm not complaining.
Teaching is not a revenue generating profession. CEOs can quantify their value in real dollars and that's how they get paid. On top of not generating revenue, teachers are barely being ranked on results. By what objective metric can we say that a particular teacher deserves X amount of dollars? Currently we just lump all teachers together and refuse to acknowledge teachers as individuals. Any attack on a particular crappy teacher is turned into an attack on all teachers.
So until that changes, teachers will be paid a decent middle class income. And no, they have no room to complain about it unless they want to change the collective mindset into an individual mindset.
Work Safe Porn
News flash: Taxes are a cost of doing business. Costs of doing business are passed on to the consumer. Microsoft and Apple would not pay these taxes in any event. Their customers would pay them through higher prices.
Now that you mention it, that makes sense. Someone needs to pay for a company's use of the public infrastructure, access to the blessings of liberty, etc. If you tax the company and they elect to pass it on to their customers, that means the people who are using their products and services pay for it. But if you don't tax the company, the price is spread over everybody, including those who don't use the company's products and services.
Ergo, taxing companies is more fair to the public at large.
Sheesh, evil *and* a jerk. -- Jade
Someone please set roman_mir's house on fire, so we can see if he's a hypocrite or not. If not, he'll refuse the fire department's help.
FWIW, Ben & Jerry's (the ice cream company) once tried to find a CEO that should be doing it for the love it, not the money. After a so-called "essay-contest" they got Bob Holland. Five years later (and after going through another CEO in the meantime), Ben & Jerry's finally sold-out to Unilever (a british and dutch megacorporation).
What lesson can we draw from this? Perhaps that sometime people (incl. CEOs, teachers and often people managers) you hire that "should be doing it for the love of it", sometimes aren't the best people for you to hire to do that job.
You can say that about nearly every job out there.
Doesn't mean that some effort shouldn't be made to evaluate workers and eliminate poor performers. Its clear that all systems aren't perfect, but no system at all is far, far worse.