Senate report: Microsoft used loopholes to avoid billions in taxes

<i>A new congressional investigation claims Microsoft has been able to avoid paying $6.5-billion in taxes since 2009 thanks to the complicated tax structure in the U.S.</i><p>The role of a CFO (and his office) is to do exactly what resulted above. Build a team of accountants, lawyers, and financial analysts that makes sure that the financial health of the company is strong. "Is this a tax credit we can take advantage of, do it." "Can we legally execute this transaction and conserve millions of dollars? do it."<p>If these items are legal based on federal law and pass Microsoft's board's scrutiny, then why is this even an issue?

Every once in a while, a publication will run something like this about major companies [1][2]. It seems to be standard practice among large corporations. As a company, if you are allowed to save large amounts of money by using existing loopholes (read: things that are within the scope of the law), wouldn't you be silly not to?<p>[1]<a href="http://www.businessweek.com/magazine/content/10_44/b4201043146825.htm" rel="nofollow">http://www.businessweek.com/magazine/content/10_44/b42010431...</a><p>[2]<a href="http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html" rel="nofollow">http://www.nytimes.com/2012/04/29/business/apples-tax-strate...</a><p>[Disclaimer: I work for Microsoft]

The problem is that loopholes are largely monotonic.<p>Every loophole that exists was originally a political favor to some important constituency. There are always important constituencies seeking political favors, or embattled politicians or parties seeking new allies; so there will always be pressure to create new loopholes.<p>If a loophole's in danger of going away, its constituency will scream bloody murder. Republicans who vote to eliminate it will be painted as "raising taxes;" ever since Bush I promised not to raise taxes, raised taxes anyway, and then lost the White House, a lot of Republicans have been very afraid of this political attack. So there will always be pressure to avoid closing existing loopholes.<p>So loopholes are monotonic -- they can only increase over time.<p>The only way we could conceivably get out of this situation is if our tax code becomes so complex, everyone -- even the beneficiaries of the loopholes -- is angry and upset at the complexity and costs of paying, and decides to support throwing the whole thing out and starting fresh. This scenario probably requires a united government (same party controlling Presidency and both houses) which is willing to make the issue a priority. It's probably not going to happen in this year's election, unless a major event occurs between now and Election Day.

The use of the word "loopholes" indicates that Microsoft is complying with the law. The word "loopholes" also implies that Microsoft's actions aren't within the intent of the law, but the article provides no explanation on the intent of the law. So this article is an unfounded and unbalanced attack on Microsoft, no more interesting than saying "Microsoft is evil!".

Can we get back to discussing topics of a more technical nature? There are a million websites for this sort of useless unresolvable back and forth debate, ranging from Daily Kos to RCP to Human Events, any of which are better suited to this than HN.<p>I love a good political debate as much as the next person, and enjoy HN for the specific reason that I can avoid this sort of bullshit. And yes, I've read the guidelines and have flagged this.

Moving around intellectual property rather than than profits is very very old practice for tech companies. Why repatriate profits when you can use them for R&#38;D spending outside the USA, where there may even also be an R&#38;D tax credit!<p>Moving the intellectual property out of the USA, and then using that to make US sales from anther country is pretty ballsy though.

If Microsoft paid taxes unnecessarily, they would be doing a disservice to their stockholders.

If only there were a governing body that had some authority to do something about these loopholes.

Microsoft should run for president. Isn't this one of the qualifications?

Firstly there are some simple issues that most international companies are very tax "efficient" - paying their alloyed fair share would drive most of the Fortune 500 into the red this year<p>I am not saying that's a bad thing but it is a hard thing<p>Secondly allocation of resources is soluble. - one example would be an international agreement to pool all taxes and share out to countries in proportion to employees per country, but in the end companies pay how much we are willing to let them get away with.

How complicated can it really be? If you're making the profit in the country, then you should pay the taxes on that profit there, not send it to another branch to avoid paying the taxes. If there isn't a law against doing that, then there ought to be one.