Slashdot Mirror
For Microsoft, $93B Abroad Means Avoiding $30B Tax Hit
walterbyrd (182728) writes "Microsoft Corp. is currently sitting on almost $29.6 billion it would owe in U.S. taxes if it repatriated the $92.9 billion of earnings it is keeping offshore, according to disclosures in the company's most recent annual filings with the Securities and Exchange Commission. The amount of money that Microsoft is keeping offshore represents a significant spike from prior years, and the levies the company would owe amount to almost the entire two-year operating budget of the company's home state of Washington."
So why this assumption that they should be paying tax on this money to the US taxman? ;-)
Presumably it was all earned outside of the US.
As a UK taxpayer, I'd be much happier if they would pay UK tax on it (maybe we should offer them a deal - 1% of something is a better deal than 50% of nothing
And no doubt French, German, Japanese, Australian, etc tax payers would feel the same way.
So what's so special about the Americans?
(GP here) By the same logic I used in my post: even if you change your name while abroad, you are still the same person, and have to keep paying taxes. Besides, the US is already applying extra-territorial measures against a number of countries (Cuba/Iran/Russia/etc.). If the US govt. doesn't apply this to corporations, it's because the govt. doesn't want it.
I will reply to my own question: this all shows that the US is all about corporatism.
One man talked about this some 80 years ago:
I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism. I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street. I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902–1912. I brought light to the Dominican Republic for the American sugar interests in 1916. I helped make Honduras right for the American fruit companies in 1903. In China in 1927 I helped see to it that Standard Oil went on its way unmolested. Looking back on it, I might have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents.
http://en.wikipedia.org/wiki/Smedley_Butler#Lectures
The tragicomic part is that US people are expecting these corporations to give something back... They will just leave and find a more profitable place. Corporations are said to be people, but in reality, they don't even have a nationality, their only authority is money.
Despite the URL, that page only talks about individuals, not companies. Can you show me I'm clearly wrong for companies? Additionally it says the states do their own thing as well and some simply ignore tax treaties.
That said, I might well be wrong! The US tax code is notorious for being amongst the worlds most complicated, in fact it probably is the most complicated tax code in the developed world at least. So if I'm wrong that would not be surprising, although even if your statement is correct for companies too it still amounts to paying tax on the same income twice. Even if it's at a lower rate than US income, this is nonetheless double taxation.
Most of it is not actually earned abroad, due to accounting practices. MS USA sold all of their IP to MS Ireland, and pays MS Ireland a fee for every copy of MS software sold in the USA. That fee is almost certainly for an amount nearly (or actually) equal to the sales price. As a result, they claim a write-off on every title sold that's just about equal to that title's sales price. As a result, MS USA says they earned nothing on those titles. It's all based on technicalities that are unavailable to real people. Only corporations are allowed to account for profits and losses in such a way as to reduce their tax bills to nothing.