When Microsoft said Tuesday that Congress should put aside tax reform and make passing legislation to revive the DACA amnesty program its top priority, it did not mention that it is a huge beneficiary of the current corporate tax system.
“We say this even though Microsoft, like many other companies, cares greatly about modernizing the tax system and making it fairer and more competitive. But we need to put the humanitarian needs of these 800,000 people on the legislative calendar before a tax bill,” Microsoft President Brad Smith wrote in a post on the company’s blog.
One reason Microsoft may be willing to wait for tax reform is that it does not pay anywhere near the 35 percent corporate rate. In its recently ended fiscal year, Microsoft had nearly $90 billion of revenue and profits of $21.2 billion. It had an effective tax rate of just eight percent.
Although the official tax rate is 35 percent, Microsoft employs armies of accountants and lawyers to avoid paying anything close to that rate. It claims that much of its money is earned offshore and not subject to the corporate rate.
The company said it expects to have an effective tax rate of 19 percent in the coming year.
No wonder it wants Congress to focus on granting amnesty to illegal immigrants who arrived as children, rather than reforming the tax code.