That this sort of thing is far more outrageous than Obama's tax hike on the wealthy. If I were king of the world, this is where I would start to correct our ridiculous defecits - corporate tax evasion has reached insane levels. What's interesting is that US tax rates are among the highest in the world. (Note however that this ignores things like value-added taxes). Of course, what this ignores is all the loopholes that allow for the following astounding statistics (note this article rails on Bush, which is justified, but really not the focus I am aiming for): This is really quite ridiculous and it would seem to me that this might be a dandy place to start rectifying here and there - although I suppose that the pragmatic counterpoint is that corporations provide jobs and high taxes would encourage them to move elsewhere. Thoughts?
It only makes sense, corporations have the money to hire lobbyists, who get preferential tax changes inserted, leading to corporations being able to write down their tax liability. This is the same kind of thing that has happened with the tax liability of the wealthy. The rich have seen their tax liability drop by nearly two thirds since WWII while the rest of us have seen no net reduction in our tax rate in that time. I am not arguing for punitive taxation, but there is a reason that in the '40s and '50s we were able to afford to build roads, bridges, and schools while today we see trillion dollar plus deficits.
theoretically, the tax money corporations saves would filter into salaries and stock prices. Which in term generates income tax and cap gain tax, plus you might gain a few new jobs in the process. Might just be a wash in the end.
That would be true if the corporations didn't already have enough to create new jobs. Do you believe Microsoft is just getting by, and doesn't have enough to invest more in anybody's salary, or a new job here and there?
it's simple what we need to do. There are just way too many taxes. Corporate taxes, capital gains taxes, federal income tax, state income tax, sales tax, property tax, TAX TAX TAX.. We need to cut our crap programs and reduce spending. Then maybe they can stop taxing us so much and we can actually increase productivity and increase jobs and wealth for all.
I would wager that Washington would be in big trouble if Microsoft got up and left. Life would be tough if they lost thousands and thousands of high paying jobs. Here is an idea. Cut spending! Government jobs pay well in Washington.
As has been very handily shown by our resident republocrats in congress, this is really easy to say but almost impossible to achieve. More's the pity. Queue Toqueville.
Do you not agree the extra money corporations keep would be reflected in salary and stock price? If we are taxing income and cap gains, my point is those money would eventually come back in as tax dollars in one way or another.
I'd be hesitant to rely on microsofttaxdodge.com as the sole source for a particular tax issue related to Microsoft. I've no doubt Microsoft engages in all sorts of slippery tax structures -- but this one seems to be more of a clearing up of where royalties are taxed. The bill itself says it is capturing tax revenue on sales to Washington customers that wasn't being assessed before. The $100m/y and $1.2b in tax "evaded" are based on the author's interpretations of how the tax law should apply to MS -- which obviously differs from MS's and seems to differ from the Washington tax department's or the courts (if in fact it has ever been challenged). Given he's projecting the tax that would have been from 1997 (and tacking on potential penalties and interest for effect) if it was assessed the way he thinks it should be assessed (but isn't currently) this may well just be a case of the law not keeping up with the tech world and Washington state attempting to capture some tax it was previously unable to do. Then again....Washington state lost Boeing to Chicago over tax incentives offered over there -- so maybe this is the case of a corporation flexing it's muscle and the state settling for something instead of risking losing even more.
No doubt. This was simply an example. This is what I meant by some amount of pragmatism is probably required - but the GAO statistics have me thinking this is too far slanted in favor of the corporations.
I chuckled at this because I thought of Mark Twain's argument in Innocents Abroad that Italians should rob their churches. Repped.
The current tax system certainly has problems and hopefully it will be changed. I personally would prefer a lower tax rate with fewer deductions, but I think taxpayers like deductions (and other means of avoiding taxes) so much that they like the current system. Of course, if you simplify the system, then we will not need as many IRS employees. Since governments don't shrink easily, I do not see the government changing the current system. It sounds like Microsoft was following a standard tax procedure for companies that operate in multiple states. Microsoft itself is probably just a holding company with no operations. It has multiple subsidiaries that perform separate tasks. If one of those entities has significant income and your home state has a high franchise tax rate, you usually set up a limited partnership. The general partner of the limited partnership will usually be set up in the high tax jurisdiction and will have a 1% interest in the limited partnership. The limited partner will be set up in a low (or zero) tax jurisdiction and have a 99% interest. A corporation can reduce its franchise tax liability in a particular state by 99% by following this simple reorganization. While some people obviously consider this as dodging taxes, the shareholders of Microsoft would call it a breach of fiduciary duty if the board of directors did not take these steps to minimize tax liability. Washington could possibly collect more in taxes if it kept the taxes low. Of course, the benefits of having Microsoft headquartered in Washington go well beyond any taxes it could collect from Microsoft.
I think he's just talking about spending cuts in the state of Washington. Unlike the federal government, state governments do cut spending when tax revenues decrease.
