Tax Analysts Blog

Microsoft's Ballmer Gets It Wrong on Obama's International Proposals

Posted on Jun 5, 2009

I lost it yesterday. Rationality went out the window. My long-repressed populist streak was exposed. What got my blood boiling was the report by Bloomberg's Ryan Donmoyer that Microsoft CEO Steve Ballmer was threatening to move jobs offshore if Obama's international tax proposals became law. “We’re better off taking lots of people and moving them out of the U.S. as opposed to keeping them inside the U.S.”

We are in a major recession. The unemployment rate hit 9.4 percent today.The budget deficit is skyrocketing. And one of the most profitable businesses of all time is not only complaining about tax increases (not so bad) but threatening to kill U.S. jobs if it does not get its way (the clincher).

After a few cleansing breaths my mind cleared and I realized something startling: the chief of the world's most successful corporation does not even understand the proposal he is complaining about. (No wonder Vista sucks!)

The Obama administration wants to change U.S. tax laws so they no longer encourage U.S. multinationals to create jobs overseas. And the president's proposals, despite some problems, would indeed achieve that objective. So Ballmer would be moving jobs offshore when taxes on offshore job creation are going up. Maybe he should move jobs offshore before the change to reduce his taxes? But shifting jobs offshore after the Obama proposal becomes law doesn't make sense.

Multinationals have some good policy arguments for opposing Obama's proposals. Current law may be helping support domestic research and U.S. exports. Current law may prevent U.S. companies from moving their headquarters offshore. (How about you move to China, Steve? You can depend on the Chinese to respect your intellectual property rights.) But Ballmer's argument that the proposal would encourage a job shift out of the United States is just plain wrong. In fact, it is more likely the opposite would occur.

That's all for now. I think my Microsoft-laden PC is about to crash.

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