Washington State to Microsoft: why aren't you paying your taxes?


14 Responses to “Washington State to Microsoft: why aren't you paying your taxes?”

  1. LB says:

    I recently found out that Washington State doesn’t have personal income tax. That would explain part of the deficit, no?

  2. McMe says:

    D a passing grade! Hey come to Canada in certain provinces you are not allowed to fail. Yep, everybody gets the useless diploma.

  3. newscloud says:

    LB, Wa. doesn’t have a personal income tax – Microsoft saves a tremendous amount on wages for its 40,224 state employees because it can pay them less knowing they don’t pay income tax here.

    So the B&O Royalty Tax (at a tiny .484 percent) is one way the state collects revenue for vital services. Microsoft’s dodge of this tax is therefore having an even more negative impact.

    And, Wa. has the most regressive tax system in the nation. So, Microsoft’s 10,000+ millionaires and wealthy staff benefit from this too:
    “People earning less than $20,000 annually pay 17.3 percent of family income toward sales and excise taxes and property taxes, the report said. People making between $99,000 and $198,000 each year pay 7.6 percent toward their tax bill. Meanwhile, people in the top 1 percent of earners – those making more than $537,000 a year – pay just 2.9 percent, the report said.” see

  4. Anonymous says:

    perhaps Microsoft should just do as Boeing just did, find a more biz friendly location….South Carolina.

  5. middleclass says:

    It’s not Microsoft’s fault that Washington pols can’t run their state.

  6. Anonymous says:

    Since when is “D” not a passing grade? F= Fail

  7. Anonymous says:

    Licensing of prewritten software is exempt from the Washington B&O tax (Note item 2):

    RCW 82.04.2907
    Tax on royalties from granting intangible rights.

    (1) Upon every person engaging within this state in the business of receiving income from royalties or charges in the nature of royalties for the granting of intangible rights, such as copyrights, licenses, patents, or franchise fees, the amount of tax with respect to such business shall be equal to the gross income from royalties or charges in the nature of royalties from the business multiplied by the rate of 0.484 percent.

    (2) For the purposes of this section, “royalties” means compensation for the use of intangible property, such as copyrights, patents, licenses, franchises, trademarks, trade names, and similar items. It does not include compensation for any natural resource, the licensing of prewritten computer software to the end user, or the licensing or use of digital goods, digital codes, or digital automated services.

    [2009 c 535 § 407; 2001 c 320 § 3; 1998 c 331 § 1.]

  8. Riiick says:

    I’m not sure if Microsoft has to pay this tax if this is the law in question:

    It states that it does not include compensation for “the licensing of prewritten computer software to the end user”.

  9. newscloud says:

    Riiick, the royalty tax is a .484 percent tax on sales of licenses to large corporations and PC manufacturers. This is about 1/3 of Microsoft’s business. End user (boxed software) is not covered under this tax. This part is explained here: http://microsofttaxdodge.com/how-it-works.html

  10. newscloud says:

    middleclass, since Microsoft is one of the state’s most active lobbyists – I argue that it is Microsoft’s fault that pols aren’t properly enforcing tax law:

    “When it’s not dodging taxes, Microsoft lobbies the Legislature on its behalf. In the last five years, Microsoft has spent more than $1.54 million enforcing the status quo. For every dollar it spent lobbying, it managed to dodge $260 in state taxes.”
    - excerpted from

  11. newscloud says:

    Also, recently on Slashdot: Microsoft Freeloading In Washington State Courts – the majority of Microsoft’s Nevada-based licensing contracts are governed by Washington law and Microsoft’s Washington-based attorneys:

    “For tax purposes, Microsoft reports that it’s earned its estimated $143 billion in software licensing revenue in Nevada, where there is no licensing tax…However, for legal purposes, Microsoft relies on Washington law and its underfunded courts to defend its contracts as it did in Microsoft Licensing GP vs. TSR Silicon. Application of common legal doctrines such as nexus, the step doctrine, and alter ego theory may lead to findings that Microsoft owes the state more than $1 billion in taxes, interest, and penalties.”

  12. newscloud says:

    Xeno, Microsoft is actually incorporated in Delaware – but also have corporate registrations in Washington State and Nevada. The tax dodging entity in Nevada is organized as a partnership Microsoft Licensing GP – controlled by Microsoft Corp of Washington State and Microsoft Management LLC in Nevada – but 8 of 12 registered officers are Washington-based employees of Microsoft Corp of Washington. This is known as alter ego – in other words, Microsoft Licensing GP is just an alter ego or sham front for Microsoft Corp. The State of Washington might prevail if they went to court on this point. More here

  13. Xeno says:

    Microsoft does ALL their business in Washington State but has incorporated in Nevada to avoid taxes. They list themselves as a Washington State business, they list their home as Washington State but they contribute NOTHING back to Washington state.

    They even manage to dodge giving jobs by making 50% of their workforce temp workers even though they are hired fulltime year round. They just lay them off for 6 months then rehire them all over again. They play this evil shuffle with their temp employees to avoid having to pay benefits.

  14. alteran says:

    Man, I totally missed that D was no longer a passing grade. I knew it was a bad grade, but didn’t know that it was flunking now.

    Is A still tops? Or is there like “alpha” or something above it?

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