Microsoft Tax Dodge At Issue In Washington State 681
newscloud writes "With Washington State facing a billion-dollar biennial budget deficit, the spotlight again shifts to Microsoft's software licensing office in Reno, Nevada. 'Although the majority of its software development is performed in Washington State, Microsoft records its estimated $18 billion in licensing revenue per year through a corporate office in Reno, Nevada where there is no licensing tax. Just by enforcing the state's existing tax law from 2008 onwards, we could reduce Washington's revenue shortfall by more than 70 percent. Alternately, we could pursue the entire $707 million from Microsoft's thirteen years of tax dodging and cover most of the expected deficit going forward.' We have discussed Microsoft's creative capitalism in the past."
Re:Disappointing though it may be... (Score:5, Informative)
Re:Disappointing though it may be... (Score:1, Informative)
But MSFT employees do figure heavily to sales and property tax revenues... Seattle wouldn't be nearly the town it is without them, to say nothing of Redmond or Bellevue.
Re:C'mon - like this isn't standard practice (Score:4, Informative)
correct; if lawmakers don't want corp entities USING the laws, then why have the bogus abusable laws in the first place?
"waaaaah! they're taking money from my state."
hey, its way worse than that; most companies in tech are sending money OFFSHORE, never to come back again, anyway. playing the 'tax and income game' left and right.
close the loopholes and stop letting corps get away with murder.
duh!
but you cannot force a company NOT to use things that are legal. I hate MS but even I can see this.
Re:Typical liberal response (Score:1, Informative)
actually, liberals reserve the right to JUDGE the law, itself.
dems and repubs are stuck in the 'its a law, that's all there is to it, follow it' idea. but liberals want to think for themselves, at every turn. a Good Thing(tm) as it raises us from robots to thinking human beings.
while I'm at it, I'll put in a plug for jury nullification (fija.org). another concept that 'law abiding citizens' mostly don't know about or think is 'wrong' somehow.
Re:If it was legal, what can they do? (Score:4, Informative)
The guy writing this article is some loony activist one man army who's been arguing this issue since at least 2004. Who knows his motivations, but let's not read into this article as though it's some sort of concerted effort that Washington Legislators are taking seriously.
Re:Disappointing though it may be... (Score:4, Informative)
I don't know about Washington, but my state, California has plenty of hits when you google "companies leaving California"...
Anecdotal information only goes so far.. personally, I know of a local printing company that has left my state, taking 28 jobs with it.
There are plenty of other stories. My brother in San Diego told me about Buck Knives leaving town a few years back, taking or losing hundreds or more California jobs.
Competition among the states was what the US Constitution once stood for - let each experiment and see what kind of environment produces the greater good. Taxes are way up there in perceived "badness", among the productive.
Re:Dodgy statesmen (Score:5, Informative)
Re:Microsoft Is the Epitome of Evil (Score:2, Informative)
When I take a look around, I'm pretty sure that avoiding taxes is a very American behavior.
(do note that Microsoft employees do pay things like property tax and fuel tax, it isn't as if 100% of their activity is free riding, it would take a very sophisticated analysis to clearly decide if the presence of the company is a net drain or benefit to the state's resources (though I would not be particularly surprised to find out that the presence of thousands and thousands of wealthy people was actually a good thing...))
Re:Microsoft Is the Epitome of Evil (Score:1, Informative)
This new bridge will basically link two Microsoft parking lots. It will be a public road but leads to no place of interest if you're not a Microsoft employee. Guess who pays for the construction costs? Hint: it's not Microsoft.
Horse Shit. It connects the HP campus and the Group Health campus. Anyone who lives and works on the east side knows this. It will be a public street, open to all, and Microsoft is paying 50% of the construction costs. Go spread your lies somewhere else.
Re:Microsoft Is the Epitome of Evil (Score:3, Informative)
There is currently a new bridge being built over state route 520, which runs right through the Microsoft campus. This is being done to alleviate congestion on the 40th Street bridge. This new bridge will basically link two Microsoft parking lots. It will be a public road but leads to no place of interest if you're not a Microsoft employee. Guess who pays for the construction costs? Hint: it's not Microsoft.
You sure managed to cram a lot of inaccuracies in such a short statement. A few corrections.
The project is one that regional planners have long thought was necessary to deal with both the current and the projected future growth in the regions, but that they had trouble funding until Microsoft offered to pay half. The Puget Sound Regional Council, when it evaluated the technical merits of hundreds of projects as potential recipients of stimulus money, gave this project a perfect score.
Re:Only a couple of problems with that. (Score:3, Informative)
A businessman (lets call him Warren) who earns a huge amount of money, but invests it back (creating more jobs)
If a business will profit from expansion - it will go ahead and expand. Personal income tax rates on the owners are completely and utterly irrelevant to this equation, as anyone who's taken 6th grade economics should know.
Re:Disappointing though it may be... (Score:1, Informative)
I left MA for TX due to income tax. Most of my coworkers did the same, except from California.
Re:Dodgy statesmen (Score:2, Informative)
although considering the fact that individuals with low income do not have the option of saving it's also a tax that is levied on 100% of the income of the poor and an increasingly smaller percentage as individuals earn more. It's a capitalists dream. It taxes all of the income of the poor and only a very small percentage of the income of the super rich.
Re:Dodgy statesmen (Score:5, Informative)
What is the state income tax like there?
I can't speak to any of your other questions, but Washington state has no income tax (yet).
Re:Dodgy statesmen (Score:5, Informative)
As the Supreme Court has made clear:
tax avoidance != tax evasion
The first is legal. The second... not so much.
Re:Dodgy statesmen (Score:4, Informative)
They've done a lot of that, too. For example, they cut the University of Washington's budget by 13%, which resulted in a 14% increase in tuition rates, and severe cuts to many graduate departments, etc., which necessitates a reduction in the number of classes taught. So, we're accepting fewer students and depressing the graduation rates of those who are already here. That provided the state with an extra $73M for their budget.
Similarly, King County is cutting almost all of the fat. County health is getting cut, county parks are getting cut, etc. So, in the impoverished unincorporated areas, we're cutting all public service, except for courts and police. I can't recall what that cut netted us, but it was on the order of a few million, and the County is still coming up short.
And we've got a case of blatant tax evasion to the tune of $700M. Yeah -- let's stick it to the poor people and the college kids and protect our holy corporations who do no wrong...
Re:Dodgy statesmen (Score:2, Informative)
No, you do. While all taxes are a disincentive to production, taxing people on what they spend instead of what they earn encourages savings.
Which is precisely the opposite of what you need in a healthy economy. You want people to consume so that production can increase.
Re:Dodgy statesmen (Score:5, Informative)
...many companies incorporate in Delaware for the tax breaks they get, even while most of their manufacturing/business/warehouses are in other states.
This is a common misconception. Delaware was attractive not because of tax breaks (there is a DE corporate tax), but laws that shield large corporations against lawsuits from shareholders. That is the reason big corporations incorporated there. And they kept offices elsewhere to avoid the taxes :)
This has been changing though as other states (such as Nevada) have adopted similar laws.
Re:Dodgy statesmen (Score:4, Informative)
On Washington State "thriftiness"... ... ... ... ... ... ... ... ... ...
http://www.washingtonpolicy.org/Centers/government/policybrief/08_guppy_piglet.html [washingtonpolicy.org]
Legislators work in a world of unending spending requests. When there is no countervailing pressure for tax-cuts, it is often easier for lawmakers to just say "yes" to the special interests. As The Seattle Times reports, "Since 2005, lawmakers have spent or allocated nearly $270 million on earmarks in the capital budget... That's more than the previous 15 years combined."[ii] The following chart illustrates the long-term trend.
Washington is one of the most heavily-taxed states in the nation. In all, residents pay more than 50 different kinds of taxes at the state and local level. The large number of taxes, combined with a growing economy, is why a record level of revenues is flowing into the treasury.
In historical terms, Washington's level of taxation is perhaps the highest ever. Today, Washingtonians pay more in taxes than they do for food, clothing and transportation combined.
Suquamish Inviting House, Longhouse and Museum
$2,550,000
Just one pork item, like $2.5 million to benefit the owners of a wealthy tribal casino, represents the entire yearly tax contribution of 1,059 Washington taxpayers.
The Ship Nobody Wants
$4.5 million
Battle Equipment the Army Can't Use
$6 million
Ending wasteful spending at Washington State Ferries
$9.6 million
Tacoma Narrows Bridge Lights
$1.5 million This earmark is to provide tax-funded night-time lighting decoration for the new Tacoma Narrows Bridge.
Hiawatha Artist Lofts, Seattle
$1 million
One million dollars is devoted in the state budget for 61 units of living/work spaces for artists, plus five commercial storefronts for artist-related businesses.[xix] ... ... ... ... ...
"SayWA" Tourism Campaign
$442,000
Money Stolen from the Crime Victims Fund
$431,376
Animal Massage Practitioners
$142,000
Medicaid Checks for Services to Dead People
$44,687
Pension Payments to Dead People
$254,694
Local Community Projects
$132,619,000
(long list of things like $130k for an opera house).
Governments always wave the baby in front of the budget cut gun. But the reality is, they are sitting on a rich leather $750 executive chair behind a $10,000 desk while they do it.
Re:Texas has no income tax, just sales tax (Score:1, Informative)
Hate to burst your bubble, but here in North Carolina, we have sales tax on our food, but only because the state sales tax applies to EVERYTHING. And they actually just increased it to I believe it's 7.75%
Re:Dodgy statesmen (Score:3, Informative)
Well.. not only is working in one state, residing in another, and claiming taxes in your state of residence not "pretty blatantly illegal"* .. but you're treating a corporate entity like it was a person. Which it isn't.
There are none of Washington State's resources utilized in the production of licenses. None. How do I know? Because the license key is a number. The software package that makes the license valuable, well now, thats all done by employees in Washington state, in facilities in Washington (and elsewhere, I'd imagine), using equipment put in service and accounted for and depreciated under federal and Washington tax codes. For which, Microsoft pays taxes. Income, property, sales, fuel, whatever. So, while you may claim that the license revenue should be Washington state's tax jurisdiction, I'd be pretty careful about making such a claim. Yes, the license is pretty worthless without the software. But the software is pretty useless to the license holder without an install disk. Which, I can't be certain of, but probably isn't pressed, boxed, and wrapped in Washington. Also, the software works (mostly) without a legit license. So the license revenue is, logically, the cost of staying legit. Which, as I said, has nothing to do with any usage of Washington state resources. So how much of this lovely revenue should be taxable by which states again? See, when states start taxing a bunch of activities, self-interested entities shift those activities as best they can to eliminate tax burden.
Too bad, so sad, Washington. They want to tax an activity that is incredibly easy to relocate and difficult to apportion value to all the locales that support it.
*I'm aware that it isn't quite that simple. Nothing is, with the tax code.
Re:Dodgy statesmen (Score:2, Informative)
Living in Delaware, I'm well aware that many tiny buildings with very few employees are the corporate 'headquarters' for companies that do no significant business here.
Maybe it's wrong, maybe it's not. Companies do tend to be careful, though. I'm not sure what to think of the situation, but I've seen a lot of bizarre corporate behavior here, so if that's any indication, this might warrant additional investigation.
Re:Only a couple of problems with that. (Score:4, Informative)
Income tax = progressive
Sales tax = regressive
There is no 40% of people who don't pay sales tax
Details about Washington State Royalty Tax Law (Score:4, Informative)
Re:Ya no kidding (Score:2, Informative)
Re:Ya no kidding (Score:3, Informative)
>>>The [interstate commerce clause] forbids this. It's in the constitution...
Actually states are allowed to forbid the sale of certain products, and there's nothing the Congress can do about it. Just ask Utah which forbids the sale of several products their citizens find objectionable. See Amendment 10 which also in the constitution...
Re:Dodgy statesmen (Score:3, Informative)
American politics is a cess pool of greed and corruption, peppered with occasional idiocy used as a patsy (Bush, anyone?), run by the political and executive classes who use their concentrated wealth and law obfuscation to exploit the working class.
However, as long as the general public continues to allow themselves to be riled up to an extreme in one direction or the other without question to what they read an hear in the biased (again, either direction depending on source) media, we will never have the power to truly correct the glaring flaws that have opened up in our system over the last several decades.
Re:Ya no kidding (Score:2, Informative)
Re:Disappointing though it may be... (Score:1, Informative)
I was shock someone would say this, so I decided to get some facts. [retailers.com]
I'd say 1.5% is pretty steep given those numbers. Note the article goes on to say that mall stores average 0%. Of course, if everyone is taxed the same, you can raise prices to "pass it on" to the consumer.