Asking for handouts from tax payers with profits like those is some shameful stuff. It's simply theft by another name.
* waits for the 'well other people do it' 'defence' *
In its final quarter of its fiscal 2017, Microsoft more than doubled its profits, saw massive cloud growth, and managed to get a rebate from US taxpayers at the same time. For the three months to June 30, Microsoft's net income rose 109 per cent and earnings per share 112 per cent. All of its divisions, with the exception of …
They're legally obligated to their shareholders to apply for the tax rebate.
We've been through this before. There is *no* legal obligation (and BTW - the word you are looking for is "obliged") for a corporation to make money any way they can.
The legal obligation is to balance profit, expenditure and other factors to provide the long-term stability and profitability to their shareholders. Not to make every fast buck that they can.
 Reputation, goodwill, research, IPR, etc etc etc.
Allow me to expand your vocabulary.
1 compel (someone) to undertake a legal or moral duty.
2 United States commit (assets) as security.
n adjective Biology restricted to a particular function or mode of life: an obligate parasite.
Middle English (as adjective in the sense 'bound by the law'): from Latin obligat-, obligare (see oblige).
1 (usually be obliged to do something) make legally or morally bound to do something.
2 perform a service or favour for. Ø(be obliged) be indebted or grateful.
Middle English: from Old French obliger, from Latin obligare, from ob- 'towards' + ligare 'to bind'.
"They're legally obligated to their shareholders to apply for the tax rebate."
Well, it's more that they are not authorized by their shareholders to pay extra taxes that they do not legally owe. But in any case, there is no rebate. The "effective tax rate" of 8% is a completely meaningless metric. The article distorts their real net income by conveniently leaving out the amount of the massive loss from its failed mobile business. They paid 35% on their real income, not 8% on the good stuff. Net income has always been revenues minus expenses, so no Trump-inspired loopholes required.
MS are simply following the example set by President Trump. Didn't he extoll the fact that he'd paid no income tax for years? If the Commander/Tweeter in Chief can do that then so can Microsoft.
Don't worry all you wonderful tax complainers out there, the Apple results are due soon. That will give you all plenty of muck to rake over and moan about.
They write the tax laws. Should Microsoft say "hey, we're entitled to a rebate but we're just going to leave it out of our tax forms and let the government keep that money?" For those who answer "Yes", please tell which how much extra taxes you pay each year by skipping deductions you're entitled to.
This is where the arguments for lowering the corporate tax rate and eliminating loopholes comes in. In theory, if you were actually able to do that, some companies like WalMart that pay at pretty much the top rate because their business doesn't match existing loopholes well would pay less, while other companies like big banks and tech firms would end up paying more because they'd lose some of the deductions they are able to take today.
We all know that loopholes will never get removed - a few obvious ones will but only if there are backup loopholes they can use, or new ones inserted. The lobbyists who will actually write the law will make sure of that. Then congress and the president will tell us how great the new tax plan is and "everyone will pay their fair share" and it'll magically pay for itself by increasing growth, and it'll be like Bush's tax cuts - increasing the deficit and the fat cats will get even fatter!
Your use of the word "shameful" shows that you are in the wrong universe - one that has a "moral" dimension.
When playing the popular game of "Corporate Monopoly", however, there is no moral dimension. Just like a game of table-top Monopoly. You get points for piling up cash, without limit and without reservation. It's delightfully simple.
AWS's short-to-medium term revenue and profit numbers only matter in terms of "are they making money".
The long term goal is ensuring they are the top cloud provider when all most all computing requirements are delivered by your local cloud provider.
Only the old timers will remember $X billion revenue in 20 years time from a company that is no longer relevant... Not saying that MS will lose relevance at this stage as they are matching Google and AWS on their cloud build out plans but 20 years is time for a lot of mistakes in the IT world. As IBM, HP and Oracle are demonstrating...
"as they are matching Google and AWS on their cloud build out plans"
Market share in terms of money is what really matters here and Microsoft just went to #1 in cloud over AWS and are still growing MUCH faster.
Google are an irrelevance in cloud used by virtually no one except the few niche companies that they effectively pay to use Google cloud with rates so low that they are commercially unsustainable....
@The Count - "Would you please type in a version of English the rest of the world can understand."
You, Sir, misunderstand the point of English. It is merely for the likes of you to understand that your, presumably unfortunate, breeding prevents you from understanding as much as we do. Good Day.
I SAID GOOD DAY.
For those of us old enough and who either were in Empire & Commonwealth artillery 1939-45 or had relatives who were, a ‘stonk’ was a technical term involving 525-yard frontages and lots of noise. Barbarians, such as infantry officers and Americans, tended to misuse the term.
I remain a devout apostle of the sainted Ian V. Hogg.
The problem (as I see it) with the current tax system is that it allows global scale companies to leave money offshore to defer tax. As long as you make enough money, you leave a large pile offshore accruing interest while you wait until your lobbyists manage to negotiate a friendly tax deal to allow you to bring some of the money back on-shore where you have to pay tax.
In the meantime, consumers spend money and the corporates effectively take it out of circulation...
None of this is illegal (as far as I can tell) - we just need to find a way of stopping the money ending up stagnating .
I try to minimise my tax, within the law, why shouldn't they? And they're far from the only ones, the other cloud providers are equally efficient at tax minimisation.
The problem is the govts, they need a more robust framework for taxation, especially of the large corporates.
@GoldCoaster ...."they need a more robust framework for taxation"
Companies need to be taxed on sales in the place where sales or goods are being consumed not on profits. Profits are too easy to disguise and move to a low tax zone.
Some people will complain that this is making the consumer pay, which is true: the consumer always pays. The profit that is taxed at present has already come from the consumers pocket.
Yes, VAT, sales tax, duty or whatever. Tax them at a place their clever accounts can't avoid. All things being even (hmmm) if a company is paying a fair level of corporation tax consumer prices will stay the same as the company generates the same net profit with a lower base price. It makes no difference to the end consumer as the rise in tax should be compensated by the fall in the base price. If a company wants to be uncompetitive by not cutting its pre tax prices that is its decision.
An interesting side effect is that the cost of zero VAT rated things (i.e. essentials) will fall because the companies making them will be paying no corporation tax. I can live with that even though it will inevitably slightly push up tax on non essentials to compensate.
To complete the tax reform, company dividends need to be taxed as income.
"rebate from US taxpayers"
Yeah, the US took lollipops from little children and gave them to the evil corporations who used them to poison puppy dogs.
Rebate means that they received money back they have already paid in. ffs!
And shouldnt the questions be why are we paying so much tax, not why are they paying so little?
"And shouldnt the questions be why are we paying so much tax, not why are they paying so little?"
Oh, I don't know. Little things like roads, schools, law and order, national defence. You know, the things that companies use in their business dealings.
Perhaps you could do without them? I don't think they could.
Oh, I don't know. Little things like roads, schools, law and order, national defence.
I read quite a fine article t'other day on the differences between the US and Canada on the attitudes to tax and the practical consequences.
Article is here:
Some thoughts here that will get me massively downvoted by the hard of thinking.
To aid borderline thinkers: remember that tax evasion and tax avoidance are two different things. Tax evasion is illegal; tax avoidance is immoral. As Aladdin Sane pointed out, under US law Microsoft is legally obligated to maximize shareholder return by whatever legal means possible. Tax avoidance is legal.
Microsoft has done nothing illegal, merely what many commentards (me included) consider to be very immoral (and something which adds insult to injury by taking money from taxpayers to produce incredibly shoddy products).
Most of you are programmers. You love finding, and exploiting, edge-cases in your code. You produce code that relies upon obscure (but documented, and therefore semi-guaranteed to keep working) effects of library calls. Any programmer who uses the variable++ convention to increment a variable is exploiting a side-effect possible in languages that permit assignments that discard the result. It is hardly surprising that IT companies are amongst the forefront of those exploiting tax laws in the same way.
For all of us (me included) who are unhappy that Microsoft, Google, Starbucks et al. evade taxes by exploiting the law, the answer is not to shame them. It's to change the fucking laws to make that evasion impossible.
Damn, it seems to be my day for writing posts that are going to get a lot of knee-jerk downthumbs. Pub o'clock cannot come too soon.
"tax avoidance is immoral"
I'm not sure I'd agree with that. As Peter Hitchens wrote a few years ago,
"A greedy, slovenly state forces you to hand over roughly half your money every year, by threatening to send you to prison if you don’t.
Then it shovels that money carelessly down a huge hole. The Government is bad at almost everything it does. If you sent it out to buy you a loaf of bread, it would come back a week later with stale cake, and pretend it had lost the change."
Who here wouldn't pay less income tax if they had the opportunity to do so?
I don't understand people who criticise companies for obeying tax law.
If you have a problem with the way tax law works, you should direct your ire at the people who created that law.
And the idiots who voted for them.
I'm off the the pub, which is the proper place to discuss these things.
I'm not going to bother with examples as you wouldn't be convinced, this being very much based on personal politics and outlook, but I disagree.
In general, government is usually better than the profit-maximising, short-term, crony capitalist, winner-takes-all, ever-voracious market.
There are exceptions, but these are often because that aspect of governmental provision has been captured by business interests.
"In general, government is usually better than the profit-maximising, short-term, crony capitalist, winner-takes-all, ever-voracious market."
Except when government is corrupt and is doing the bidding of those same profit-maximising, short-term, crony capitalist, winner-takes-all corporations? I can hardly see any difference between them any longer.
Not quite. It's a share buyback, so the volume of shares on the market decreases but the company's market capitalisation stays the same, therefore the value of repurchased shares is redistributed amongst the outstanding shares and the people who sold their shares get a nice cash lump.
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