Cheers not jeers to Speaker Chopp on the Microsoft tax concession

All I can say to Ted is:

Will you please run for Mayor, or County Executive, or Governor. This region is screaming for some common-sense leadership on a variety of issues, and your voice is that clarion in the wilderness.

• Reply 
• Post a new comment

Grant County has to have the lowest power rates in the nation, except maybe for adjacent counties along the Columbia. Server farms need to get more efficient, re-utilizing their waste heat and implementing solar to mitigate their enormous energy use. Bill and the boys are bluffing; the ones that are there aren't leaving, and if they do, so what?...

• Reply 
• Post a new comment

If any of you have ever wondered why our state sales tax is 8.8% and not 4 or 5% like it is in many other states, you can indeed thank companies like Microsoft. And Boeing. Like a lot of newcomers arriving here (actually 11 years ago for me), I would wonder aloud every chance I got. One day, someone passed along this interesting local story that may simply turn out to be anecdotal but I've seen it in too many news stories about taxes of late not to suspect it's true. Each time a paying customer arrives to pick up a finished plane, Boeing takes the client's representatives offshore over the Pacific with two flight crews. Once they cross over into international waters, they swap out flight crews to make it a returning international flight, accepting the customer's check WITHOUT added retail sales tax as the deal was completed out of Washington State over the Pacific Ocean. Nice. Now if you were thinking about buying your next car in Oregon to avoid paying that sales tax and then bringing it back here to Washington for registration, think again. You'll not only have to pay the full sales tax but you might also face severe prosecution for attempting to avoid paying sales tax (they call it Fraud here). Because everyone HAS to pay their fair share of that 8.8% in order to cover the billions in taxes that Boeing and Microsoft manage to extort from our spineless politicians in Olympia.

Like the piece points out, let 'em try and move out. Microsoft threatening to move out of Eastern Washington? Someone else will gladly take over their choice location for cheap electricity on the Columbia Basin. And Microsoft move out of its ensconced headquarters in Redmond? I don't think so. With their investment in a sprawling campus sitting atop an invisible underground server farm complete with self-contained power grid, the physical assets alone are enough to anchor them here for a long time to come. And imagine the logistics of trying to re-locate 20 - 30,000 employees (of course, that's a stretch - a huge number of them would never re-locate from this area) or re-hiring and re-training all of the new hires to replace the people who stayed here. A nightmare I wouldn't wish on anyone; not even Microsoft. So Microsoft moving out of its Redmond campus? I don't think so.

As for Microsoft's own little tax-avoidance story, I've heard that they manage to conduct all of their sales from offices located in Nevada so none of the sales are from Washington State; Nevada has no business tax while Washington does. As such, it means that over the past 11 years, we've probably lost around half a billion dollars of tax revenue that the rest of us have to make up in order to pay for things like improving the I-520 floating bridge. Which, by he way, thousands of Microsoft's employees use daily to commute from their homes on the Seattle side to the Eastside campuses. So then after helping cause all our problems with traffic and decaying roadways, they then have the arrogance to cruise their own well-marked Microsoft shuttle buses back-and-forth to remind us that they're better than we are. Nice.

• Reply 
• Post a new comment

The reason sales tax in Washington is so high is because we don't have an income tax.

And why should any company ask their customers throughout the world to pay some ridiculous local tarriff? When a company in Japan buys a new plane from Boeing, why should they pay a huge fee for Seattle's roads, schools, and police force? Just because we're too cheap to pay for them ourselves? Dream on.

Your post is also self-contradicting. You claim that Microsoft would never relocate any of its operations to save money on taxes, and in the same breath you point out that all sales are done out of Nevada -- to avoid taxes. Huh? FYI - it doesn't take much to relocate a server farm, and if a more economical locale becomes available, you can bet Microsoft and everyone else will go there. Who cares, you say? Try saying it to the faces of the moms and dads who suddenly find themselves unemployed.

P.S. Boeing recently moved its headquarters to Chicago. Why do you suppose they did that?

• Reply 
• Post a new comment

So let's see: You have two far-fetched stories one that "may simply turn out to be anecdotal" and another that starts with "I've heard...". You then go on to estimate the millions of dollars lost as a result of these two absurd pieces of fiction.

Write back when you have a single piece of evidence, please.

• Reply 
• Post a new comment

Boeing is actually exempt from sales tax on planes, so they don't have to go off-shore to do the transfer.
There's simple reason why MS won't relocate their server farms. Cost of power. That eastside subsidized Columbia River system hydro electricity is the cheapest electricity in the country. The largest cost of operating server farms is the power. Moving elsewhere would increase operating costs by 2-4 times.
And what if MS did move? Cheap power is an increasingly valuable commodity. These eastside locations are highly desirable for energy intensive operations. If MS doesn't use that power, someone else will.
Personally, I'm tired of subsidizing giant corporations.

• Reply 
• Post a new comment

Let's see, next time I go watch a Mariner game, I'll see if I can get a hot dog, a coke, and a one billion dollar tax concession for my industry of choice. I promise to stay in the state and spend my hard-earned money. Tax me all you want because the billion dollar tax concession will make up for it! I'll be a very happy corporate customer!

And let's compare me to the other big corporations. Boeing is back to its losing ways, whining about losing after the fact of its uncompetitive bid and its proven corruption. Fortunately, all the Boeing business and execs they move out of state seems to be corrupt or uncompetitive, proving that the grass isn't greener in St. Louis. And Microsoft uses the tax concession savings for hostile take-overs of $40 billion dollar companies, paying huge dividend checks to billionaires and millionaires, and paying fines for abusing its monopoly powers. It's sure a good thing that we have extended those whopping tax concessions to these worthy companies, particularly when we have a crippling B&O tax on small businesses, and a sales tax that used to be the little engine that could, but can't anymore. The corporate demand on infrastructure and residential real estate by corporate employees has gotten out of control. Notice how we prevent sprawl, but actively build increasing numbers of massive, eco-decadent, high carbon footprint, conspicuously energy consumptive homes. If corporations won't pay, then we should purposely assess income taxes on corporate employees for the infrastructure and growth burden they have placed on the state. As they say, let growth pay for growth.

I understand that the dynamic is a bit complicated because of the competition for international corporations such, as Microsoft and Boeing, who bring huge cash flows nto the region. From a taxation point of view, we don't want to lose Boeing or Microsoft, or any other corporation for that matter, because of the enormous net income (net of the tax concessions provided) from property taxes and sales taxes that comes from the corporations and their employees. On the other hand, sunsetting some of the subsidies or ratcheting them down over time makes huge sense. If practically all corporations are subsidized, as Van Dyk's article suggests, then we make up for these subsidies with the regressive sales tax, which falls on everyone (and burdens non-corporate folks the most because of their lesser incomes).

As an aside, if I recall correctly, there's a clause in the State Constitution that forbids shameless subsidy and tax concession for individual corporations. Unfortunately, the loophole is simple. Grant tax concessions to broad industries such as aeronautics and software, not to the individual elephants in the room. Mice get tax concessions too.

Maybe we should allow all the tax conession, but make sure that all subsidized corporations pick up the tab for transportation and environmental cleanup. Then there'd be a decent quid pro quo. Or maybe we add the Sonics clause, which forbids the company from moving out state. Remember, we're supposedly one of the greatest places in the world to live, so moving out of here isn't something that people and corporations do lightly. Also note that it's CEOs who decide were corporation headquarters are. Studies have shown that they site HQs near where they live. This suggests that we provide corporate CEO tax concessions rather than full corporation tax concessions. Oops. I forgot. That's what the capital gains tax at 15% is for -- to subsidize unearned, undeserved income.

Maybe the only good solution is draconian: have the federal government or local government (say Renton or Everett or Redmond) tax all State tax concessions subsidies at 100%. That'd change the tax concession policy in a hurry if corporations or the State found out that the money was disappearing elsewhere.

• Reply 
• Post a new comment