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09.20.10

More Microsoft Antitrust and Tax Evasion, Legalised by Former Microsoft Management (Ross Hunter) in the Government

Posted in America, Antitrust, Asia, Finance, Microsoft at 10:13 am by Dr. Roy Schestowitz

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Summary: India is better than the United States at regulating Microsoft; the latest figures about Microsoft’s tax dodge in the US are revealed, along with the role of former Microsoft staff in letting this be

A former Microsoft lawyer recently said that Microsoft “routinely produces and/or condones deficient investigations, covers up alleged misconduct, mischaracterizes evidence, refuses to preserve or provide pertinent facts and data, protects the perpetrators and retaliates against victims.”

At the end of last year in India, Microsoft was fined for using “money power” to “harass” defendants. Earlier this year we wrote a great deal about Microsoft’s connections in government, which enabled to company to “legally” evade tax (when one controls the law, any crime can become lawful). It’s another type of money games which may be tolerated in the United States, but in India Microsoft was found guilty of tax evasion a few years back (last mentioned here in the comments). For further background, compare Microsoft influence in the Indian government to Microsoft influence in the United States government.

There is a highly-referenced report in the Times of India right now and it says that the Competition Commission of India takes on Microsoft:

Global software major Microsoft Corp has been dragged to the Competition Commission of India (CCI) by a law firm for allegedly abusing its dominant position as a market leader.

Singhania & Partners has filed a complaint against Microsoft alleging that software company first signed an agreement to sell a software at a certain price, but later raised the price intending not to sell it, sources said.

The law firm had placed an order for MS operating systems and MS Office software. They had paid 50 per cent advance the got quotations for original equipment manufacturer (OEM) licences, but at the time of delivery Microsoft said that they would give them volume licence, which would cost the firm double the price.

The life of an OEM finishes with the life of a computer, while that of a volume licence is transferable.

Microsoft’s antitrust violations are recalled here this month (“Obama antitrust enforcement looking like more of the same”) and more coverage from India was shared last night by Chips B. Malroy who quoted: “Software giant Microsoft has been dragged to the Competition Commission of India by a Delhi-Headquartered Law Firm. The company has been charged with allegedly breaching the competition act by using its monopoly position in the Indian market, reports CNBC-TV18′s Ashwin Mohan. [...] In short, Singhania and Partners has claimed before the Competition Commission of India that Microsoft is coercing its consumers to buy its softwares at higher prices. Now, there are two things that it has sought before the commission. It has to sought an investigation into the anti competitive practices, the alleged anti competitive practices of Microsoft. Secondly, it has also an enquiry into the overall consumer impact as a part of these practices of Microsoft.”

“Microsoft becomes less of an American company over time.”There’s also this one which says: “During the economic slowdown, Microsoft expanded its reach in India from around 13 cities to at least 300 cities, through a network of nearly 7,500 partners??seeds for future growth?, as Ruskill puts it.”

We wrote about this several hours ago. Microsoft becomes less of an American company over time. It’s expensive to be based primarily in the United States because of ‘nuisance’ like workers’ protection rights.

Microsoft Florian is taking Microsoft’s side on the face of it (no surprise here) and in India there are other noteworthy wage discussions that ignore share holdings/value (Larry Ellison being the victim of this pattern of disinformation as in some companies the founders receive only a symbolic wage of $1). Despite the fallacies, here is how the article from the India Times goes:

Patni Computer Systems, 90 times smaller than Microsoft by revenues, cannot hold a candle to the US software company on most counts. There is one notable exception though — CEO pay.

The cash portion of Patni chief executive Jeya Kumar’s compensation was twice that of Mircrosoft’s Steve Ballmer in 2009. An Australian citizen, Mr Kumar, 55, received Rs12.19 crore for the year to December 2009 compared to $1.26 million, or nearly Rs6 crore, for the fiscal to June 2009 for Mr Ballmer.

Likewise, Wipro chief Azim Premji earned Rs7.8 crore, again outshining Mr Ballmer’s pay.

They refer to Wipro, one of several companies that are like Microsoft subsidiaries in India. To quote again from the article “Microsoft wants India among top 5 markets”:

Mumbai: The world’s largest software products company Microsoft Corp. wants India to be among its top five revenue generators globally within the next three-five years.

Yes, that’s where the wages go and the wages are embarrassingly low. Microsoft is neither interested in paying its workers enough nor in paying taxes for its citizenship (a problem in Europe and in the United States, with Ireland and Nevada being the tax havens, respectively).

The former Microsoft employee who became an activist against Microsoft’s tax dodge is back to blogging after a long time being idle. He revises his figures to show that Microsoft has avoided paying far more taxes than he initially calculated:

Instead of a projected $3.3 billion deficit, Washington State would today have a $1.8 billion surplus.

So, while Microsoft’s been publicly lobbying the legislature to spend more on transportation and education, its behind the scenes lobbying to cut its tax bill and its Nevada tax dodge have actually helped make Washington State insolvent, siphoning the coffers that might have otherwise invested in our state’s infrastructure.

I read today that the Gates Foundation has made a tentative deal with Seattle not to have the city tunnel under its new offices during the rebuild of the crumbling Alaska Way Viaduct. But apparently, it’s just fine for Chairman Gates to figuratively tunnel under the capital in Olympia and dismantle the state’s financial stability.

Back in 2004 when I interviewed Microsoft General Counsel Brad Smith for my Seattle Weekly article Citizen Microsoft, he seemed open to considering opening up more of Microsoft state tax records for public inspection. Perhaps it’s time.

Coming soon at the Microsoft Tax Dodge blog: Ross Hunter’s Message to 48th District Taxpayers and My Discussion with Seattle Times Executive Editor David Boardman on the paper’s failure to cover Microsoft’s Nevada tax dodge for readers.

In another post, Microsoft’s former manager Ross Hunter is being slammed for betraying citizens of Washington. As a public official after his long Microsoft career he is throwing all the burden of taxes on the public while leaving Microsoft almost tax free. It is outrageous and it’s true. Where are the protests?

Ross engineered a gigantic tax cut for Microsoft. Some pesky blogger had been hassling Microsoft for avoiding the state’s royalty tax through a small office in Nevada, so Ross just changed the tax! With the royalty tax cut to shreds, the blogger had nothing bad to say about Microsoft. But just in case, Ross quietly added in amnesty for Microsoft’s entire 13 year tax dodge. Ross likes Microsoft because, well, he worked there for 17 years. And Microsoft likes Ross!

And, that pesky blogger, he recently estimated that if Microsoft had just stayed out of Olympia and paid the OLD royalty tax, Washington State would have a surplus today … Ross knows that surpluses are bad because they just feed big government…and big government is bad.

As Chair of the powerful Finance committee of the democratically controlled House of Representatives, Ross pushed through the legislation that delivered our new $4.5 billion deficit. It couldn’t have been easy to do that. That’s delivering results!

[...]

In the meantime, if you’re tired of paying all those taxes, ask Ross to make a video about how to evade them. I’m pretty sure Microsoft has watched all of Ross’ Tax Evasion for Dummies videos … especially steps 2 and 3 about shell corporations and step transactions. Microsoft must have a pretty bad-ass post office box in Nevada to hold $30 billion a year.

Over at Associated Press we now learn about the tax-exempt Gates Foundation (Bill’s bank account under a different name). It says that “The Bill & Melinda Gates Foundation has made a deal with the city of Seattle to build a new street around its new campus rather than allow the city to tunnel under the property.”

Gates’ booster Kristi Heim does not investigate these issues properly. Some journalists play along with the idea that Gates is helping the city/state, but actually, he is paying for his own project/private property. In some places and almost exclusively in the Seattle Times (which is a strong Microsoft and Gates booster and therefore a biased and poor publication) it is almost described as an investment in the city, but it’s not. Recall the bridge controversy. Microsoft is only taking from the state and gives back almost nothing, not even jobs (many workers are laid off, then replaced by workers in countries like India and others come to to the state from another country on a visa). This gives unregulated capitalism a bad name.

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