FROM a Microsoft employee who at last saw the light and decided to expose his former employer for what it does to avoid paying tax (financial misconduct notwithstanding) come some new posts that help reveal how Microsoft uses politics to essentially loot the public at large. The latest posts are:
Under Democratic Rep. Ross Hunter's leadership in the Washington State Legislature, Microsoft's licensing revenue is no longer taxable in Washington. Hunter led the change to Washington's royalty tax so that only licensing revenue sold to Washington State customers is taxable. Prior to 2010, worldwide royalty revenue was taxable.
Hunter is a former 17 year veteran of Microsoft, now head of the powerful finance committee. Rather than apportion the royalty tax (which resulted in only a tiny gain in state revenues), Hunter could have adopted stricter enforcement language around out of state tax transactions such as was proposed by the state's Department of Revenue. Since 1998, Microsoft has used a small office in Reno, Nevada to record its worldwide royalty profits - avoiding nearly $1.25 billion in tax liabilities.
If there's one thing I learned the past year working the Microsoft tax dodge issue, it's that the state legislature is pretty well bought and paid for by corporations like Microsoft. Who would have thought Rep. Ross Hunter would lead the charge to raise taxes on voters while giving Microsoft a giant back door tax cut? Well, at least today, we'll see what voters think of Ross Hunter's efforts.
If you want to know what the Kool-Aid tastes like at Microsoft, check out this clip of its Nevada Licensing employees offering up their own "I'm a PC" anecdotes. It's not quite as cringeworthy as the Windows 7 Launch Party and not as bizarre as the IE8 vomit girl ad, but it's definitely painful to watch.
I was most intrigued by this brief segment in which an apparent Reno-based Microsoft Licensing employee jokes, "I'm a P.C. and I'm a criminal." On the wall in the background, there appear to be pictures of two to three other mugshot photos - perhaps also Reno employees? Exactly what is she referring to?
* Most people in Seattle (and Washington State), know nothing at all about Microsoft's Nevada tax practice in part due to the fact that The Seattle Times has never reported the story.
* Local coverage of this issue does not appear to be improving. e.g. The Gates Foundation gave $400,000 to local news blog Crosscut.com, which later was caught removing anti-Microsoft sentiment from a published editorial by the University of Washington's Bill and Melinda Gates Chair of the Computer Science and Engineering Department.
* Perhaps due to the lack of awareness of his actions, King County voters re-elected Rep. Ross Hunter. Diane Tebelius, Hunter's Republican opponent never mentioned the Microsoft tax dodge, though she was briefed on it (by me), presumably because she did not want to alienate Microsoft employees in her district.
Today, Governor Gregoire appointed former nine year Microsoft executive Suzan DelBene to run Washington State's Department of Revenue. DelBene's husband Kurt is President of Microsoft's Office Division. DelBene's basically a marketing executive, although she recently ran unsuccessfully to unseat Congressional GOP Rep. Reichert. As far as I know she has no formal background in tax law. Full disclosure: I used to work with Ms. DelBene and for her husband Kurt at Microsoft in the early 1990s.
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The Seattle Times has reported in the past that Mrs. DelBene is also a longtime friend of Representative Ross Hunter. Hunter is the 17 year ex-Microsoft veteran who as Democratic chair of the powerful legislative finance committee led the move to apportion the state's royalty tax, getting Microsoft off the hook for up to $145 million annually in taxes and potentially over $1.24 billion in back taxes, interest and penalties. Since 1998, Microsoft has recorded the bulk of its software licensing revenue in Nevada to avoid Washington State's royalty tax. This blog regularly questions the legality of this accounting practice.
Microsoft (Nasdaq: MSFT) just borrowed $6 billion even though it has roughly $40 billion in idle cash. Crazy.
DelBene, a former vice president for marketing on Microsoft's mobile communications team, contributed $2.3 million of her own money to her campaign. She is married to Kurt DelBene, the current president of Microsoft's Office business.
Former congressional candidate Suzan DelBene was appointed director of the state Department of Revenue on Tuesday, with Gov. Chris Gregoire saying that the former Microsoft executive "has the knowledge, skills and experience needed to guide the agency through what is a transformative time for the department and the state."
Lately, every day feels like Election Day. The frenzy is everywhere from those TV commercials, to sign-crowded intersections. And protestor-frenzy, in Reno to greet Sharron Angle as she made a Monday visit to Microsoft Licensing off Neil Road. Microsoft would not let us in…we weren't exactly invited. Angle's campaign did not even tell us ahead of time that she was appearing. Outside was a group of protestors, comprised of a man in a chicken outfit, 2 Reid campaign workers, one unemployed volunteer, and 3 members of local 3, the operators-engineers union. They told us they're not getting any work. Union apprentice Ronald Feemster told us he'd "like to see somebody in office that might actually do some good for northern Nevada." As to why he doesn't blame the current administration, including Harry Reid, he told us, "Because I feel it was inherited."
The key bailout test was whether or not Ireland would retain its 12.5% corporation tax, which has attracted a number of giant multi-nationals to relocate there -- such as Google (GOOG), Pfizer (PFE), and Microsoft (MSFT) -- much to the annoyance of other European countries, especially France and Germany who had this at the top of their conditions hit list. The fact that Ireland has apparently retained sovereignty over the corporation tax bodes well for eventual economic recovery as the relocated multi-nationals account for more than 70% of Irelands exports and generate more than 50% in corporation tax revenues, without which Ireland truly would be bust for the next decade.