Microsoft paid $0 taxes on $315 Billion in profits in 2020.

[landman 559]

Maybe it's an S-corp?

[brown water 3761]

3 hours ago, Orale said:

 I'm curious what the right wing argument in favor of this is.  

“Because I’m smart”

 

[MonkeyDoughnut 10145]

36 minutes ago, Willfully Horn said:

yes, but more like....

[RPM 26228]

 

[lmao 178]

Oligarchy gonna oligarchy

[lmao 178]

4 hours ago, Orale said:

https://www.theguardian.com/world/2021/jun/03/microsoft-irish-subsidiary-paid-zero-corporate-tax-on-220bn-profit-last-year

 I'm curious what the right wing argument in favor of this is.  

-Taxes should be low across the board

-They're job creators. If you tax them there will be no more jobs.

Broke right wingers go to bat for coporations like no one else. It's wild.

[TwiceHorn 31283]

3 hours ago, Incredulity said:

Misleading headline is misleading.

The 300 billion was gain on sale of a foreign subsidiary held in a foreign subsidiary.  What right does the USA have to entirely foreign business income?

 

Should Iowa be able to tax a company for business it does in Illinois?

Except that's not true.  

The subsidiary, which collects licence fees for use of copyrighted Microsoft software around the world, recorded an annual profit of $314.7bn in the year to the end of June 2020, according to accounts filed at the Irish Companies Registration Office. Its profits jumped from just under $10bn the previous year and compare with Ireland’s 2020 GDP of €357bn ($437bn).

That's about 20% of Microsoft's global revenue.  That accrues to the benefit of a US domiciled corporation that is untaxed through a complete accounting fiction.

[TwiceHorn 31283]

1 hour ago, We’reTexas said:

It is. Microsoft needs to set up foreign subs in foreign markets to do business. As with many companies, onshoring IP to Ireland has become the most tax efficient structure for non-US operations. 

This is also false.  It is a copyright/software royalty collection point with no employees.  It is an accounting fiction that fictitiously resides in Ireland.

Ireland is a good location for foreign outposts of US corporations as it has an highly educated and generally underemployed workforce.  Dell does or did most of its manufacturing for the European market there.

This particular subsidiary is not there for that reason.

[fattyflattie 4636]

28 minutes ago, lmao said:

Taxes should be low across the board

They should be.  One should not have a lesser responsibility for being more of a burden to society. 

Edited June 3, 2021 by fattyflattie

[MonkeyDoughnut 10145]

In the 1950's corporate taxes made up about 33% of federal taxes....now that number is less than 7%.

We're talking percentages here....the tax laws are bad, the tax laws are why we can't afford military grade armor for police AND chalk for teachers.

[Bullneck 18987]

2 hours ago, freyguy said:

why ruin your day?

From this response I conclude you have no idea what you're talking about.  

[Incredulity 11555]

1 hour ago, TwiceHorn said:

Except that's not true.  

The subsidiary, which collects licence fees for use of copyrighted Microsoft software around the world, recorded an annual profit of $314.7bn in the year to the end of June 2020, according to accounts filed at the Irish Companies Registration Office. Its profits jumped from just under $10bn the previous year and compare with Ireland’s 2020 GDP of €357bn ($437bn).

That's about 20% of Microsoft's global revenue.  That accrues to the benefit of a US domiciled corporation that is untaxed through a complete accounting fiction.

The 300 billion was from a sale of foreign subsidiaries, not from licensing.

If I own a business in Texas and a business in Arizona should I pay Arizona taxes if I sell the Texas business?

Edited June 3, 2021 by Incredulity

[yoladu 4067]

1 hour ago, fattyflattie said:

They should be.  One should not have a lesser responsibility for being more of a burden to society. 

[Willfully Horn 7915]

1 hour ago, MonkeyDoughnut said:

the tax laws are bad, the tax laws are why we can't afford military grade armor for police AND chalk for teachers.

Not the only reason, IMO.

The Pentagon’s $1.5 Trillion Addiction to the F-35 Fighter

 

https://www.google.com/amp/s/www.thenation.com/article/archive/f35-fighter-jet-pentagon/tnamp/

Edited June 3, 2021 by Willfully Horn
Ham phalange

[David Dennison 18659]

2 hours ago, lmao said:

-Taxes should be low across the board

-They're job creators. If you tax them there will be no more jobs.

Broke right wingers go to bat for coporations like no one else. It's wild.

You should be glad that the state allows you to have money.

[sidis 9754]

3 hours ago, CooterBrown said:

The US and Eritrea are the only two countries that tax citizens globally. Along with our death penalty peers, we keep great company.

hey now, don't forget our imperial units system peers - liberia and myanmar/burma.

[Judge Roybeanbag 11810]

49 minutes ago, Incredulity said:

The 300 billion was from a sale of foreign subsidiaries, not from licensing.

If I own a business in Texas and a business in Arizona should I pay Arizona taxes if I sell the Texas business?

I finally found the explanation of what you’re talking about.

Quote

According to the accounts, the profits were the result of surpluses and assets received from two subsidiaries that were liquidated during the year. These were Microsoft Luxembourg USA Mobile Sarl and MACS Holdings Ltd. The net impact of the corporate reorganisation was the receipt of assets worth $301.l billion.

Shareholder’s equity increased by $290.2 billion in line with the increase in profits during the year. It is understood that this non-cash gain was exempt from tax as it is driven by a group reorganisation.

 

[Dahobbs 17447]

50 minutes ago, Incredulity said:

The 300 billion was from a sale of foreign subsidiaries, not from licensing.

If I own a business in Texas and a business in Arizona should I pay Arizona taxes if I sell the Texas business?

If you're a citizen of Arizona, maybe you should, particularly if your Texas business is really part of your Arizona business. . 

[David Dennison 18659]

52 minutes ago, Incredulity said:

The 300 billion was from a sale of foreign subsidiaries, not from licensing.

If I own a business in Texas and a business in Arizona should I pay Arizona taxes if I sell the Texas business?

If the Arizona business owns the Texas business, absolutely.

[Fudge Nuggets 19151]

5 hours ago, Incredulity said:

https://www.microsoft.com/investor/reports/ar20/index.html#

 

Our effective tax rate for fiscal years 2020 and 2019 was 17% and 10%, respectively.

 

In fiscal year 2020, our U.S. income before income taxes was $24.1 billion

 

Paid 4 billion in taxes.

I wish like hell my tax rate was only 16.6%.

[Fudge Nuggets 19151]

2 hours ago, TwiceHorn said:

Ireland is a good location for foreign outposts of US corporations as it has an highly educated and generally underemployed workforce. 

Counterpoint, it's full of stank ass Irish people.

[TwiceHorn 31283]

1 hour ago, Judge Roybeanbag said:

I finally found the explanation of what you’re talking about.

 

Yes, rather than sale of businesses, it appears to have been the dissolution of other IP holding companies and transfer of the IP assets to the Irish sub. 

[We’reTexas 1469]

5 hours ago, TwiceHorn said:

This is also false.  It is a copyright/software royalty collection point with no employees.  It is an accounting fiction that fictitiously resides in Ireland.

Ireland is a good location for foreign outposts of US corporations as it has an highly educated and generally underemployed workforce.  Dell does or did most of its manufacturing for the European market there.

This particular subsidiary is not there for that reason.

That’s actually what I meant (I work on these frequently for clients from the corporate side and was thinking of “operations” in a different sense). I was simply making the point that Microsoft is not a monolithic entity but rather probably a hundred or so entities set up around the world to enable global operations, and tax efficiency and planning of course drive structure. As a corporate lawyer I don’t see anything wrong with that (why would one choose to be less efficient?), but that doesn’t mean I don’t support to concept of increasing corporate taxation either. 

[Incredulity 11555]

3 hours ago, Fudge Nuggets said:

I wish like hell my tax rate was only 16.6%.

Post your return.

I’ll take the under.

[Incredulity 11555]

3 hours ago, Judge Roybeanbag said:

I finally found the explanation of what you’re talking about.

 

Yes!

EXEMPT from taxation.

Edited June 4, 2021 by Incredulity

[TwiceHorn 31283]

31 minutes ago, We’reTexas said:

That’s actually what I meant (I work on these frequently for clients from the corporate side and was thinking of “operations” in a different sense). I was simply making the point that Microsoft is not a monolithic entity but rather probably a hundred or so entities set up around the world to enable global operations, and tax efficiency and planning of course drive structure. As a corporate lawyer I don’t see anything wrong with that (why would one choose to be less efficient?), but that doesn’t mean I don’t support to concept of increasing corporate taxation either. 

Well, as an IP guy and a pro-IP guy, I find a lot of the manipulation of IP assets (to include what trolls do to secure venue) to be abusive.

IP holding companies are not particularly new, but their main purpose was to make depreciation easier, at least like 30 years ago.  Apparently this notion of holding all IP somewhere outside the US, and nominally or fictively collecting revenue there, has become pretty common and is abusive, in my opinion.

[Fudge Nuggets 19151]

29 minutes ago, Incredulity said:

Post your return.

I’ll take the under.

You would lose.

[Incredulity 11555]

14 minutes ago, Fudge Nuggets said:

You would lose.

Certified Rocko

Edited June 4, 2021 by Incredulity

[Fudge Nuggets 19151]

2 hours ago, Incredulity said:

Certified Rocko

If I had been dumb enough to post my return then you would be correct.  I didn’t so fuck off.

[hornmpa96 2598]

First, the United States has the most aggressive system for taxing foreign income after the 2017 TCJA. Just because income is not taxed in Ireland doesn’t mean it’s not taxed in the US. Currently US companies are required to include deemed dividends in US taxable income based on the net income of its foreign subsidiaries under the GILTI regime. This deemed inclusion is subject to a potential 50% deduction and the US tax can be reduced by foreign tax credits.

This Microsoft example is a horrible example as majority of the profits relates to a bullshit accounting gain from the liquidation of the certain subsidiaries of the company. Under the US system, there is likely zero taxable income because generally the liquidations of corporate subs into a parent company is tax free.

Prior to the TCJA, the Irish company with Bermuda residency generated sizable tax benefits; however, under the current system, it’s likely subject to 10.5% US income tax. One can certainly argue if the rate is too low, etc.

[Incredulity 11555]

18 minutes ago, Fudge Nuggets said:

If I had been dumb enough to post my return then you would be correct.  I didn’t so fuck off.

How is the vette running?

[Incredulity 11555]

15 minutes ago, hornmpa96 said:

First, the United States has the most aggressive system for taxing foreign income after the 2017 TCJA. Just because income is not taxed in Ireland doesn’t mean it’s not taxed in the US. Currently US companies are required to include deemed dividends in US taxable income based on the net income of its foreign subsidiaries under the GILTI regime. This deemed inclusion is subject to a potential 50% deduction and the US tax can be reduced by foreign tax credits.

This Microsoft example is a horrible example as majority of the profits relates to a bullshit accounting gain from the liquidation of the certain subsidiaries of the company. Under the US system, there is likely zero taxable income because generally the liquidations of corporate subs into a parent company is tax free.

Prior to the TCJA, the Irish company with Bermuda residency generated sizable tax benefits; however, under the current system, it’s likely subject to 10.5% US income tax. One can certainly argue if the rate is too low, etc.

What????

The Guardian published leftist bullshit???? No wai!!!!111!11!!!

[Fudge Nuggets 19151]

7 minutes ago, Incredulity said:

How is the vette running?

yawn

[TwiceHorn 31283]

36 minutes ago, Incredulity said:

What????

The Guardian published leftist bullshit???? No wai!!!!111!11!!!

Well, actually, the article didn't purport to address US taxation.  It is apparently true that it paid no taxes in Ireland, which is Ireland's problem.

But, as hornmpa points out, if it does pay dividends back to US M$, they are taxed, and dividends may be "deemed," whether actually paid or not.

It is a bit ironic that liquidation of subs back into a parent is tax-free under US tax law, because that implicitly recognizes that it's the parent's money and assets anyway.  Yet revenue generated by those same assets, that belong to the parent regardless of "title," are not taxable income to the parent without exception.

Edited June 4, 2021 by TwiceHorn

[Incredulity 11555]

6 hours ago, Fudge Nuggets said:

yawn

Well done.

[Bullneck 18987]

7 hours ago, Incredulity said:

How is the vette running?

Yawn

(Dammit, need to post that before I go to sleep)

Edited June 4, 2021 by Bullneck

[Nice Guy Eddie 13414]

At the end of day, Microsoft mgmt has a fiduciary duty to their shareholders. If they have legal methods to save tax expenses, they need to do so. Now if they’re writing laws for politicians, so that they can save on taxes, that is on the politicians and even more so the people who elect them.

 

[Dahobbs 17447]

1 hour ago, Nice Guy Eddie said:

At the end of day, Microsoft mgmt has a fiduciary duty to their shareholders. If they have legal methods to save tax expenses, they need to do so. Now if they’re writing laws for politicians, so that they can save on taxes, that is on the politicians and even more so the people who elect them.

 

Yeah I don't think Microsoft is doing anything unusual or illegal. But it does demonstrate what I view as flaws in our tax system and the fiction of nominally independent companies that are actually fully operated by a parent. From a litigation perspective, I think 99% of corporate subsidiaries should be treated as alter egos of the parent. These aren't truly independent entities in any practical sense. 

[TwiceHorn 31283]

5 minutes ago, Dahobbs said:

Yeah I don't think Microsoft is doing anything unusual or illegal. But it does demonstrate what I view as flaws in our tax system and the fiction of nominally independent companies that are actually fully operated by a parent. From a litigation perspective, I think 99% of corporate subsidiaries should be treated as alter egos of the parent. These aren't truly independent entities in any practical sense. 

Yep, wholly owned subsidiaries really need to be treated as the parent, for most purposes.

On the fiduciary issue, I think that gets overplayed a bit.  Yes, they are fiduciaries, but they're legally protected by the business judgment rule, which gives management leeway to govern a corporation other than by next quarter's financials.  They can be voted out, of course, but "social responsibility" can be sold to shareholders along with ROI.

[Dahobbs 17447]

21 minutes ago, TwiceHorn said:

Yep, wholly owned subsidiaries really need to be treated as the parent, for most purposes.

On the fiduciary issue, I think that gets overplayed a bit.  Yes, they are fiduciaries, but they're legally protected by the business judgment rule, which gives management leeway to govern a corporation other than by next quarter's financials.  They can be voted out, of course, but "social responsibility" can be sold to shareholders along with ROI.

I don't even think that all wholly owned subsidiaries need to be treated that way. But the reality is that most such entities don't operate as distinct entities. For instance, a case I have now involves a parent with a dozen sidsidaries world wide. Each subsidiary has the exact same executive management team. And the CEO of the subsidiaries is also the third in line for the foreign parent. And it is impossible to distinguish when that CEO is acting on behalf of a subsidiary or the parent. This is very common. 

[hornmpa96 2598]

I totally understand the comments about wholly owned subsidiaries being generally managed and controlled by their parent.

However, in the international tax context, we need some mechanism to determine which countries have the right to tax which income. The US system generally started with the premise that the corporate form is respected and therefore foreign income earned by foreign subs shouldn’t be subject to US tax unless repatriated to the US or is the type of income subject to potential abuse so that it’s subject to tax under a deemed repatriation regime. Lastly, the foreign tax credit system existed to prevent double taxation of this income between countries.

Since 2017, the US moved away from those base principles. Under the current proposals, the US is moving to a full inclusion system with the most restrictive foreign tax credit system in the world. It’s extremely punitive to US based multinationals with real foreign businesses.

[Dahobbs 17447]

1 hour ago, hornmpa96 said:

I totally understand the comments about wholly owned subsidiaries being generally managed and controlled by their parent.

However, in the international tax context, we need some mechanism to determine which countries have the right to tax which income. The US system generally started with the premise that the corporate form is respected and therefore foreign income earned by foreign subs shouldn’t be subject to US tax unless repatriated to the US or is the type of income subject to potential abuse so that it’s subject to tax under a deemed repatriation regime. Lastly, the foreign tax credit system existed to prevent double taxation of this income between countries.

Since 2017, the US moved away from those base principles. Under the current proposals, the US is moving to a full inclusion system with the most restrictive foreign tax credit system in the world. It’s extremely punitive to US based multinationals with real foreign businesses.

Well, now you're getting into the much muddier area of sovereignty. Ideally there would be international agreement on the scope of taxing authority related to multinationals. But the reality is that a company doing business in multiple countries is going to be subject to the power of each of those countries. And the laws of each country are going to dictate their taxing authority. I disagree that a more inclusive regime is punitive, but I do agree that represents an additional expense. Ultimately, those companies will need to decide whether they want to continue doing business in the US. I think, regardless of the tax consequences, that answer is going to be yes. 

Edited June 4, 2021 by Dahobbs

[Fudge Nuggets 19151]

This alleged punitive tax system allowed Microsoft to get away with paying (checks notes) fuck all on billions in profits. 
 

Thoughts and prayers to MSFT. Hopefully they can survive this. 

[Beau Vine 54003]

On 6/3/2021 at 3:15 PM, Fudge Nuggets said:

I wish like hell my tax rate was only 16.6%.

Humblebrag?

[Fudge Nuggets 19151]

4 hours ago, Beau Vine said:

Humblebrag?

I didn’t think so.  I figured most on this board were well over a 17% tax rate, but now that you mention it I forgot that a bunch of posters were happy to get their stimulus checks.  Good for them.

[Nivek 16860]

Corporations are people, charge them individual rates for doing business in the US.

[TwiceHorn 31283]

22 hours ago, Dahobbs said:

Well, now you're getting into the much muddier area of sovereignty. Ideally there would be international agreement on the scope of taxing authority related to multinationals. But the reality is that a company doing business in multiple countries is going to be subject to the power of each of those countries. And the laws of each country are going to dictate their taxing authority. I disagree that a more inclusive regime is punitive, but I do agree that represents an additional expense. Ultimately, those companies will need to decide whether they want to continue doing business in the US. I think, regardless of the tax consequences, that answer is going to be yes. 

Apparently, there is about to be. https://www.nasdaq.com/articles/exclusive-g7-to-back-minimum-global-corporate-tax-and-support-economy-draft-2021-05-31

It seems fairest to me for the jurisdiction where the bulk of the economic activity takes place to get the tax revenue. And I think it comports with most notions of fairness that there ought not be double taxation from two jurisdictions, or if there is, it should be proportionate to the actual activity occurring in the two jurisdictions.  Maybe that's wrongheaded.  Maybe it should just be a hazard of doing international business that you subject yourself to double taxation, unless you do so by other than wholly owned subsidiaries.

 

[hornmpa96 2598]

The Irish response will be interesting. Ireland built its economy by having a low tax rate and access to the EU. 

[Grade of D as in David 13253]

2 hours ago, hornmpa96 said:

The Irish response will be interesting. Ireland built its economy by having a low tax rate and access to the EU. 

And potatoes