On Bill Gates and Microsoft’s taxes

Given that Ritchie is mentioned here as a source we know that this story is going to be codswallop:

None of this is illegal, however absurd it appears. But it is highly unethical, especially when the chairman is exhorting countries to hand over taxpayers’ cash to his pet causes – and it certainly tarnishes that saintly image. According to tax campaigner Richard Murphy, Microsoft avoids a sum in tax equivalent to more than 3% of the global aid budget. Despite this, Gates was star speaker at the IF campaign rally against hunger in Hyde Park last summer – although one of the four central issues was supposed to be corporate tax dodging.

Gates, when pressed on his firm’s tax policies, gave the usual glib response that they play by the rules. “If people want taxes at certain levels, great, set them at those levels,” he said. “But it’s not incumbent on those companies to take shareholder money and pay huge sums that aren’t required.”

The background argument being that Bill Gates might give his Microsoft money to charity but it’s terribly naughty that Microsoft doesn’t pay more tax before he gets it.

The problem with this argument is the old one that Ritchie always has with corporate taxation: tax incidence. The company doesn’t bear the burden of the taxes. It’s either the investors in the company or the workers in the economy in general who do. And let’s here, take Ritchie’s viewpoint on this. Not because he’s correct but just because it’s interesting to see the effects of his beliefs.

That is, that it’s capital, the investors, who bear the burden of the corporate tax. So, if Microsoft had paid more tax then the shares Bill Gates owns would be worth less. There would therefore be less in the Gates Foundation to spend on things like a malaria vaccine. And it’s very difficult indeed to take the position that more would have been spent on poor countries if Microsoft had paid more taxes: foreign aid budgets are not set that way as we know.

So, Bill Gates keeping the money out of the hands of the politicians and their plans, and spending it instead directly on aid to the poor would seem to be increasing the amount of money spent on said poor.

But, according to anti-poverty campaigners this is bad apparently.

Go figure.

12 comments on “On Bill Gates and Microsoft’s taxes

  1. More spent on poverty, less spent on ‘anti-poverty campaigners’. And members of the union which pays Richie. And on the Indian space program.

    Weep.

  2. Agh, it’s just green jealousy. Not even the environmental kind. I’d set the small amount of tax MS didn’t need to pay & didn’t against the trillions of added value MS has created in the world with it’s O/S’s* & say thanks, Bill, know you don’t need it but I’ll buy you a beer.

    *Yeah, I know. Mac & Linux. But they didn’t.

  3. Yes, but……

    The Bill Gates story isn’t a good example as anti-malaria is something most would agree was a thoroughly good thing to spend money on.

    What, however, if he left all his billions to a donkey sanctuary in Dorset ?

    And judging by the billions many animal charities have there are clearly many well-meaning types who do spend their philanthropy this way.

    All of which is a separate issue from whether Microsoft is or isn’t paying appropriate taxes. As the article says, quoting Gates, if you don’t want low tax jurisdictions etc then democratically legislate for that. Don’t expect Microsoft to act voluntarily against its shareholders interests.

  4. Shinsei1967

    “What, however, if he left all his billions to a donkey sanctuary in Dorset”

    What, instead of a really good use like paying his taxes so it could be spent on a state’s bloated housing benefit budget?

    My point is, there will never be an allocation that satisfies everyone’s world view. So actually, I think defeating Malaria is a very good example indeed; I’m sure somebody else will think the donkey sanctuary would be an even better example.

    And, for the next 24 hours only, I believe that the incidence of CT falls entirely, entirely, ENTIRELY on Capital.

  5. the left hates this stuff as it shows that private initiatives can provide “social” goods without a profit interest. It undermines their argument (market failure) for having the state provide them.

  6. @Emil

    Indeed. It really sticks in the craw of the Guardian set that people like Gates contribute enormous sums of money to aid programs that are actually making a difference, show appreciable results, yet have little state involvement. It’s just not supposed to work like that.

    There was another article on that same site some years back where some goof decried the idea of Gates doing just this and that he should be forced to channel all that money through the relevant government agencies as it was assumed, of course, that those same agences knew better than Mr. Gates. I know who’d I’d rather have control over BILL GATES’ OWN MONEY.

    And the whole coporate tax dodge/evasion thing is being used as little more than a stick to beat companies like Microsoft. These people must know (mustn’t they?!) that no laws are being broken, but that to come out and say that we should just confiscate stuff because it’s “the right thing to do” would probably not read very well.

  7. Shinsei 1967

    “And judging by the billions many animal charities have there are clearly many well-meaning types who do spend their philanthropy this way.”

    Care to give us some figures ? Most animal charities, including donkey sanctuaries, seem to live from hand to mouth. Unless you’re including the likes of the RSPB and RSPCA which are fakes.

  8. Ironman – “What, instead of a really good use like paying his taxes so it could be spent on a state’s bloated housing benefit budget?”

    What if he did? I am all for Gates keeping his own money and spending it however he likes. I really do admire his effort at malaria prevention and so on. But looking at what his foundation does, the problem looks to be that he has to rely on the sort of people who work in foundations. And a lot of that money is being wasted – perhaps as much as if it had been paid in taxes.

    He does fund malaria – or more accurately he funds GFATM – the Global Fight Against AIDS, TB and Malaria. Which is a large group of First World people in Switzerland that seem to do nothing whatsoever except pass a percentage of his money on. He also funds a lot of the polio eradication scheme – some $85 million. But he has given $287 million to HIV research. I am not sure that is a good division of priorities.

    He funds the usual jokers. People like the GAVI Alliance. Which as far as I can see does nothing except lobby and contribute to their own pensions. They got $750 million. The Alliance for Financial Inclusion. To quote:

    AFI utilizes a peer-to-peer learning model to connect, encourage and enable financial policymakers to interact and exchange knowledge on policy initiatives such as consumer protection, mobile financial services,[4] financial integrity, agent banking, formalizing microsavings, data and measurement, and general financial inclusion. AFI has pioneered regional approaches to knowledge exchange among policymakers and stakeholders worldwide, notably within the Pacific Islands,[5] Africa[6] and Latin America.

    Great. They organise p!ss ups for kleptocrats. That is going to help the poor.

    You know, he funds a lot of rich First World White people to sit around and lecture Third World people on their problems. Not so much funding for Third World people solving those problems.

    And his judgement is questionable. He is paying for a better condom. As if condom companies do not have a strong interest in doing this and a much better research base. But it is popular among the right sort of people.

    The Gates Foundation is just going the same way as the Ford Foundation or any of the others – the militant arm of the BBC really.

  9. There’s at least one donkey sanctuary that on paper has a lot of assets. Whether thats actually bringing in any income is rather another matter – a field thats owned for the donkeys to run in can be an asset but if its not rented to anyone its not bringing in any money.

  10. Thornavis – “Care to give us some figures ? Most animal charities, including donkey sanctuaries, seem to live from hand to mouth. Unless you’re including the likes of the RSPB and RSPCA which are fakes.”

    Well going over the Donkey Sanctuary’s figures, which is what I assume most people are talking about, they do not seem to have millions. Their budget is about 25 million pounds a year. And they care for 4,000 donkeys. Which seems a little pricey to me. But then they seem to be the world’s largest supplier of vet services to the Third World. They do work improving harnesses in the Third World and funding vet treatment for hundreds of thousands of Third World donkeys.

    Which seems a perfectly reasonable use of their money really. B&M Gates ought to toss them some cash.

    The only problem is their Trustees. Some of them seem decent enough chaps. But others seem … worrying.

  11. ‘No man in this country is under the least obligation, moral or otherwise, so as to arrange his legal relations to his business or to his property as to enable the Inland Revenue to put the largest possible shovel into his store’

    (Lord Clyde in Ayrshire Pullman Motor Services & Ritchie v CIR, 1929, 14 TC 754).

    Wise words. How have we moved from the above to “if you aren’t mismanaging your tax affairs to the point where you pay the absolute maximum amount of tax you possibly can you must be an evil bastard who BBQs babies”

  12. SMFS

    Thanks for that. My contributions to animal welfare are largely confined to paying the vet’s bills for the cats, there’s not a lot of slack left after that.

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