Report: Microsoft, Boeing stash money offshore to dodge tax bills
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SEATTLE -- What would you do with an extra $1,000?
A local non-profit says taxpayers lose out on that money every year because of offshore tax loopholes.
"America's largest corporations and wealthiest individuals basically take advantage of accounting gimmicks to shift profits offshore to avoid paying taxes," said Micaela Preskill, state advocate for the Washington Public Interest Research Group. "Small business owners and American taxpayers are left to pick up the tab."
WashPIRG, a local non-profit, released a report Thursday, saying the loopholes cost federal taxpayers $150 billion dollars each year, leaving small businesses to fill the void.
"This is cheating. When you misrepresent yourself, you're cheating," said Barbara Elza, owner of Daily Dozen Donut Company, a Pike Place Market mainstay for nearly 30 years. "I don't even have enough to meet my expenses this month, let alone stash something offshore."
The report contains a state-by-state analysis, listing some of the largest corporations in the U.S. that allegedly used tax havens to shrink their tax bills. As of 2008, 83 of the top 100 publicly traded corporations in the U.S. stash money offshore to dodge tax payments, the report found.
Boeing, Microsoft, and the now-defunct Washington Mutual are among the Washington companies listed in the report.
In Microsoft's case, the report alleges the company skirted $4.5 billion in federal income taxes by shifting income to Puerto Rico, a tax-friendly commonwealth, over a three year period.
"We comply with the tax laws in each jurisdiction in which we operate," the company said in a statement. "Our tax results follow from our global business which requires us to operate in foreign markets to compete in worldwide trade, grow, and create US jobs. Last year, Microsoft paid over $5 billion in taxes worldwide, and our effective tax rate was approximately 24 percent."
The report also alleges that Boeing paid a tax rate of just 0.3 percent -- or $13 million in federal taxes on a $4.3 billion dollar profit in 2010 -- due to 42 subsidiaries based in tax havens.
A spokesman vehemently denied the numbers, pointing to tax returns and arguing the company's tax payments are often deferred in states and countries where they do business.
"Boeing is the largest manufacturing exporter in the country. We earn almost all of our revenue right here in the United States and pay associated taxes here," said Chaz Bickers, communications director for Boeing. "In 2010, more than 95 percent of our earnings was taxable in the U.S. with state and federal tax expense of just under $1 billion."
"Boeing is the largest manufacturing exporter in the country so tax havens simply are not a relevant or meaningful part of our business," he added.
Elza, who struggles to support her four employees, hopes that federal lawmakers will step in and correct the laws to go after the worst offenders.
"(I'm) struggling now like I haven't ever struggled," she said. "It hurts everyone when the state has to cut back on things like meals on wheels or rides for people with cancer to get their treatment. That hurts every person."
A local non-profit says taxpayers lose out on that money every year because of offshore tax loopholes.
"America's largest corporations and wealthiest individuals basically take advantage of accounting gimmicks to shift profits offshore to avoid paying taxes," said Micaela Preskill, state advocate for the Washington Public Interest Research Group. "Small business owners and American taxpayers are left to pick up the tab."
WashPIRG, a local non-profit, released a report Thursday, saying the loopholes cost federal taxpayers $150 billion dollars each year, leaving small businesses to fill the void.
"This is cheating. When you misrepresent yourself, you're cheating," said Barbara Elza, owner of Daily Dozen Donut Company, a Pike Place Market mainstay for nearly 30 years. "I don't even have enough to meet my expenses this month, let alone stash something offshore."
The report contains a state-by-state analysis, listing some of the largest corporations in the U.S. that allegedly used tax havens to shrink their tax bills. As of 2008, 83 of the top 100 publicly traded corporations in the U.S. stash money offshore to dodge tax payments, the report found.
Boeing, Microsoft, and the now-defunct Washington Mutual are among the Washington companies listed in the report.
In Microsoft's case, the report alleges the company skirted $4.5 billion in federal income taxes by shifting income to Puerto Rico, a tax-friendly commonwealth, over a three year period.
"We comply with the tax laws in each jurisdiction in which we operate," the company said in a statement. "Our tax results follow from our global business which requires us to operate in foreign markets to compete in worldwide trade, grow, and create US jobs. Last year, Microsoft paid over $5 billion in taxes worldwide, and our effective tax rate was approximately 24 percent."
The report also alleges that Boeing paid a tax rate of just 0.3 percent -- or $13 million in federal taxes on a $4.3 billion dollar profit in 2010 -- due to 42 subsidiaries based in tax havens.
A spokesman vehemently denied the numbers, pointing to tax returns and arguing the company's tax payments are often deferred in states and countries where they do business.
"Boeing is the largest manufacturing exporter in the country. We earn almost all of our revenue right here in the United States and pay associated taxes here," said Chaz Bickers, communications director for Boeing. "In 2010, more than 95 percent of our earnings was taxable in the U.S. with state and federal tax expense of just under $1 billion."
"Boeing is the largest manufacturing exporter in the country so tax havens simply are not a relevant or meaningful part of our business," he added.
Elza, who struggles to support her four employees, hopes that federal lawmakers will step in and correct the laws to go after the worst offenders.
"(I'm) struggling now like I haven't ever struggled," she said. "It hurts everyone when the state has to cut back on things like meals on wheels or rides for people with cancer to get their treatment. That hurts every person."
"Puerto Rico, a tax-friendly country".
Great, the author of this story does not know that Puerto Rico is part of the USA.Â
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 @lorenray HAHAHAHAHAHA!!!!!
As a small business owner, sadly I predict Ms. Elza's business will fail. It appears she has wasted valuable time and resources researching companies that aren't even in her competition circle. If she had spent the time and resources researching what her immediate competition is doing, she'd be faring better. Boeing and Microsoft aren't putting her out of business. The mom and pop shop down the street is! She should be asking herself "what is my competition doing that is diverting customers from my business to theirs? What can I do, or offer that will intice their customers to come to my store? What do my customers want or need???!!
What can my business do to fullfil those needs??If she were to focus time and energy on her own business practices and operations, she'd probably be faring better. Hire a consultant! It's a business tax write off. Hire a CPA to look at your finances. It's a tax write off. Play your suppliers against each other for your business so you get the best quality at the lowest price. All it takes is some effort and negotiating skills. You're a consumer, so you have those skills already!
Wasting time complaining about big business is not going to save your small business. You are not entitled to have a small business that flourishes. You are entitled to use the opportunities and financial incentives this country offers to make your business grow, but YOU must go after them! It's called capitalism, not Socialism and it's one of the core principals this country was founded upon.Â
Wishing Ms. Elza the best.
Mmm. You think I would have figured that out 30 years ago. 30 years is how long that I have been in business at the pike place market. I am in fact one of the top ten business in the market based on square footage. It's too bad the entire interveiw wasn't aired. I think it is only fair that. . all of us pay the same rate. The full report points out from a social responsability point of veiw what bcould be done if we all paid our fair share.. Perhaps more of us need to see whats really happening out on out streets with so many folks and if they are of a compassionate nature do their best to ease the suffering of their fellows
@PCSNUPRÂ The big companies are not paying their fair share of infrastructure costs, which they use far more of than small businesses. When small businesses have to pay that too, their overhead is much higher, making them less competitive, no matter how good their product and marketing.
What a bunch of BS. My friends from India told me the IRS wants them to pay taxes in the USÂ on the properties they own in India that werent even purchased by them but were given to them by their parents.
So, its legal, and they are incentivized to do it because of a higher corporate tax rate here. The problem is not the companies, its the tax attack upon them by a government so thirsty for money.  Money made in the US is taxed here and stays here. Money made outside of the US is just never booked back to the US.
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However, thanks to QE, QE2, QE3, operation Twist, and operation "kill the dollar" being persued by one Ben S Bernanke (aka, the man behind the curtain with the all important levers and buttons), it is also advantageous for these companies to borrow money at 1% to pay things like dividends here domestically so they don't really NEED the foreign profits. So, pay 20%+ more in tax on earnings or pay 1% bond interest? WWYD?
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Fix the Federal budget, fix the structural deficit, bring corporate tax rate to par with other nations, and the companies will find it easier to pay tax on profits here rather than in, say, Ireland.
They're not loopholes. Â Any chance a person or business can get to keep the money they earned is a moral obligation. Â Only if you agree to pay are you ethically obligated.Â
It's just wrong boy's and girl's.
really blame boeing because the countries we do business with write contracts that demand that a certain part of our budget be used in their country for the development of Boeing overall. Why do you think we outsourced the battery to Japan? Without Microsoft or Boeing, what industry would be left in Washington besides state employment followed by county and city employment? rely on the military when they have been told their going to have their own budget cutbacks?
Isn't it great that big business has lobbied and jiggered our politicians into rewriting the laws that now allow them to stash their profits overseas while us poor working stiffs have to make up the difference? We need a revolution in the congress and senate to make them change things so we ALL are fairly taxed and we all fairly pay what is due. Taxes would go down (maybe the day after hell freezes over) if everyone was paying their fair share.Â
 @LongBeachBum Isn't it great that people oversimplify just about everything and turn it into a devious, greedy ploy by the corporations and government against the people?
Why do they call it a loophole when they are following the law?
 @cyclops Because it wouldn't be newsworthy to use the correct term.
"American" corporations such as the aforementioned,have become nothing short of squatters on American soil..they don't want to pay taxes for roads,or infrastructure upgrades that lead to their warehouses,they don't want to pay decent wages to local Americans-that's why they lobby congress for special visas for foreign workers to come here and squat at their workplace,and then those temporary employees either send American dollars back to their homeland,or just work here for 5-10 years and then take their earnings back overseas.
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The aforementioned companies are nothing short of traitors to America...can't wait for those hefty tolls on I-90
In Corporations We Trust...oops that was too close to the real interpretation,Â
The smart voters have been demanding tax reform for decades. Unfortunately the dumb voters are still in the majority.Â
I was told one time that Boeing flies purchasers of their airplanes out past the territorial limit to sign the purchase papers in order to skirt the Washington sales tax and other taxes.
Does anybody know if this is a fact?
 @Glassman This is false. It doesn't matter where the contract is signed. It matters where the seller is licensed.
no its a lie
 @Vince So...how much sales tax does Washington garner from aircraft sales?
 @Glassman Wow, just the thought of something like that really gets going...I'd love to see a followup to this question by someone who is knowledgeable of that.
Due to out of country earnings being taxed by the US why wouldn't they keep profits overseas? The US gov is one of few who screw their companies for making a profit overseas while buying "freindships" with the like of Saudi Arabia with taxpayer $$
Fast forward 20 years ... these will both be offshore companies.
 @Eugene357 With the present tax structure they should.
I used the mortgage interest deduction, did I dodge taxes? How about a report to see what lawmakers are "tax dodgers". What an intellectually corrupt headline KOMO.
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 @the unvarnished truth It may be unethical, but it is legal. Is what the Government does ethical? I guess the saying," lead by example" or "practice what you preach" comes to mind. These companies are for profit companies that have a responsibility to their shareholders, not the tax payer. The Government came up with these rules, probably because of lobbyist spreading the money around. So I am not sure we can expect companies to do the ethical or moral thing here.
I took my mortgage interest deduction and itemize, I could have paid more taxes if I did not itemize, is that unethical? No, it is a legal vehicle provide by Government to lessen my tax burden. I don't see the difference.
This story forgot the "this is all legal part".  Who among us doesn't take advantage of every legal tax exemption we are entitled. Stories like this belong on the front page of the newspapers at the checkout stand at Safeway not on KOMO. Journalism just rolled over in it's grave.
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 @the unvarnished truth  @al_wa There is no more ethics or morals left in American business or for that matter any countries businesses. If you believe this look at the unemployment and food stamp lines in the US or the forced labor of most European countries. If a company operates in Europe they make a forced commitment to the country's government to employ the people for so long. If they lay them off then they have to pay the government extra money to support their social systems.
This is news?lol Been going on for decades, even Romney did it and I'm sure Obama does it to.. The laws are just for us little people. I'm actually in favor of ending all US based corporations from taxes. Just tax personal income and tax imports. Or tax imports and have a federal sales tax.
And lets remember the politicians starting from the top with the president who in "blind trust" takes the same tax advantage too. I bet the major media outlets also do the same as well.....KOMO?
I'm guessing they are mostly guessing. They do not have access to the actual tax returns and balance sheets, Their intent is to simply make allegations to further their agenda. Two sides to every story.
Actually Mike, the company  financials are available in the Annual Report and thier 10K filings. So, you should check your assumptions. Publicly traded companies must disclose this information to the board, shareholders and the Security and Exchange Commission.
Is this really suppose to be surprising? The rich perpetually do things that would get the "Average Joe" hung out to dry by our government, and yet, a blind eye somehow is always turned. Must be all of those back door campaign contributions.
 @Harley-H.S.C. Did you take a mortgage interest deduction, do you claim yourself or dependents or do you claim sales tax deduction? If so, you are dodging taxes just like the mean rich people. You are correct though on the campaign contributions, this is why most of these loopholes exist.