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Puerto Rican Tax Amnesty For Microsoft?
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July 22, 2011, 03:44 PM
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From a Washington Post article on Microsoft’s quarterly earnings announcement:

Net income in the fiscal period that ended in June rose 30 percent to $5.87 billion, or 69 cents a share, from $4.52 billion, or 51 cents, a year earlier, Redmond, Washington-based Microsoft said in a statement today. That beat the 58-cent estimate of analysts surveyed by Bloomberg.

Sales rose to $17.4 billion, compared with the $17.2 billion average projection. …

Microsoft said its tax rate fell to 7 percent from 25 percent a year earlier because more earnings were taxed at lower rates in Ireland, Singapore and Puerto Rico, Microsoft said.

“Our effective tax rate was lower than the U.S. federal statutory rate primarily due to a higher mix of earnings taxed at lower rates in foreign jurisdictions,” Microsoft said in the statement.
The rate explains much of the reason why results surpassed predictions, Chief Financial Officer Peter Klein said in an interview.

Can I get my income taxed at the rate of some random foreign country? For example, I became a lifetime foreign member of the Ballybunion Golf Club in 1987, so therefore I should be able to take advantage of any tax breaks Ireland happens to be offering, just on general principles. Granted, I’ve only been back to Ireland once since then, but I bleed green (at tax time, at least).


Back in 2004, there was a “tax holiday” that allowed American firms to “repatriate” cash they’d nominally piled up in overseas tax havens without paying American corporate profits tax rates on it. Now, there’s apparently $1.2 trillion piled up abroad and American firms are trying to get another tax amnesty.


And exactly how much work does Microsoft actually get done in Puerto Rico?

Microsoft Building
This building is located in Metro Office
Park, marginal PR Road 2 Guaynabo
is an office complex with 64,000 sq. ft
Class-A office space. Parking is 1,180         .
cars. The owner is Muñoz Holding
and the Bldg. complex is completed.
Parking is 3/1000 No-Rent including
with office rent. The Office complex
is only for rent. The property
is available now.

Somewhat to my surprise, there actually is a five story building in a nice suburb of San Juan with a Microsoft sign on it, but the address on Microsoft’s website for Microsoft Puerto Rico (”Suite 5000“) suggests that Microsoft doesn’t use the whole building, which is owned by somebody else. A real estate agent in Puerto Rico advertises 64,000 square feet of the Microsoft Building for rent, “available now.”


Twenty minutes of Googling (or even of Binging) would suggest that Microsoft does not actually “earn” in Puerto Rico (in any reasonable sense of the term) a material portion of the $2 billion or so in profits it’s booking every month these days. But, apparently, Microsoft’s tax lawyers have persuaded the IRS of this.
I ought to be able to declare my house The Commonwealth of Steve and then rent it to Apple as its official global headquarters and all purpose tax haven.


Why does the U.S. government let itself get cheated out of taxes by its own Commonwealth? How much exactly are we bribing Puerto Rico in tax breaks to be part of the American Empire, and why? What is owning Puerto Rico doing for us, anyway? Back in the 1890s, Admiral Mahan suggested grabbing it to guard the approaches to a future Isthmusian Canal, but we don’t even own the Panama Canal anymore.


No wonder Puerto Rican independence only gets about 4 percent in referendums, even though Puerto Ricans are happy to cheer for their own national Puerto Rican team in the Olympics:

Puerto Ricans Treat Victory Over U.S. Team Like Gold
August 16, 2004

SAN JUAN, Puerto Rico (AP) - Puerto Ricans celebrated the island’s historic 92-73 thumping of the U.S. basketball team at the Olympics, treating the victory like gold.

Islanders honked horns and waved Puerto Rican flags after Sunday’s game, which was only the third Olympic loss for the United States and its first since adding professional players.

“This is like winning a gold medal,” teacher Carmen D. Torres said from the north-coast city of Arecibo. “I expected the Puerto Rican team to play well, but the fact that it defeated the world’s greatest team is like a dream. I still don’t believe it.”