“Microsoft is being accused of finding a loophole that has thus far saved it from paying some $707 million in software licensing taxes, according to a blog entry from Seattle-based technologist and writer Jeff Reifman,” Electronista reports.
“The software giant is based in Redmond, Washington, but it records its software licensing revenue from an office in Reno, Nevada,” Electronista reports. “Microsoft does this to save on taxes because of different laws in the two states, Reifman says, and so would have saved hundreds of millions of dollars over the past 13 years.”
Electronista reports, “The majority of its software development is performed in Washington State, Reifman says, but Microsoft records its estimated $18 billion in licensing revenue per year through the Reno corporate office… While Microsoft is not technically breaking the law, Reifman and others like him believe the company is morally wrong in hurting its own state for the alleged discounts. Washington is currently operating on a $430 million deficit in its biennial budget, which is believed to be shortchanging residents in the state, including Microsoft’s own employees.”
Full article here.
MacDailyNews Take: Aw, come on, everybody knows Microsoft has no ethics or morals. Their flagship product is an upside-down and backwards knock-off of a superior competitor’s product, for crying out loud.
That said, the state of Washington should look into why corporations based there feel the need to establish offices in less confiscatory states. Besides the fact that the loophole exists in the first place, that’s the actual root of the issue. You think Microsoft or any corporation or its shareholders are going to authorize paying hundreds of millions in taxes that they do not legally have to pay out of the goodness of their hearts? If so, welcome to Fantasy Island. If you don’t like it, work to close the loophole(s). Obviously, while this practice might be legal, it doesn’t sound like it should be; tens of thousands of employees doing all the work, but a relative handful claiming the income in a tax-free state? Who paid for that loophole?
Here’s another thing to consider: Microsoft’s tens of thousands of Washington State employees are presumably paying sales taxes, gas taxes, tolls, and many other taxes out their wazoos that benefit the state of Washington immensely. How much is all of that worth? Jeff Reifman should write a blog entry about what would happen to the state of Washington if Microsoft moved all of their offices to Nevada.