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Not Just Apple, How Microsoft Sidestepped Billions In State Taxes 595

Posted by samzenpus
from the birds-of-a-feather dept.
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."
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Not Just Apple, How Microsoft Sidestepped Billions In State Taxes

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  • Race to the bottom (Score:2, Insightful)

    by TubeSteak (669689) on Sunday April 29, 2012 @07:14PM (#39840163) Journal

    This is what competition between the States brings us.
    Corporate profits are up, wages are flat, and State tax revenues are down.

    Just wait till property taxes get reassessed downward and State tax revenues plunge even further.
    It's hard to talk about this without sounding like a partisan, but that's only because one side of the debate wants these kinds of anti-social outcomes.

  • by chill (34294) on Sunday April 29, 2012 @07:17PM (#39840191) Journal

    Except no one is moving to Nevada. The open an accounting office there, at most. More likely it is just a PO Box.

    Microsoft's major physical presence is in Redmond, WA and the surrounding area.

    I wonder what Washington would lose in the way of property tax and sales taxes in Microsoft moved wholesale to Nevada -- and most of their employees up and moved. I'll bet it is a damn sight more than $4 billion.

  • "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?

  • Blatant Lie. (Score:3, Insightful)

    by NalosLayor (958307) on Sunday April 29, 2012 @07:23PM (#39840231)
    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 [google.com] 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.
  • by Billly Gates (198444) on Sunday April 29, 2012 @07:27PM (#39840265) Journal

    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.

  • Re:And Google (Score:5, Insightful)

    by AK Marc (707885) on Sunday April 29, 2012 @07:33PM (#39840315)
    The most "fair" tax is wealth, not income. Taxing income hold back those who are trying to gain wealth, so the wealthy (those with the power) prefer taxing income. Not to mention that the rich live off billions with zero income. What were the tax bills on Steve Jobs the last 5 years of his life? He made $1 in salary and didn't cash out his stock, instead, he hoarded it and borrowed against it, which allows him to spend it without being taxed on it.

    But taxing wealth will never happen (except at death, when it is essentially income for others) because the rich don't want it, and counting wealth is hard.
  • by damn_registrars (1103043) <damn.registrars@gmail.com> on Sunday April 29, 2012 @07:37PM (#39840351) Homepage Journal

    Does geeknet, Inc. pay accountants to minimize their tax burden?

    Are you assuming slashdot still brings in enough traffic to make money?

  • by denzacar (181829) on Sunday April 29, 2012 @07:39PM (#39840363) Journal

    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.

  • Re:Blatant Lie. (Score:4, Insightful)

    by TubeSteak (669689) on Sunday April 29, 2012 @07:49PM (#39840437) Journal

    Declaring that MS has no right to do business in states where taxes are lower is...well, disgusting.

    Declaring that MS has no right to shift income to states where taxes is lower is... well, reasonable.

  • by CrackedButter (646746) on Sunday April 29, 2012 @07:50PM (#39840445) Homepage Journal

    Make tax payable at the same rate everywhere. Simple.

  • by Billly Gates (198444) on Sunday April 29, 2012 @07:51PM (#39840451) Journal

    So basically MS does not pay taxes and neither do 80% of employers in Seattle. I go to school for a CS degree. I have to pay for the degree with debt because MS wanted a higher margin. That means part of my labor is free because I paid for the right to work for Microsoft in essense.

    Rates keep going up and are so high now that college grads can't get car loans, save for homes, and owe more than 1 trillion in credit card debt. Why? Corporations no longer pay taxes and universities need funds to keep running.

    So yes the costs are externalized to their workforce and other tax payers.

  • Re:Perfectly fine (Score:5, Insightful)

    by MightyMartian (840721) on Sunday April 29, 2012 @07:51PM (#39840453) Journal

    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.

  • by AngryDeuce (2205124) on Sunday April 29, 2012 @07:57PM (#39840487)

    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?

  • by MightyMartian (840721) on Sunday April 29, 2012 @07:58PM (#39840499) Journal

    Every civilized society throughout history has required taxes. Pay yours, you pathetic selfish cunt.

  • by gstrickler (920733) on Sunday April 29, 2012 @08:05PM (#39840545)

    Which is precisely the reason individuals and companies should take all the deductions they can, and keep that money out of the hands of politicians.

    We need government, and government needs taxes to operate. But the legitimate purpose of government is national defense, implementing a legal/court system, promoting the welfare of the people (actual people, not corporations), promoting the development of infrastructure and standards, and protecting the resources and environment. When you give them more money, they just find more ways to spend it, usually wastefully or for the benefit of a few friends/donors.

  • by Swampash (1131503) on Sunday April 29, 2012 @08:08PM (#39840563)

    I think everyone tries to minimize their tax burden. What makes these companies stand out is the vast extent of effort they put into it.

    I earn an above average salary and I pay my accountant to do my taxes to ensure that I am able to claim all the deductions that I am entitled to. The difference is that I don't have a shell company set up in a tax haven paying me in some nefarious manner that is done to avoid yet another fee of some sort. These stories wouldn't be stories if MS or Apple simply claimed all that they could on their tax statements, they are stories because of the absurd lengths that they go to. I am absolutely sure that /. and many websites try to claim all that they are entitled to, but I would be exceptionally surprised if the lengths that they went to included offshore tax havens, "Offices" set up in a state to claim a different regional address and the like.

    Summary: when you do it that's OK, but when someone else does it, that's bad.

  • by Anonymous Coward on Sunday April 29, 2012 @08:10PM (#39840581)

    The effort that any entity puts into minimizing its tax burden is proportional to the unminimized tax burden. You already admit to taking advantage of the deductions to which you are entitled.

    If your accountant said he could save you $5,000 a year by doing something perfectly legal that will only cost you $200, you are going to tell me you wouldn't jump on it? Please.

  • Right, because (Score:2, Insightful)

    by publiclurker (952615) on Sunday April 29, 2012 @08:14PM (#39840609)
    It should be an honor and privilege for everyone to sacrifice themselves doing the work for self-important idiots like you. Id you don't want to pay to live in a decent society, please feel free to leave. Of course, there wouldn't be anyone for you to sponge off of, so I guess you'll just leach off of your betters while whining like a self-entitled four-year-old.
  • Re:Perfectly fine (Score:5, Insightful)

    by gutnor (872759) on Sunday April 29, 2012 @08:21PM (#39840639)

    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 ?
    Wait, Microsoft, IBM, Boeing, ... 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.
    And the bailout ? Add all the bankers and all their support people (it, pa, cleaner, ...) to them.

    It starts to be pretty crowded on the "them" side.

  • Re:Perfectly fine (Score:2, Insightful)

    by Anonymous Coward on Sunday April 29, 2012 @08:46PM (#39840783)

    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.

  • by artor3 (1344997) on Sunday April 29, 2012 @08:47PM (#39840797)

    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.

  • by strength_of_10_men (967050) on Sunday April 29, 2012 @08:58PM (#39840849)

    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.

  • by SydShamino (547793) on Sunday April 29, 2012 @09:28PM (#39840991)

    Even Warren Buffet claims all the deductions and tax breaks he can, all while pointing out that he could and should pay more. If he, or I, or Fluffeh just gave money to the federal government, it would have no measurable effect on the overall deficit or direction of government spending. If, on the other hand, everyone who could pay more did, we could minimize the deficit when times are bad, pull into a profit when times are good, and try to get on a plan to pay down the debt.

    Voluntary extra payments just let people with empathy and benevolence cover for people with neither. We don't want to enable those people to live a life of selfishness. We want to force them to comply with the will of the majority. And frankly, most of the laws of society exists to force people who lack empathy and benevolence to comply under penalty of imprisonment. Exactly what should be forced and what shouldn't is the matter for strong, healthy political debate. But anyone who argues that no one should be forced to pretend to have empathy or to do anything that benefits society likely lacks empathy and benevolence, and serves to prove why we need laws to force compliance.

  • by the eric conspiracy (20178) on Sunday April 29, 2012 @09:48PM (#39841121)

    First, be more careful of your terminology. Tax evasion is illegal. Tax avoidance is not.

    Tax avoidance is not unethical. It is in fact legally required of publicly held corporations who must operate to the maximum legal advantage of their stockholders.

    If the tax system is not working properly it is the fault of government who writes the rules.

  • by twotailakitsune (1229480) on Sunday April 29, 2012 @10:07PM (#39841227)
    If the corps paying fairly get named, than there share holders could sue for not doing their jobs.
  • by Adrian Lopez (2615) on Sunday April 29, 2012 @10:47PM (#39841453) Homepage

    Publicly traded companies have a fiduciary responsibility to their share holders to save money and maximize return on their investments. Therefore it is the right thing to do.

    I would argue that avoiding taxes through legal maneuvering inconsistent with the law's intent is not an ethical means of satisfying a corporation's fiduciary responsibility to its stockholders.

    More profits flow to share holders, who pay taxes on their earnings, at a higher rate than the corporation does.

    Corporations are "persons" legally distinct from their owners. As such, the way it's supposed to work is that both the corporation and the stockholders are taxed for their particular incomes as individuals. If that seems unfair, then perhaps corporations should not be treated as persons under the law?

  • by tibit (1762298) on Sunday April 29, 2012 @11:16PM (#39841617)

    A corporation, in its IPO papers, and subsequent SEC filings, clearly defines what its goals are. You're entirely mistaken if you think that every publicly traded company must "save money and maximize shareholder ROI". It's a common misconception. Stop repeating it.

  • by PineHall (206441) on Sunday April 29, 2012 @11:24PM (#39841665)

    Tax avoidance is not unethical. It is in fact legally required of publicly held corporations who must operate to the maximum legal advantage of their stockholders.

    I think is could be unethical at times. If the company takes from the community (using city services, etc) and does not put back much of anything, it harms the community. In the short term it looks good on the books, but in the long term, I believe it can harm the company, by harming the community. For an example, the students in town have a substandard education because of a lack of revenue. After several years of substandard education the word gets out and the company has trouble filling positions in that town. Maximizing revenue can be short sighted and unethical. Companies should support the cities, states, and countries where they do business. In the long term, it hurts them if they don't support their communities.

  • by smellotron (1039250) on Monday April 30, 2012 @12:33AM (#39841991)

    Well in this case it was both legal and ethical. Publicly traded companies have a fiduciary responsibility to their share holders to save money and maximize return on their investments. Therefore it is the right thing to do.

    I would argue that the conclusion does not follow, and that a fiduciary responsibility to maximize tax avoidance is necessarily unethical. Put another way, the duty to shareholders should not trump the duty to society at large.

  • Re:Perfectly fine (Score:4, Insightful)

    by rachit (163465) on Monday April 30, 2012 @01:59AM (#39842327)

    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.

  • by Anonymous Coward on Monday April 30, 2012 @03:40AM (#39842649)

    Tax management seems "wrong" only to the stupid. Nothing immoral or wrong in keeping your money as long as it is legal.

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