The Wall Street Journal reports:
Billionaire Bill Gates on Thursday agitated for state governments to adopt "clear and honest" accounting of their budgets, saying states' true finances are being obscured from voters and threaten America's public-education system.
Speaking at a meeting here of leading thinkers known as the TED conference, Mr. Gates said that state budgets need more scrutiny and should follow more-transparent accounting principles, such as those used by Google Inc. and Microsoft Corp, which Mr. Gates co-founded.
"It's riddled with gimmicks," Mr. Gates said of the "tricks" states use to balance their budgets. Citing moves such as selling state assets and deferring payments, he said some methods are "so blatant and extreme," that "Enron would blush," referring to the energy company that collapsed a decade ago amid an accounting scandal.
Oh dear Bill. Microsoft and Google. Two companies who artificially make their sales from Ireland to avoid tax that might pay for education world wide.
And in the case of Microsoft, when I helped Glenn Simpson of the Wall Street Journal expose the facts in 2005 they adopted unlimited status in Ireland to avoid further disclosure.
And yet Bill you're lecturing about transparency? And artificiality? Have you ever read that one about removing the plank from your own eye first?
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Meanwhile back in the UK …
Tax fraud (not AVOIDENCE) costs the UK an estimated £15 billion each year according to figures published (27th January 2011) by the National Fraud Authority (Government’s organisation on counter-fraud activity). This figure includes criminal attacks at £5 billion, EVASION at £7 billion and losses resulting from the hidden economy of £3 billion. Benefit and tax credits fraud comes in at £1.5 billion
In TOTAL, fraud costs the UK over £38 billion a year (that’s the equivalent of building 800 secondary schools, or employing over 615,000 nurses) with £21 billion (55%) worth of fraud committed against the public sector. (Although the report claimed this figure is influenced by public officials being more diligent in reporting fraud).
Minister for the Cabinet Office, Francis Maude, says: – “It’s a problem that we are not going to ignore. Ripping off the taxpayer will not be tolerated.”
This in a scenario when in 2005 HMRC employed circa 100,000 staff — and by 2015 (after 10 consecutive years of cuts) the figure is predicted to be less than 60,000 staff.
What sense does this make?
Bill Gates certainly has form in this department, viz. his complaining about the quality of Washington State’s public schools while Microsoft incorporates most of its business units in Nevada for tax reasons.
However hypocritical (and Microsoft may now have found a political solution to its tax issues – link below), though, I suspect his complaints are still accurate.
http://microsofttaxdodge.com/2010/09/microsofts-nevada-tax-dodge-much-larger-than-previously-estimated.html
http://microsofttaxdodge.com/2010/11/ex-microsoft-executive-to-lead-washington-state-department-of-revenue.html
You often accuse your opponents of playing the man not the ball when they bring to your attention your own tax avoidance, Richard. So why is it different with Bill Gates?
@David Taylor
Because he made the speech
He can’t set himself up as the symbol of good practice and not be
The minstrel boy to the war has gone…………
Microsoft (like Google, Apple, Yahoo, etc.) are American company, started by Americans, run by Americans, with American shareholders, employing predominantly Americans. They are under no obligation whatsoever to provide funding for education worldwide
The reason that Microsoft or Google channel their sales through Ireland is to avoid paying taxes to governments other than that of the United States that they owe strictly nothing to. These companies bring enormous benefits to consumers of worldwide by offering unique products and services developed and marketed by American genius and enterprise. Those who fail to notice this could simply try to stop using Google or Microsoft (or in your case, Murphy, you could return your Mac and use a British-made and engineered computer instead). That would be fun (not).
That is a sufficent contribution. U.S. corporations have no duty to provide education or social benefits to foreign citizens. If foreign government and their citizens want to have an equivalent of Google, Microsoft or Apple to tax, why don’t they creat ther own?
@DaK
What a load of nonsense
Those companies have entities trading outside the US
They therefore owe a duty to the country where those entities trade for the protection and rights granted to them by those places – their implicit licence to operate – and as such owe their taxes there in the first instance
Your argument entirely ignores the fact that these companies could not trade without the protection of the governments who protect their property rights – and to whom they therefore owe a duty – a duty settled in the form of tax
@Richard Murphy
I completely disagree with this.
Any duty to the foreign countries is more than adequately discharged by the provision of products and services which the locals would otherwise have no ability to access. To test this assumption, I suggest again that you return your Mac and try to run this blog on a British computer system and a British Internet hosting system instead. If anyone should be taxed it is the beneficiaries (i.e. consumers) of these products.
@DaK
This is utter nonsense – on this logic set up offshore and supply into the UK and any business should be tax free here
How absurd
If you can’t see that please don’t bother to comment again
Richard, spot on. Follow this silly argument to its conclusion and, say, Bermudan companies, would have no obligation to pay taxes anywhere else than Bermuda.
Unfortunately this very argument – we will bring you enormous benefits – is advanced by resource companies seeking to do tax free business in developing countries, often successfully.
Cheers skip
@@pineappleskip
Your argument is flawed. In the case of resources company, the main resource is in the ground and clearly the property of the host nation.
In the case of Microsoft, Google or Apple, the essential resources are American-educated brains, American-generated capital and American-based manufacturing expertise. The host nation makes no contribution, but is the beneficiary of products and services it would no way of developing domestically.
@DaK
Wrong
These companies develop world wide
And are you really saying oil should only be taxed at source?
Nothing about your argument stacks at all
@Richard Murphy
Of course these companies have worldwide operations and have employees in non-US locations. Some of these employees even move to the United States and are offered access to higher education at US institutions. This is yet another considerable benefit they bring to the local populations.
But these are American companies, created and funded by Americans (often first- or second-generation immigrants) and which prospered because of the unique American clture of freedom and enterprise. It is no coincidence that almost all major technology companies in the world are American. This is makkes it legitimate for the United States to tax these companies, and indirectly their various stakeholders. The same does categorically NOT apply to the UK or other European nations; If Europeans want to tax the likes of Micrsoft or Google, they should think of starting their own.
I don’t that we will agree on this issue, but the discussion is certainly interesting.