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Microsoft Inside the US Government Enables Tax Escapism

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Summary: Microsoft's former GM Ross Hunter and Microsoft's former CFO Greg Maffei turn political and Microsoft continues to dodge tax in the mid-west

The previous post gave an example of Microsoft influence in the US government and the following batch of stories ought to convincingly present an example of another Microsoft employee who intersects with the government.

Jeff Reifman, who used to work for Microsoft [1, 2, 3], writes about State Representative Ross Hunter, who also used to work for Microsoft and is now acting as an apologist for Microsoft's tax dodge. Here is Reifman's latest response to Hunter:

For the past six months, I've created a billion dollar public relations problem for Microsoft. Rep. Hunter's responded by essentially proposing to grant amnesty to Microsoft for its past tax practices (through the "field audit" sentence) and to redefine the royalty tax down (from Worldwide revenue to Washington-sales only) going forward. I've never met Rep. Hunter, but these actions raise red flags for me. I hope that they do for you as well.


In other news, Microsoft will receive even more tax breaks.

Gregoire said she'd spoken to Microsoft Corp. and other companies about their desire to build new server farms if the tax break were enacted, and predicted at least three of the facilities would be built soon.


We wrote about this before, but the article above is new.

Also, from Forbes:

What The Top U.S. Companies Pay In Taxe



[...]

As a result, figures tax economist Martin Sullivan, companies are keeping some $28 billion a year out of the clutches of the U.S. Treasury by engaging in so-called transfer pricing arrangements, where, say, Microsoft's overseas subsidiaries license software to its U.S. parent company in return for handsome royalties (that get taxed at those lower overseas rates).


Microsoft was found guilty of tax evasion, which is a crime. That happened in India not so long ago.

Going back to Reifman's site, here we have Representative Ross Hunter (apparently also a de facto Microsoft representative) denying bias.

The article does a great job of giving all sides of the issue their say. Representative Ross Hunter, a 17 year veteran of Microsoft, told TechFlash: "We don’t think we’d win a court case on this,". In response, Microsoft Tax Dodge publisher Jeff Reifman says, "The substance of what they're doing is tax avoidance."


Here is the estimated death toll of Microsoft's refusal to pay tax. It is finally getting more media attention.

If Microsoft weren't minimizing its taxes with its Nevada subsidiary, would there be more money available to fund this program and save lives - it's very likely so.


As the pressure grows and some people in Washington become angry at Microsoft, all we find are Microsoft PR moves that are advertised free of charge by the Seattle press [1, 2, 3], some of which Microsoft is funding too. Needless to say, Microsoft's biggest boosters join the PR party, pretending that Microsoft has kindly donated to the state of Washington. This little stunt has paid off in PR value, but as Reifman points out, giving $125,000 to a state where you avoided about $1,000,000,000 in tax is a tad insulting and petty.

Washington State has a $2.8 billion deficit. Its treasurer has said the state will be insolvent by the fall if a budget deal is not reached. We have two major highways on the verge of collapse. Over the last thirteen years, we estimate Microsoft has avoided $757 million in royalty taxes through its Nevada subsidiary. Microsoft's $125,000 fireworks donation is equivalent to one day's interest of its tax debt (calculated at 6 percent). So, we just have one question for Bill Gates: where's the other $756.75 million?


More clarifications from Reifman:

Since 1997, for all of the thirteen years of Microsoft's tax dodge, its Washington Headquarters, its Washington corporation's co-ownership of Microsoft Licensing GP of Nevada and the four Microsoft employees based in Washington registered as officers of Microsoft Management LLC of Nevada (the other co-owner of Microsoft Licensing GP) all represent systematic and continuous contact between Microsoft of Washington and its tax dodging Nevada corporation's intangible assets.


Here is a new article about Greg Maffei, who came from Microsoft's CFO position and will possibly become Colorado's governor. That would be worse than Ross Hunter moving from Microsoft to politics, a venue where he helps Microsoft avoid paying tax. Maffei is a financial type.

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