In the midst of Washington State's brief biennial legislative session to address the state's pending insolvency from a $2.8 billion budget deficit, you might think that an estimated $1.27 billion tax dodge by Microsoft, the state's most profitable company, and a proposed bill by Bill Gates' own representative which would grant Microsoft a $100 million annual tax cut and likely amnesty from it's unpaid taxes would warrant coverage in the state's most successful newspaper, The Seattle Times. Today, the Seattle Weekly points out that it hasn't, aside from a lone reader comment:
Microsoft's alleged dodging of over $1 billion in Washington state Royalty taxes may or may not be illegal. It may or may not be unethical. But it's certainly news. The P-I, Crosscut, KUOW, HorsesAss, TechFlash, BoingBoing, the U.K.'s Guardian, Huffington Post and Seattle Weekly all think so. The Seattle Times does not. The city's only remaining daily and the supposed paper of record hasn't devoted a single bit of space, either online or in print, to an issue involving one of the region's biggest employers.
There's nothing "alleged" about this tax dodge. When I interviewed Microsoft's General Council and Vice President Brad Smith in 2004 for Citizen Microsoft, a Seattle Weekly cover story, he admitted as much to me:
"Well, the principle focus of discussion inside the company and with people in state government here at times has been both the focus on revenue generation for the State of Washington and job creation in the State of Washington. And, obviously the company did make a decision, I'm not remembering exactly how many years ago to put Microsoft Licensing Incorporated in Nevada, in part to recognize the lower tax rate that was in place there. And, there have have been times when people in state government have mentioned to us the issue of whether we might move that back to the state of Washington. The reality is that in the scheme of things the impact is not very significant either for the company or for the state either the state government or the state economy."
That was back in 2004, but since then Microsoft's dodge has grown to nearly half the state budget deficit. Note: Nevada's tax rate for licensed software is zero. Washington's is .484%, lowered in 1998 from 1.5% by lobbying from...the software industry.
I actually began calling the Seattle Times about Microsoft's tax practices on October 27, 2009. I've made three phone calls and sent numerous emails to keep them apprised about this issue. They've reported on all other aspects of the state deficit and Legislative attempts to fill the gap, but so far no coverage at all on the Microsoft issue.
I don't understand why the paper won't cover the issue though the Times has had a history of taking stances on the estate tax at odds with our community's traditional centrist values. In 2000, the paper endorsed George Bush for President. This week, the paper complained that the Legislature's proposed sales tax increase was enough to push the author to evade the sales tax by driving south to Oregon.
I know Seattle journalism is under strain. The failure of the print edition of the PI recently has hurt the city. But, it's up to journalists to make their work relevant to readers. In choosing so far not to cover this issue, the Seattle Times is failing all of us. If you don't cover issues that materially affect events in our region, then perhaps your business deserves to struggle financially.
The only issue at question at this point is whether Microsoft's Nevada tax dodge is illegal or not. So far, neither the Department of Revenue or the State's Auditor has given me a sound reasonable explanation - despite numerous requests. That seems like a great topic for The Seattle Times' first story! You know how to reach me.
Update: Should have added ... HB3176's proposed $100 million tax cut for Microsoft and possible granting of tax amnesty to Microsoft's Nevada tax dodge by its community Legislator, Rep. Ross Hunter of Medina seems also to warrant coverage.