fronkis

“Microsoft’s Cumulative Tax Evasion Now Exceeds Washington State’s Biennial Deficit”

Some quick background: Microsoft bases their software licensing office in Reno, Nevada.  Microsoft does this because Nevada has no tax on software licensing.  Jeff estimates that Washington (state) has lost out on $700M in tax revenue.

It’s a good read and he makes some good points. However (and you knew there was one coming)…

It’s not really evasion if it’s legal.  You want it made evasion? Change the tax law so that what they’re doing is illegal.  Microsoft is a business, a publicly held business.  By that nature alone, they have a fiduciary responsibility to its shareholders to perform the best that it can within the constructs of the law.  Microsoft is doing that in this respect (perhaps not others, but that’s another arguement).

States compete with other states to gain businesses.  How do they do this you ask?  Through taxation.  If states want to attract certain industries, they will create tax breaks for those industries.  The state makes back its revenue from payroll taxes from the jobs that were created.  It also is just a good idea from the state’s perspective - the bigger number of employers that you have, the larger your tax base.

From a business perspective, taxation isn’t a moral thing.  It’s a cost to do business.  You’re going to go where there’s less taxation when it makes sense to.  Until that is illegal, Washington (and Jeff) have no leg to stand on.