Photo: Associated Press
After we ran our post on Bill Gates supporting an income tax in Washington for people making over $200,000, a reader emailed us the following:I’m surprised that no one has yet written about how pissed off a lot of people in WA are about Bill Gates supporting this tax for the following reasons. If you were in Seattle, you would hear a lot of grips about Bill Gates from state employees and small business owners.
One of the big reasons WA is in a tax bind is all the crafty moves MSFT has done in the past 10 years to avoid paying their share of WA Corporate taxes. See: Microsoft Wins Nevada Royalty Tax Cut and Tax Amnesty; Reports Record Revenue
Microsoft has done the Nevada gimmick for years and when WA tried to go after them, MSFT strong-armed them with threats of moving WA jobs to other regions, etc.
“It also gave Microsoft amnesty on an estimated $1.25 billion in unpaid taxes, interest and penalties that the company has avoided paying since 1997 by reporting this revenue from a small Reno, Nevada office.”
So instead of closing the state’s budget crisis in one shot by having MSFT pay their fair share of back taxes, they gave MSFT amnesty and to make up for it, they increased the corporate tax for all small business owners by 20%! A LOT of small business owners in Seattle (esp service providers, small software companies, etc) are incensed that WA would give MSFT a pass and pass on the buck to them! This new tax on businesses was passed a few months ago. Now, Bill Gates is supporting an income tax on WA residents, and that has gotten business owners even more pissed off!
Now, as to other reasons why Bill Gates supports this new income tax is:
1 – The new income tax would allow WA to decrease property taxes – which is one of the reasons they cite for the income tax. Bill Gates pays a ton in property taxes per year. Over $1 million in property taxes. He has been at odds with his township to get his property taxes reduced for years. With a WA income tax, he knows that a reduction in property taxes statewide would help him a lot! Since he only collects about $800K in salary, he knows that net-net, this new state income tax would benefit him greatly! Esp since most of his other income is considered capital gains as opposed to income (when he sells MSFT shares, etc)
2 – Most MSFT employees make less than $200K a year, so by imposing the tax only on people who make over $200K (or married couples who make more then $400K), MSFT gets to keep recruiting employees by saying that they will not have to pay State income taxes in WA, and that’s why they should move to Seattle, etc, etc..
3 – A lot of people in WA know that this tax (if passed) will eventually be applied to people making less then $200K as well. The gimmick of this being a “rich people tax” is being used to get the votes to pass it. People know that over time, that tax would be applied to other income levels.
I think it would benefit readers to know the real reasons why Bill Gates supports this tax and how angry and betrayed many business owners feel in WA. In fact, one small start-up said that they might as well move to Silicon Valley since the costs of doing business in WA are getting on par with CA!
Anyone from Washington, Microsoft, or Bill Gates’ camp that thinks this analysis is bunk, feel free to email us: [email protected]