The Seattle Times reports that Microsoft is pushing Washington legislators "to pass a law making it illegal for manufacturers that use pirated software to sell goods in the state."
For example, if a large Washington store sold T-shirts made from a company in China and the Chinese company uses pirated copies of Excel at an office in Shenzhen, Microsoft could seek an injunction to prevent the manufacturer from supplying T-shirts to be sold in Washington state.
The legislature appears eager to please Microsoft: "'We have a problem internationally with stolen and counterfeited software,' said state Rep. Deb Eddy, D-Kirkland, one of the bill's sponsors."
The irony of this of course is that from 1997 to 2010, Microsoft avoided paying approximately $757 million of Washington State's Royalty Tax on software licenses by booking the sales in a small office in Nevada. With interest and penalties, the amount is over $1.25 billion.
Put it more simply, the Washington State Legislature is now poised to pass a bill that would allow Microsoft to interfere in the supply chain of Washington State companies simply for legally purchasing goods from foreign companies. Yet, despite facing a $5 billion budget shortfall, the Legislature has shown no interest in collecting back taxes on Microsoft's unpaid royalty tax bill from its Nevada alter ego subsidiary.
Recently, we saw a message in which a state employee acknowledged Microsoft's Nevada tax dodge for the first time: "The issue of tax breaks for Microsoft by allowing them to avoid taxes by licensing their software in Nevada was solved last year by House Bill 6143. The act solved the problems in two ways: First, it redefined 'economic nexus' for purposes of the B & O tax, thereby allowing Washington to tax economic activity occurring in Washington, regardless of the location of the parent company. Second, it allow the Department of Revenue to disregard economic transactions designed to avoid taxation by locating an activity in another jurisdiction (like Nevada)."
Of course, by solve, they meant that the royalty tax was redefined in such a way as to eliminate 99% of Microsoft's taxable revenue and that a one sentence amnesty clause was inserted to shield Microsoft from past tax abuses.