Bonum Certa Men Certa

Tax-Free Financial Gain at Microsoft Assisted by Governor Gregoire

Christine Gregoire



Summary: Christine Gregoire's apathy, indifference or fear of her colleague/s who came from Microsoft leaves her incapable of doing the right thing and demanding tax money from Microsoft

WE have already explained why attempts by Bill Gates Sr. to change tax law are self serving [1, 2]. In short, they hardly increase tax imposed on himself and his family and they do help Microsoft justify its legalised tax evasion. Here is a new article titled, "Trust Gates, Sr.? Washington state liberals? No way!"



Bill “I have my fortune, now I want to tax yours” Gates, Sr. wants to tax all of those “rich people” with a state income tax.

His “rich” threshold is $250,000 in income per year.

What a deal. Our property taxes and the B&O tax will be cut.

Really?

We can count on the state to do the cuts after we vote this tax in?


As we stated before, this would work pretty well for Microsoft and the Gates Foundation, which receives tax exemptions it cannot quite defend because it operates like a business. What are Washington's heads going to do about it? Probably nothing because they are surrounded by former Microsoft employees like Hunter. Here he is mentioned again by Microsoft Nick in Seattle:

(A 17-year Microsoft veteran, Hunter left Redmond in 2000 after jobs such as program manager for Microsoft Access and general manager for Microsoft Commercial Internet System. He winced when he looped a Google badge around his neck Tuesday.)


As we showed some weeks ago, Microsoft used its external PR department (Waggener Edstrom) to help lobby against taxing Microsoft. It was a real PR blitz and Governor Gregoire is stuck in the middle, somewhere between former Microsoft manager/s, lobbyists, and AstroTurfing. "Governor Gregoire Isn't Clueless, She's Gutless," says the headline of this latest post from a former Microsoft employee. He protests against the company's tax dodge, which left the Governor acting more like a marionette than a representative of Washington's citizens.

Her answer confused me since the bill she just signed gave Microsoft a huge effective tax cut, changing the royalty law from a tax on gross worldwide revenue to one only on sales to Washington State customers. Whereas Microsoft will earn approximately $20.7 billion in worldwide licensing revenue this year, its sales to Washington State are a tiny fraction of this. So having slashed Microsoft's tax exposure, what exactly did Gregoire want to bring back?

Furthermore, every effort in the Legislature, spearheaded by 17 year veteran ex-Microsoftee and Chair of the Finance committee Rep. Ross Hunter, seemed geared towards rewriting the system in favor of Microsoft ... the legislation even includes language which grants Microsoft amnesty on its past 13 year Nevada tax dodge, an estimated $757 million in unpaid taxes.

[...]

In the year of a $2.8 billion budget gap, Gregoire chose not to cast Microsoft as a tax evading villain, enforcing the old royalty tax in a PR and legal coup that might have netted the state $100.7 million this year (note: that's more than $84.7 million) not to mention $1.2 billion in past payments, interest and penalties, instead she chose to raise the business service tax rate, create new "7-11" taxes on beer, wine and candy and to cut vital services including unemployment benefits to the disabled.

[...]

The Two Biggest Myths About Microsoft in Washington State

Rather than worry about the next ten thousand high paying technology jobs Microsoft's creating in India, China, Texas and elsewhere, she wants us to believe she's fighting the company to return its 100 - 200 Nevada managed lawyers, paralegals and accountants who run its (formerly) tax avoiding royalty business. As it only takes a small number of lawyers and accountants to dodge $100.7 million annually in taxes, Microsoft's tax avoidance jobs don't scale the way it's next big technical success like Azure, or Natal or Kin might.

The biggest myth in Washington State is that Microsoft plans to grow its next ten thousand jobs here. The second biggest myth is that if we tax the company more it will leave. The painful truth is that it's already engaging in a number of steps to reduce its growth (and even downsize) here and we'd have to pass a lot more bad law like the one Gregoire just signed if we want them to stay.

Meanwhile, no one in state government has responded to legal precedents that suggest the state might have prevailed in a lawsuit to collect that billion in unpaid royalty taxes from Microsoft. Why would they, aren't we all on the same team?


Gregoire is being used by Microsoft to keep injustice in tact and other companies do something similar (to a greater or lesser degree). From last week's news we have another corporate opposition to tax:

The effort is led in part by the U.S. Chamber of Commerce and an alliance of companies including IBM, Microsoft Corp. and General Electric Co. They are targeting a measure that extends aid to unemployed workers, promotes bonds for infrastructure projects and renews more than three-dozen business tax breaks, including a credit for experimental research that many of the companies support.


Speaking of financial affairs, a short while ago we explained that money could be passed by Microsoft to SCO through Pequot Capital, whose manager got busted and escaped with a settlement but no prison sentence. Here is some more coverage of this corruption:



The SEC separately brought an enforcement action against Zilkha, which is continuing in an administrative proceeding before the SEC.

The SEC said that in Jan. 2009 it first received direct evidence that Zilkha had material, nonpublic information about Microsoft, including copies of emails that had been located on a computer hard drive that was then in the possession of Zilkha's ex-wife.




Separately, the S.E.C. has filed a complaint against David Zilkha, a former Microsoft employee who later worked at Pequot, accusing him of tipping off the hedge fund and Mr. Samberg with nonpublic information about Microsoft’s earnings, the agency said in a statement.

The case against Mr. Zilkha will continue in an administrative proceeding before the commission, the agency said in a statement.


Let this teach us what happens when employees like Hunter move from Microsoft into another entity where mischief and corruption become more likely. Shouldn't Gregoire just expel someone like Hunter for consistently serving his former employer's interests whilst in government? No wonder such a small proportion of the US population trusts the government. These numbers may have improved when Bush left office, but they carried on declining since then. Industry and governance ought to be separated, but Microsoft won't let them be.

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