While Apple has come under the spotlight for not paying billions of dollars in tax lately, it seems that it is not the only tech outfit which has cunning methods of avoiding paying up.
According to Microsofttaxdodge.com, Redmond lobbied to reduce Washington State’s Royalty Tax from 1.5 percent to 0.5 percent in 1997.
But this was not enough, because the company had to open a small Reno, Nevada office to dodge the whole lot.
Between 1997 – 2011, the company allegedly used its Nevada office to avoid $1.51 billion in Washington state taxes, interest and penalties.
If it had not lobbied for a tax cut in Washington, and done its Reno trick, it would have had to have paid $4.37 billion more in tax.
Washington has needed the money. It had to cut $4 billion from K-12 and Higher Education and as a result Microsoft has to bring in foreign programmers because the state’s funding for techies has fallen.
In 2010, Democratic State Representative Ross Hunter, Chair of the Finance Committee, investigated the perfectly legal but decidedly dodgy move. In the true style of US politics it turned out that Hunter was a former Vole. He led the legislature to change the state’s Royalty Tax from a tax on sales to worldwide customers to just a tiny tax on sales to Washington State customers.
While this killed off Microsoft’s effective Nevada tax dodge by about 99 percent, Hunter granted Vole an amnesty on its back taxes which meant that it was still quids in.
Apparently other companies do not get those sorts of tax breaks in Washington so it seems that Redmond has a fun ride in the state.