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Thursday, February 14, 2008

$75 Million Tax Break for Microsoft

posted by on February 14 at 12:59 PM

A belated shout out to Chris McGann at the PI for breaking the news earlier this week about a $75 million tax break that the state wants to hand over to Microsoft.

Nice scoop. Controversial policy. McGann reports:

Microsoft and Yahoo already have server farms in Eastern Washington and had planned to build more. But when the state Department of Revenue recently determined that the server farms aren’t eligible for an existing tax exemption for rural manufacturers, both companies halted new construction and began pushing for a new tax break.

Eager to shore up the flagging economy, lawmakers led by Gov. Chris Gregoire have taken up the issue. The server farms generate many temporary construction jobs and a small number of full-time positions. They also reduce the tax burden on local communities by expanding the property tax base.

Gregoire requested an exemption in Senate Bill 6666, which would eliminate half the state sales tax on replacement equipment for the mammoth computer server farms in Eastern Washington.

Bill 6666? True. And Capitol Hill’s Sen. Ed Murray is carrying the bill for Gov. Gregoire.

Last session, the legislature heard from the Joint Legislative Audit and Review Committee, JLARC, a committee set up the previous year to review corporate tax breaks to see which ones were and were not worth it. To my knowledge, JLARC has not been persuasive enough to kill any of the state’s corporate freebies.

RSS icon Comments


In actual practice, most tax writeoffs are for "job creation" - most of which never occurs or occurs at only a small fraction of the jobs promised - and then they leave.

Bad idea to subsidize this, especially at a time when we don't know if we have the energy resources to do it.

Posted by Will in Seattle | February 14, 2008 1:00 PM

In what world does $75 million in tax breaks equal $75 million in wages for temporary construction workers and a small number of full-time employees? The state would be better off putting that money where it really counts, such as maintaining existing infrastructure. That creates jobs too.

Posted by keshmeshi | February 14, 2008 1:12 PM

I couldn't agree more. Why does a company headed by the richest man in the world need any kind of tax break?

Posted by Brandon Dismuke | February 14, 2008 1:18 PM

These server farms are actually sucking up valuable power that can be sold to outside markets for WAY more than what Microsoft and Yahoo are getting it for.

They build the farms in Central Wash where localized power is extremely cheap thanks to hydro power. All of this surplus power, when not used, has much better benefit to the state when it can be SOLD to California and other localities not in our utility districts.


Posted by Non | February 14, 2008 1:18 PM

Corporate subsidies during flush times, corporate tax breaks as a "stimulus package." Thanks, Democrats!

Posted by Trevor | February 14, 2008 1:20 PM

I don't understand all the specifics, but this sounds like a really bad idea. Why don't we just give Boeing a big tax write-off while we're at it? Oh, right. We did that last year.

Posted by Greg | February 14, 2008 1:27 PM

the richest man in the world doesn't privately bank roll Microsoft, and he is just one, powerful, voice on the board of directors of the most publically traded stock in the world.

Giving Microsoft a tax break here would allow them to take that $75 million and invest it in other ways, creating new products, new jobs, a bigger stock dividend, etc. Those options would stimulate the economy, especially in WA and Seattle metro area.

Posted by @#3 | February 14, 2008 1:30 PM

Agreeing with #4.

If they don't build them here, they will build them somewhere else where some legislature will give them an even bigger tax break. # of Employees on a 5k machine server farm, maybe 20 - 30.

Posted by Cato | February 14, 2008 1:49 PM

Microsoft and Yahoo already have server farms in Eastern Washington

Damn farmers in Eastern WA, always looking for a handout.

Posted by JMR | February 14, 2008 1:53 PM

We have tax breaks for rural manufacturers?

I'd rather give the tax break to Microsoft than some company pouring mercury into the rivers.

Posted by Cale | February 14, 2008 2:05 PM

Over time they will need/get newer & faster computers. They going to use that $75 Mil to dump the old servers into a landfill? Be the practical equiv of dumping mercury into the rivers.

Posted by Cato | February 14, 2008 2:25 PM

asinine. they need to drop sales tax on non-profit construction projects like low income housing and clinics, etc - not corporate tools that already make billions and billions of dollars and can afford to pay sales taxes. fuck microsoft. fuck them with a big black ken hutcherson-case rubber cock.

Posted by holz | February 14, 2008 3:57 PM

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