Today, Microsoft announced record quarterly profit of $16.2 billion. The company now holds $44 billion in cash and short term assets.
Under Democratic Rep. Ross Hunter's leadership in the Washington State Legislature, Microsoft's licensing revenue is no longer taxable in Washington. Hunter led the change to Washington's royalty tax so that only licensing revenue sold to Washington State customers is taxable. Prior to 2010, worldwide royalty revenue was taxable.
Hunter is a former 17 year veteran of Microsoft, now head of the powerful finance committee. Rather than apportion the royalty tax (which resulted in only a tiny gain in state revenues), Hunter could have adopted stricter enforcement language around out of state tax transactions such as was proposed by the state's Department of Revenue. Since 1998, Microsoft has used a small office in Reno, Nevada to record its worldwide royalty profits - avoiding nearly $1.25 billion in tax liabilities.
None of this would be a big deal if Washington State wasn't facing a $3 billion deficit.
Microsoft Tax Dodge founder Jeff Reifman recently endorsed Hunter's Republican opponent, Diane Tebelius, in Tuesday's upcoming election.
We'll have a lot more to talk about in coming weeks. Stay tuned.