Earlier this year, Steve Ballmer threatened that an Obama administration tax increase would cause it to move more jobs offshore." We're better off taking lots of people and moving them out of the U.S. as opposed to keeping them inside the U.S." Scare tactics like this is one way that Microsoft keeps residents and legislators on the defensive.
Many Washingtonian's fear that Microsoft will move jobs out of Washington if corporate taxes are too high. Their fears are well founded. Boeing has accelerated its move out of Washington over the last ten years - including its headquarters and most recently with a new, albeit poorly conceived, 787 plant in South Carolina.
I've been called many names online by frightened anonymous commenters who fear that further enforcement of Washington tax law might hurt our economy. But these readers miss the point.
The battle over Microsoft's Nevada tax dodge is one of enforcing existing tax law and cracking down on fraudulent accounting practices. Many Washington software companies gladly comply with the royalty tax and face a competitive disadvantage with Microsoft as a result.
The truth is that Microsoft has been moving jobs out of Washington and out of the hands of Washington residents for many years now:
- Recently, Microsoft chose to open a new cloud data center in San Antonio, Texas rather than to expand its existing Washington facility. The company sought to avoid paying sales tax on its computing hardware (if it's not avoiding one tax, it's trying to avoid another)
- After laying off more than 2,000 Washington employees, Microsoft lobbied Congress (again) to end restrictions on the H1B visa program. Essentially, Microsoft seeks to hire foreign workers to replace those it lays off domestically.
- Microsoft has gradually been opening research and project centers internationally worldwide to tap into broader bases of talent, often more economically
Microsoft is expanding away from Washington - and it will continue to do so. The question is whether the state plans to enforce current tax law and collect revenue rightfully due to its citizens or whether it will sit by while our infrastructure continues to collapse.
For years, Washington State bent over backwards to provide tax breaks to Boeing - and where did it get us? Boeing moved its corporate headquarters to Chicago and has very little skin left in the game here. The opportunity to fund needed infrastructure on Boeing's presence is rapidly fading.
The same is true with Microsoft. Just as Apple iPhone and Google's Android killed Microsoft's Smart Phone initiatives, Google's upcoming Chrome Operating System, Google Docs & Gears and the emergence of inexpensive Netbooks threatens to kill Microsoft's Windows and Office franchise.
Washington State has failed to capture sufficient revenue from Microsoft's activities here over the past twelve years. When Microsoft's revenue has crashed in five years, it will be too late. We'll be left with wider swaths of unemployed workers and a devastated real estate market, at best.
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