Ballmer Threatens To Pull Out of the US 1142
theodp writes "Microsoft CEO Steve Ballmer is threatening to move Microsoft employees offshore if Congress enacts President Obama's plans to curb tax avoidance by US corporations. 'It makes US jobs more expensive,' complained billionaire Ballmer. 'We're better off taking lots of people and moving them out of the US as opposed to keeping them inside the US.' According to 2006 reports, Microsoft transferred $16 billion in assets to secretive Dublin subsidiaries to shave billions off its US tax bill. 'Corporate tax is part of the overall advantage of doing business in Ireland,' acknowledged Ballmer in 2005. 'It would be disingenuous to say otherwise.'"
Like Delaware (Score:3, Interesting)
I don't believe Ballmer has the ballmers to move the whole company out of the U.S., much less trade his life in the Emerald City for the Emerald Isle.
But I do believe he has a point about seeking out the lowest cost of business, and if it comes down to it, I wouldn't be surprised to see Microsoft move all accounts receivabo to a tax haven and just keep cost centers in the U.S.
Take a look at what they've already done. They have already set up development centers in low labor cost countries like India and China. Moving more of those jobs out of the U.S. would just be a natural progression in the quest for lower costs. The worst part of this is that as time goes by the developers in those up and coming countries are getting just as good as their American counterparts. At some point we're looking at a hiring crisis here in America.
We're facing a 16 year educational depression as the currently undereducated kids gets graduates and makes way for a new generation educated satisfactorily. Naturally, this begs the question, but I think Obama is the guy to make the right changes to the DOE.
And as a reward... (Score:5, Interesting)
While it is a requirement of a corporation to maximize the shareholders' value, Ballmer is simply grandstanding and expecting the government to roll over for MS' benefit. The current administration is much less submissive to corporate political desires.
The Administration should VERY publicly call them out and recommend government offices immediately develop a schedule for converting as much of the IT infrastructure as possible away from MS software.
Re:Sure, move out. (Score:5, Interesting)
Or, how will US government (e.g. its military) view the idea of using a 'foreign' OS?
It would not surprise me if such a move would hasten a 'turning away from windows' trend in US government.
And if the US government is anything like the EU on this, the consequence would be that other businesses would start migrating away from windows as well...
I am no consultant with Mircrosoft, but if I were, I would advise against it... The strength of the Microsoft brandname is largely due to its US connection. Cut it, and it might very well dwindle overnight?
Sound business decision (Score:2, Interesting)
Re:Sure, move out. (Score:5, Interesting)
Or, how will US government (e.g. its military) view the idea of using a 'foreign' OS?
Well I know that the Norwegian Military (particularly parts of the intelligence operations) decided that they would no longer trust or use Windows some years back.
Re:Not very bright... (Score:5, Interesting)
First off, it just isn't a very good idea to start going tit-for-tat with the US government.
No duh. If it happened (or started to happen), I'd see three possibilities:
Don't let the door hit you on the ass (Score:4, Interesting)
MS does not have the balls to piss off their largest group of consumers and if they did, the government and turn around and start using a Linux distro developed by Americans (they should be doing this anyway) and MS will not go for that. They'd lose far more than they would by Obama fixing the tax loopholes.
So he can make empty threats all he wants. The gov should just tell him to fuck off to Ireland.
Like Nokia did in Finland (Score:5, Interesting)
This is a much bigger problem than MS (Score:2, Interesting)
Ballmer's statement is simply the truth for a whole lot of industries. Supposedly, the fabric for your Levi's jeans is shipped to China to be cut into parts and then shipped back to the USA for sewing together. The LCD TV you buy from Sharp isn't really a constructed TV until the plastic bezel is snapped on here in the USA. All of this is done so that companies can avoid taxes. Companies are in business to provide a return on their shareholders' investment. Wall Street doesn't care if the profit margin went down because the government changed the tax laws. Investors will find some other company to invest their money. Adapting to the rules governments' place on them is part of doing business. IMO, this really isn't any different than when we 'forget' to pay the sales tax on stuff we bought from out-of-state. We all work the system to the extent that we can. I think this is just another example of the disconnect between the government and the real world. Seems to me the optimal solution would be to change the tax law so that these companies tax burden matches what they are achieving using these offshore loopholes and then eliminate the loopholes. That might encourage the companies to bring the jobs and profit back the the USA. We certainly could use the jobs right now.
Re:Ballmer threatens to pull out? (Score:3, Interesting)
I kind of thought the news here was CEO Donkey Kong using a five dollar word like "disingenuous". It's one of my favorite words, and ironically enough I often apply it to statements from Microsoft.
Re:Sure, move out. (Score:5, Interesting)
Re:Get rid of our horrible tax system (Score:5, Interesting)
You know, cause the Republicans and George W Bush are evil.
Or it might be because 30 years of supply-side greedfest has destroyed our economy... One of the two. Yeah, it's probably because they're evil though, because slashdotters are too stupid to notice something like economics but we all consult our priests and/or crystal balls daily.
Nid ad hominem though, I really felt part of a group there for a second.
Re:Like Nokia did in Finland (Score:3, Interesting)
Sounds familiar. Nokia threatened to leave Finland unless they get the right to spy on their employees. The law (named "Lex Nokia" by the media) was passed on March 11th and became effective beginning this month.
And people thought Nokia's password harvesting [slashdot.org] was an innocent mistake.
Re:But corporations don't pay tax (Score:3, Interesting)
And ones one start to think about it that way (moving money), one start to wonder about the validity of "wealth cration"...
Especially as more and more physical production is automated to the point where things can run 24/7 as long as the base materials and energy needs are fulfilled.
And then one may find a insight into why the governments are buying the idea of "intellectual property". If a nation cant monopolize the means of physical production, how about it monopolize the means of intellectual production? If every other industry around the world have to pay your nations companies and people for their ideas, then your basically printing money. Also, as the physical workforce is being reduced, re-school the freed up people into idea producers...
Hmm, matrix scene, only with the rows of pods being mental monkeys hammering on mental idea writers?
Re:Capitalist flight (Score:2, Interesting)
You already have the cheaper labor. They're called Mexicans. The more businesses that move out of California the more the state turns into a third world country or an extension of Mexico. LA is kind of like Mexico's ballsack if you think about it. That state is done.
Re:Capitalist flight (Score:1, Interesting)
While the official corporate tax rate is high (~35%), the actual corporate tax rate paid is much lower. Between 2000 and 2005 (pre-bust) the actual corporate tax rate paid was 13.4%, which is fairly competitive. In that same time period, U.S. corporate taxes amounted to 2.2% of the GDP while the average for the 30 countries of the Organization for Economic Cooperation and Development was 3.4%. (http://www.smartmoney.com/investing/economy/high-corporate-tax-rate-is-misleading-22463/)
Not to mention over 50% of the top 500 corporations paid 0 in federal taxes at least one year between 200-2007.
If we set our corporate tax rate the same as, say, that of Ireland, and made it a flat tax - no breaks or loopholes whatsoever - we'd probably have more revenue as a result. I'm down with that.
Fair is fair (Score:3, Interesting)
Okay, you decide it's too expensive to continue to pay American taxes, that's fine.
BTW, we've decided it's too expensive to continue to enforce your copyright on Windows.
Re:Ballmer is giving Obama a lesson in Economics 1 (Score:3, Interesting)
FACT of the matter (and it is a FACT), is that the U.S. has the second highest corporate tax rate in the world. It's no surprise that companies choose to do business elsewhere
Oh, i love guys like you.
The Fact is that while USA has the second highest corporate tax rates, an abolition of CIT (corporate income tax) and replacing it with VAT will increase additional investment only by 1.5% (source: NBER [nber.org] )
while it increases corporate cash flow by $5.2 Billion. And that is in 1969 dollars.
The FACT, as you love to put it is that Federal corporate tax has decreased steadily from 52% in 1955 to 30% in 1967 only to rise up to 33.8% in 1968 (in response to Vietnam) and dropped to 28% in 1977 and again to rise and fall to 16% in 1984 (the begining of the Reagan Era of freedom and corporate irresponsibility).
And no, am NOT quoting these stats from my a$$. You can check it up at NBER.
So you were sayin???
Re:Sure, move out. (Score:5, Interesting)
Well I know that the Norwegian Military (particularly parts of the intelligence operations) decided that they would no longer trust or use Windows some years back.
That's likely because they either were not bribed or simply did not accept said bribe. Remember, in the US, MS' OS were put in place despite explicit regulations disallowing its use. Which is to say, it was not on the approve OS list for use which means it should have never been deployed. Yet somehow it magically happened. Endless factual accounts consistently proved every time this type thing happens, its because large bribes have been paid. If it were not for such bribery, its very unlikely MS would ever be in any system other than desktop and unclassified server systems.
One could even argue MS has taken the first step is destroying national security in the US. Hell, they've managed to take destroyers out of commission.
Re:Bite the hand that feeds... (Score:3, Interesting)
Slashdot "libertarians" *never* respond to what I call "The Somalia Bomb".
See it interferes with their religion, that there already exists a country already that they define as "paradise" which is just a hell hole doesn't match up with their fairy tale. So don't go upsetting the religious people with facts and reality and the like. It's impolite and they get all riled and carry on about "Rand this" and "barrel of a gun" that for no good reason. Just let them rant, nobody's really listening outside of their echo chamber so it doesn't matter.
No (Score:1, Interesting)
Tools like you, and you are obviously a tool, are forgetting that corporations have to also be of the public benefit, ie, for the citizens inside the nation where they are GRANTED their incorporation charters. You only parrot half the equation for corporations, the maximizing profits side, which is both disingenuous and also quite capricious and harmful to society.
Corporations are artificial organizational structures that have NO natural rights. They are not exactly the same as a live physical human. YOU as a live physical human have born with inalienable rights, corporations do not, and neglecting the "be of public benefit" side of the equation for their permission to even be a corporation is pretty bad behavior. I think "we the people" would be perfectly within our rights and duties as custodians of these incorporation charters to just cancel their permissions, revoke their charters, once they start to act in an inimical fashion to society. And at which point I think in this case Microsoft crossed that line years ago due to their obviously ongoing criminal and obnoxious behavior, here and around the world.
This should happen a lot more IMO. Corporations that threaten to pull out should have their charters instantly revoked. Instantly. One minute after Ballmer said that, MS should have ceased to be a legal operating US company. He can go try his luck someplace else, but his stock would have ceased being able to be traded on any US exchanges. What happens then to their stock price...tough shit. Their call. If they want to be a US company, play fair, if not, hit the road, leave, good bye, and in the meantime if your stock tanks, maybe the stockholders and their employees on the boards should have been a little less greedy and a little more patriotic if they wanted all the benefits of being in our national society.
You want all of the benefits, all the profits possible, but none of the *responsibilities*. Go to hades then, you and your stockholders greed obsession are a huge part of what is wrong with society today, traitorous scumbags.
Re:Good luck! It's an idle threat by a hothead (Score:3, Interesting)
"You get crappy product because the offshore teams give you EXACTLY what you ask them for, instead of working with you to understand the goal and produce a result that makes more sense."
To true,
I've worked on three projects in the last year alone that were initially outsourced to India then brought back because of the abysmal final product.
This is why I don't care one whit when companies outsource. We get to charge more when they inevitably bring it back and give it to us tail between the legs to get us to "fix" the problems. It'd be cheaper to start again but there's usually pride at stake so we let them do what they need to do to save face. Unfortunately others have gone broke instead of admitting that they fucked up trying to save a couple of dollars.
It's a bit of an inside joke in the industry here. A mate of mine working in another company and has had two major projects in the last six months for the same reason.
I don't know what goes on over there, but I've seen swaths of code that are worse than *anything* I've ever seen even from beginners. Lots of it seems like something a code generator would spit out, but it's all logic so who I don't see how. Unless they're super advanced genuiuses and are creating AI to auto write programs or something... geez that'd be a problem! Then again the AI is writing some pretty crap code so maybe not. :)
Just being curious, what is _your_ fair share? (Score:3, Interesting)
I personally think we could run a constitutional sized government on a 3% sales tax.
I'm not sure how high a sales tax would need to be with a national sales tax and user fees I do believe the income tax could be eliminated. This year Tax Freedom Day [wikipedia.org] was 13 April and taxes will eat up 28.20% of people's income. As president Abraham Lincoln [directorym.com] instituted the first income tax, to pay for the Civil War. And when the war ended the tax was phased out. The tax wasn't even 10% though.
Falcon
Re:Income taxes are far more fair than sales taxes (Score:4, Interesting)
I replied to the top post explaining that you can have your cake and eat it too :
You want a VAT (sales tax) with a rate determined logarithmically based upon gross corporate income. An "income adjusted VAT" will massively benefit free market competition and discourage monopoly.
You'd also move anti-trust law into tax courts, giving judges the power to penalize companies by increasing their VAT rate for future years or charging backed taxes for past periods of violations. So if your company get fines 5% for 10 years because you spent 10 years destroying your competitors, well that's some hefty fine.
Re:Capitalist flight (Score:5, Interesting)
Please, please, won't people on Slashdot please stop repeating this tripe?
Man, I've been trying forever. Unfortunately, the people with rolled-up sleeves on CNBC tell them that they're right, several times a day.
It's not likely to stop, either. It's a very convenient idea for officers who would like to act badly, for one thing. Second, nearly all of the people on Slashdot who talk about financial news get it from places like CNBC, which is not only run by officers who enjoy this misapprehension of the law, but whose programming consists of mostly brown-nosing officers who were, or are currently, running companies in this way.
On the bright side, I have seen a new meme rise up; Free marketeers are starting to realize that their purer market will require strong tort... They're starting to accept the reality that "tort reform" and an efficient market are incompatible. It's not worth accepting the rest of dogma, but at least the drive to disable lawsuits has been weakened.
Back on topic: As Obama said at the outset, corporate tax reform is on the table, but only if every closed loophole is not portrayed as a tax increase. For one thing, reform is impossible without knowing what the current tax burden is precisely (i.e. figures for the top corporate rate are a lie). It's a subtle thing with what Ballmer and others are saying; they're not protesting a statutory tax increase, they're protesting increased difficulty in being a scofflaw.
Re:And as a reward... (Score:3, Interesting)
One thing that the corporate world can count on when they whinge about making billions instead of tens of billions is the 21st centuries version of the "useful idiot" - I.e "libertarians" that will come running to take their defense (defending a government created legal entity strangely enough) when they make these extraordinary claims that they actually have to pay into the system that lets them make that sort of profit in the first place.
(Sorry Liberatarians, I'm pretty down on you in this thread but I really do like the idea! I love the show Freedom Watch and really like Ron Paul and all that but...it's just that as usual a good *ideal* has been hi-jacked by sycophants and lick-spittles. So with regret I have to take the side of sanity and reality).
Then again now I now know how 1920s communists must have felt when the same type of group took over their ideology and turned it into a vehicle for themselves, so it gives me a better insight into history at least.
Re:Sure, move out. (Score:3, Interesting)
Mumbai wouldn't work; not because of it's location, but because the culture shock would be too much for most of the people in Redmond.
Cheap? I think M$ would want quality. It can get cheap from the tax benefits, but quality is much harder to find (and keep).
Fast-growing also tends to go hand-in-hand with under-regulation. I'm not saying that Mumbai is under-regulated (I haven't been there to say one way or another) but it is an observation.
M$ moving to Mumbai would disrupt things more than you'd think. Consider the crime that it would bring with it (pirate from the M$ labs instead of buying their overpriced products? sure), as well as the political corruption (we bring you jobs, you owe us a favor, and another favor, and another...)
It makes sense for all the wrong reasons.
Did no one read the article? (Score:2, Interesting)
Hasn't anyone RTF? These aren't profits from inside the US, they're international profits. Why should the American gov't be able to tax international revenue in the first place IF that revenue is kept and invested internationally? I hate Microsoft as much as the next man, but Balmer is actually making a lot of sense here.
Re:Capitalist flight (Score:1, Interesting)
Then maybe corporations should be abolished.
Re:And as a reward... (Score:4, Interesting)
the crap like "it is a requirement of a corporation to maximize the shareholders...." blah blah blah need to be RETIRED. Repeating this corporate dogma garbage just strengthens the hand of blowhards like Ballmer.
Actually, the problem is that it's codified into law. The primary fiduciary responsibilities for a company's offices are to maximize shareholder value. If they take things other than cost into consideration ( such as the environment, etc ), then they are breaking the law.
That's what needs to change. Either update it, or get rid of it. But it is causing the problem.
Re:Capitalist flight (Score:1, Interesting)
Taxes are figured on profits, so avoiding taxes does not increase profits (nor does paying taxes decrease profits). Besides, if a tax is a legitimate tax and it is avoided, how would that be any different than shoplifting for a consumer? Somebody, somewhere is going to have to pay for the goods and services that those avoided tax revenues were going to provide.
But, in reality, since we treat corporations like they have individual rights, then why not tax them like individuals? That way, a corporation can deduct expenses and be taxed just like a small business owner or a partnership, at an individual tax rate. Maybe if that were to happen, people would realize what a break corporations get tax wise compared to most businesses.
I do agree, though, when business move off shore, I have yet to see prices decline, even though they always state it is cheaper to produce off shore.
Sweet Irony! (Score:5, Interesting)
And I'm threatening to move to Linux.
Oh man... do you have any idea how outsourced/globalized the Linux market is? Linux as a commercial software product is almost entirely third world off-shored. Microsoft was sort of an outlier in doing so much development here in America.
Do you really think companies like Lynx or Motorola or Red Hat are doing their work here with American developers? They're not nearly profitable enough. If you want to be principled and supportive of the American business framework, then Linux is basically raping our software economy. Hell, even Solaris is more of an American product, and Sun is pretty globalized, as well.
I am fairly certain BSD is, as well.
All I am saying is that the Linux v. Microsoft argument is really really inappropriate here. It doesn't apply on any front. The American Linux development companies did this years ago. It's just a bigger deal when Microsoft does it.
If you are pro American industry and development that employs Americans and doesn't subvert out tax structure, you should be using Windows or Mac OS X. Seriously.
Tax Cheats Cost Me Money (Score:3, Interesting)
Interesting how low we've come.
A Tax Cheat costs honest tax payers money.
SMALL BUSINESS POWERS MOST OF THE ECONOMY. THEY CAN'T CHEAT LIKE MS!
If I don't pay taxes than YOU end up paying the difference. That alone should upset tax payers. Instead we frame it in some warped way so many of us rejoice that somebody is screwing the system-- are we so daft that we can't see the next step anymore?
Then we have big tax cheats who BRIBE officials (using legal games - everybody knows its bribery) to continue to cheat and/or create more ways to cheat on their taxes! That should REALLY upset tax payers. Instead we get easily fooled with irrelevant distractions like the endless rhetorical debate over taxation itself and government services etc.
Fix the tax system. Make it fair. THEN spend eternity fussing over details and principles.
BTW, teach MATH. Too many people do not understand how percentage works and why it is equitable.
Comment removed (Score:5, Interesting)
Re:Oh come on Steve (Score:4, Interesting)
That's exactly what some people said to folks like Alec Baldwin eight years ago when they threatened to leave the country because they didn't agree with the politics of new leadership (iow, "don't let the door hit you in the ass on the way out").
But then those comments were accompanied by accusations of treason and worse... now that it's a corporation instead of a liberal, let's see if Ballmer receives the same treatment as Baldwin.
Re:Move Microsoft Employees Offshore? (Score:3, Interesting)
Notice that US Employment rose steadily from 1950 through 2007 [wolframalpha.com] with a few bumps along the way, even as the unemployment rate has vascilated wildly throughout [wolframalpha.com]. Basically, the US has been able to add a steady number of jobs each year regardless of labor conditions. If we hadn't moved people offshore, we still wouldn't see a jump in US employment. The rate for adding jobs looks like it's roughly the same whether the unemployment rate is 2% or 12%. I just don't see a giant suck.
On a side note, Wolfram Alpha's search engine turned out to be very useful looking for facts like these.
Re:Capitalist flight (Score:2, Interesting)
Using a legal loophole is NOT against the law - spirit of the law, sure, but if we start jailing and fining people for doing things that aren't even against the law, that would set an incredibly frightening precedent.
Does that really sound like a good idea to you?
Comment removed (Score:3, Interesting)
Not sure if this could work but..... (Score:1, Interesting)
If they really wanted to discourage outsourcing of labor to avoid higher taxes, they could just try and have it import taxes relative to their countries of origin so their net taxation on the goods is equal regardless of where they came from.
Say we charge 15% taxes on the goods and they move to country "X" that charges 8% taxes on the goods. We could have our import tax from said country setup so they pay an extra 7% income tax on the goods so even if they left here and tried to avoid the taxes on it, they would still be stuck paying it on every item they shipped here.
I am sorry if I got this wrong as I am not exactly too knowledgeable on this area. But I figured I would just throw it out there.
I figure with an approach such as this moving out of the country would not make their in country prices any cheaper while the loss of faith from the countries government and people would be a big deal to lose.
Re:Corporation IS a property of state (Score:3, Interesting)
In the United States, government does NOT grant rights. Rights are inherent, and the structure of government is such that government has limited powers. Basically, by default everything is permitted. The only way things are prohibited is if they're specifically restricted. It's the complete opposite of many other governmental structures where 'rights' are granted by a traditional monarchy or other hierarchy.
You must not be an American. Which is okay, but you're talking outside your area of expertise.
Re:Capitalist flight (Score:2, Interesting)
But if it never actually gets paid back, or the currency is rather devalued in 50 years time, there really is little difference between issuing bonds and printing money.
Germany had hyperinflation when printing money because the rest of the world did not use their currency.
Because if the rest of the world were using their currency for most stuff, Germany could print money and instantly make themselves richer than the rest of the world. Since traded goods would instantly be cheaper for them.
But the rest of the world didn't, so the German government only made themselves richer than their citizens.
As I said, inflation can be a form of taxation. You make those with your currency pay, whether they like it or not. If you tax only your citizens the per person tax is higher, but if you get to tax the rest of the world, the rest of the world might take a while to figure it out
Go look at how much the US Dollar has devalued in the past 20-30 years. So did the bondholders get enough interest to cover that and more?