Pluralistic: Microsoft put their tax-evasion in writing and now they owe $29 billion; The Lost Cause prologue, part 6 (13 Oct 2023)

doctorow · 2023-10-13T22:36:48.335Z

Originally published at: https://pluralistic.net/2023/10/13/pour-encoragez-les-autres/

Today's links

Microsoft put their tax-evasion in writing and now they owe $29 billion: The process is the punishment.
The Lost Cause prologue, part 6: Big finish!
Hey look at this: Delights to delectate.
This day in history: 2008, 2013, 2018, 2022
Colophon: Recent publications, upcoming/recent appearances, current writing projects, current reading

A Puerto Rican flag. Microsoft Clippy has been superimposed over the star. His speech bubble reads, 'It looks like you're doing a pure tax play. Would you like help? [Yes] [No].

Microsoft put their tax-evasion in writing and now they owe $29 billion (permalink)

If there's one thing I took away from Propublica's explosive IRS Files, it's that "tax avoidance" (which is legal) isn't a separate phenomenon from "tax evasion" (which is not), but rather a thinly veiled euphemism for it:

https://www.propublica.org/series/the-secret-irs-files

That realization sits behind my series of noir novels about the two-fisted forensic accountant Martin Hench, which started with last April's Red Team Blues and continues with The Bezzle, this coming February:

https://us.macmillan.com/books/9781250865847/red-team-blues

A typical noir hero is an unlicensed cop, who goes places the cops can't go and asks questions the cops can't ask. The noir part comes in at the end, when the hero is forced to admit that he's being going places the cops didn't want to go and asking questions the cops didn't want to ask. Marty Hench is a noir hero, but he's not an unlicensed cop, he's an unlicensed IRS inspector, and like other noir heroes, his capers are forever resulting in his realization that the questions and places the IRS won't investigate are down to their choice not to investigate, not an inability to investigate.

The IRS Files are a testimony to this proposition: that Leona Hemsley wasn't wrong when she said, "Taxes are for the little people." Helmsley's crime wasn't believing that proposition – it was stating it aloud, repeatedly, to the press. The tax-avoidance strategies revealed in the IRS Files are obviously tax evasion, and the IRS simply let it slide, focusing their auditing firepower on working people who couldn't afford to defend themselves, looking for things like minor compliance errors committed by people receiving public benefits.

Or at least, that's how it used to be. But the Biden administration poured billions into the IRS, greenlighting 30,000 new employees whose mission would be to investigate the kinds of 0.1%ers and giant multinational corporations who'd Helmsleyed their way into tax-free fortunes. The fact that these elite monsters paid no tax was hardly a secret, and the impunity with which they functioned was a constant, corrosive force that delegitimized American society as a place where the rules only applied to everyday people and not the rich and powerful who preyed on them.

The poster-child for the IRS's new anti-impunity campaign is Microsoft, who, decades ago, "sold its IP to to an 85-person factory it owned in a small Puerto Rican city," brokered a deal with the corporate friendly Puerto Rican government to pay almost no taxes, and channeled all its profits through the tiny facility:

https://www.propublica.org/article/the-irs-decided-to-get-tough-against-microsoft-microsoft-got-tougher

That was in 2005. Now, the IRS has come after Microsoft for all the taxes it evaded through the gambit, demanding that the company pay it $29 billion. What's more, the courts are taking the IRS's side in this case, consistently ruling against Microsoft as it seeks to keep its ill-gotten billions:

https://www.propublica.org/article/irs-microsoft-audit-back-taxes-puerto-rico-billions

Now, no one expect that Microsoft is going to write a check to the IRS tomorrow. The company's made it clear that they intend to tie this up in the courts for a decade if they can, claiming, for example, that Trump's amnesty for corporate tax-cheats means the company doesn't have to give up a dime.

This gambit has worked for Microsoft before. After seven years in antitrust hell in the 1990s, the company was eventually convicted of violating the Sherman Act, America's bedrock competition law. But they kept the case in court until 2001, running out the clock until GW Bush was elected and let them go free. Bush had a very selective version of being "tough on crime."

But for all that Microsoft escaped being broken up, the seven years of depositions, investigations, subpoenas and negative publicity took a toll on the company. Bill Gates was personally humiliated when he became the star of the first viral video, as grainy VHS tapes of his disastrous and belligerent deposition spread far and wide:

https://pluralistic.net/2020/09/12/whats-a-murder/#miros-tilde-1

If you really want to know who Bill Gates is beneath that sweater-vested savior persona, check out the antitrust deposition – it's still a banger, 25 years on:

https://arstechnica.com/tech-policy/2020/09/revisiting-the-spectacular-failure-that-was-the-bill-gates-deposition/

In cases like these, the process is the punishment: Microsoft's dirty laundry was aired far and wide, its swaggering founder was brought low, and the company's conduct changed for years afterwards. Gates once told Kara Swisher that Microsoft missed its chance to buy Android because they were "distracted by the antitrust trial." But the Android acquisition came four years after the antitrust case ended. What Gates meant was that four years after he wriggled off the DoJ's hook, he was still so wounded and gunshy that he lacked the nerve to risk the regulatory scrutiny that such an anticompetitive merger would entail.

What's more, other companies got the message too. Large companies watched what happened to Microsoft and traded their reckless disregard for antitrust law for a timid respect. The effect eventually wore off, but the Microsoft antitrust case created a brief window where real competition was possible without the constant threat of being crushed by lawless monopolists. Sometimes you have to execute an admiral to encourage the others.

A decade in IRS hell will be even more painful for Microsoft than the antitrust years were. For one thing, the Puerto Rico scam was mainly a product of ex-CEO Steve Ballmer, a man possessed of so little executive function that it's a supreme irony that he was ever a corporate executive. Ballmer is a refreshingly plain-spoken corporate criminal who is so florid in his blatant admissions of guilt and shouted torrents of self-incriminating abuse that the exhibits in the Microsoft-IRS cases to come are sure to be viral sensations beyond even the Gates deposition's high-water mark.

It's not just Ballmer, either. In theory, corporate crime should be hard to prosecute because it's so hard to prove criminal intent. But tech executives can't help telling on themselves, and are very prone indeed to putting all their nefarious plans in writing (think of the FTC conspirators who hung out in a group-chat called "Wirefraud"):

https://pluralistic.net/2023/09/03/big-tech-cant-stop-telling-on-itself/

Ballmer's colleagues at Microsoft were far from circumspect on the illegitimacy of the Puerto Rico gambit. One Microsoft executive gloated – in writing – that it was a "pure tax play." That is, it was untainted by any legitimate corporate purpose other than to create a nonsensical gambit that effectively relocated Microsoft's corporate headquarters to a tiny CD-pressing plant in the Caribbean.

But if other Microsoft execs were calling this a "pure tax play," one can only imagine what Ballmer called it. Ballmer, after all, is a serial tax-cheat, the star of multiple editions of the IRS Files. For example, there's the wheeze whereby he has turned his NBA team into a bottomless sinkhole for the taxes on his vast fortune:

https://pluralistic.net/2021/07/08/tuyul-apps/#economic-substance-doctrine

Or his "tax-loss harvesting" – a ploy whereby rich people do a "wash trade," buying and selling the same asset at the same time, not so much circumventing the IRS rules against this as violating those rules while expecting the IRS to turn a blind eye:

https://pluralistic.net/2023/04/24/tax-loss-harvesting/#mego

Ballmer needs all those scams. After all, he was one of the pandemic's most successful profiteers. He was one of eight billionaires who added at least a billion more to his net worth during lockdown:

https://inequality.org/great-divide/billionaire-bonanza-2020/

Like all forms of rot, corruption spreads. Microsoft turned Washington State into a corporate tax-haven and starved the state of funds, paving the way for other tax-cheats like Amazon to establish themselves in the area. But the same anti-corruption movement that revitalized the IRS has also taken root in Washington, where reformers instituted a new capital gains tax aimed at the ultra-wealthy that has funded a renaissance in infrastructure and social spending:

https://pluralistic.net/2023/06/03/when-the-tide-goes-out/#passive-income

If the IRS does manage to drag Microsoft through the courts for the next decade, it's going to do more than air the company's dirty laundry. It'll expose more of Ballmer's habitual sleaze, and the ways that Microsoft dragged a whole state into a pit of austerity. And even more importantly, it'll expose the Puertopia conspiracy, a neocolonial project that transformed Puerto Rico into an onshore-offshore tax-haven that saw the island strip-mined and then placed under corporate management:

https://pluralistic.net/2022/07/27/boricua/#que-viva-albizu

A mockup of the hardcover for the Tor books edition of The Lost Cause.

The Lost Cause prologue, part 6 (permalink)

For the past week, I've been serializing the prologue of The Lost Cause, my solarpunk novel of a post-Green New Deal backlash that comes out on November 14:

https://us.macmillan.com/books/9781250865939/the-lost-cause

The occasion is a crowdfunding campaign for the audiobook – because Amazon won't carry my audiobooks on Audible, I self-produce them and pre-sell them on Kickstarter. The campaign is going brilliantly, and there's still time to back it:

http://lost-cause.org/

Usually I hire voice actors like Wil Wheaton to read my audiobooks, but this time, at the urging of director Gabrielle de Cuir, I read it myself. It came out great:

https://www.youtube.com/watch?v=SkmW4UFJwtI

Today is the final day of the serial. I hope you enjoyed it!

Here's part one:

https://pluralistic.net/2023/10/06/green-new-deal-fic/#the-first-generation-in-a-century-not-to-fear-the-future

And part two:

https://pluralistic.net/2023/10/07/met-cute-ugly/#part-ii

And part three:

https://pluralistic.net/2023/10/09/working-the-refs/#lost-cause-prologue

And part four:

https://pluralistic.net/2023/10/10/weaponized-interdependence/#super-soaker-full-of-hydrochloric-acid

And part five:

https://pluralistic.net/2023/10/11/equal-opportunity-class-war/#part-v

And now, the thrilling conclusion!

* * *

“Hey,” someone hissed from beneath the climber and I nearly jumped out of my seat.

“Jesus,” I said, and it came out as a loud bark that echoed down the empty street.

“Shhh,” the voice said. “What are you doing out there, man?”

“I’m sitting on a bench. What are you doing in there?”

“Wait, Brooks?”

“Yeah. Who’s that?”

A person climbed out of the climber, then another. As they drew closer to me, I recognized them as Dave and Armen, two goofballs I’d known since grade school, and I knew exactly what they were doing.

“Are you assholes out here in the middle of the night tripping balls?” I couldn’t help but smile, though. It was so them.

“No,” Armen said, and then Dave spoiled it by dissolving into giggles.

“Just some shrooms,” Dave said. They were everywhere, whenever the rains came, all over the hills and even on the verges between the sidewalks and the roads, popping up faster than the city could send out workers to pick them and destroy them (or, rumor had it, to dry them out and offer them for sale, if you knew the right person).

“On a school night?”

“Yeah. Only a month to graduation. What’s it matter anymore? The dire is cast.”

“The die,” I said.

“Die,” Armen said. “How morbid.” They both dissolved into more giggles. These guys. I mean, they were high af, but they had been like this since the third grade. They were silly, and not all that smart, but they were nice, never mean to anyone, never on anyone’s side in any kind of feud, even the ones where everyone took a side.

Armen and Dave were like goofball Switzerland, neutral and always in a corner making each other laugh. To be honest, they were exactly the guys I needed to see at that moment.

“Got any more shrooms?”

We stayed up all night tripping balls and eating more mushrooms whenever we started to come down. About three thirty in the morning Armen suggested we walk up to Brace Canyon, which is a long-ass walk, but Armen insisted that the sunrises from Brace were incredible so that’s where we went.

It turned out he was wrong. It was sunsets that were great from Brace Canyon. The sun rose behind us, staining all of Burbank— the airport, downtown, Magnolia Park—pink as it crested the hill behind us, and Armen was embarrassed to have gotten it backward and tried to convince us to climb farther up, try to get over the hill and see the sun rise on the other side before it was fully up, but Dave pointed out that the last time they tried that they got stuck because of the monster houses on top of the hills with high fences, and then I pointed out that he was talking about a thirty- minute run and the sun would be over the hill in five minutes, and then Armen pointed out that we’d been tripping and walking all night and we were all tired, so we lay in the grass and watched the city brighten by degrees.

Then it started to get hot, and we were coming down and dozed a little, but then the mosquitoes came out, and then the dog-walkers, and so it was time to drag our asses back down out of the hills.

They walked with me down to Glenoaks, then we split up. There was no way I was going to school that day. I knew the guidance office would give me an excused absence after my traumatic events and all, so I bumbled home slowly, my legs filled with lead, my eyelids drooping. People passing by on bikes or on foot gave me a wide berth that let me know I was giving off walk-of-shame vibes.

I got home and paused in front of the back door. Did I dare go inside? Would Gramps still be awake and “ornery”? Would he be out with his Maga Club buddies planning Mike Kennedy’s wake? Or would they be in the living room, ready to give my ass the beatdown Gramps could no longer administer himself?

Hell with it. I was so tired I was about to fall over. If Gramps hadn’t calmed down by now, then he and I could just have another fight. I’d let him win. Why not? I was tired and graduation was weeks away.

I let myself in. The house was spooky-quiet. What was spooky about quiet? It was always quiet when Gramps was out, or when he had his headphones on to listen to his podcasts, while he played large-format solitaire on his huge tablet.

But it was spooky. I think I must have known. Otherwise, why wouldn’t I have just gone to bed? I mean, I was really tired. I didn’t go to bed. I called out “Gramps?” as I moved from room to room, and I saw that his keys were on the kitchen table and that his shoes were by the door, so I went to his bedroom and whispered “Gramps?” and knocked softly, as though he was asleep.

But I think I knew, even before I opened the door. Otherwise, why would I have peeled back the covers? Why would I have reached out to touch the exposed skin of his neck, felt how cold it was? Why would I have turned him over, boneless and limp, and put my ear next to his mouth, knowing there would be no breath sounds?

I called the nonemergency number and told them my grandfather was dead, that he had died in his sleep, and then I filled the biggest glass in the kitchen with cold brew. I was going to need to stay awake for a while yet.

Hey look at this (permalink)

What is OpenCola? https://whatis.openco.la (h/t Oxblood Ruffin)
Biden-⁠Harris Administration Announces Broad New Actions to Protect Consumers From Billions in Junk Fees https://www.whitehouse.gov/briefing-room/statements-releases/2023/10/11/biden-harris-administration-announces-broad-new-actions-to-protect-consumers-from-billions-in-junk-fees/
We Don’t Talk About Leonard: The Man Behind the Right’s Supreme Court Supermajority https://www.propublica.org/article/we-dont-talk-about-leonard-leo-supreme-court-supermajority

A Wayback Machine banner.

This day in history (permalink)

#15yrsago Randall “XKCD” Munroe and me on our work habits — video https://archive.org/details/3Pi-Con-2008-MyDayAtWork-Doctorow-Munroe

#15yrsago TSA screener ripped off hundreds of thousands of dollars’ worth of electronics from passengers, TSA itself didn’t notice https://gadling.com/2008/10/10/tsa-agent-helped-himself-to-a-47-900-camera-and-more/

#15yrsago XKCD strip explains how DRM creates piracy https://xkcd.com/488/

#15yrsago Twelve Hours Sleep by Twelve Weeks Old: the best parenting book I’ve read https://memex.craphound.com/2008/10/13/twelve-hours-sleep-by-twelve-weeks-old-the-best-parenting-book-ive-read/

#10yrsago Cute Girl Network: adorable, illustrated skate-punk love-story https://memex.craphound.com/2013/10/13/cute-girl-network-adorable-illustrated-skate-punk-love-story/

#10yrsago Thomas Friedman: IHOP menu copywriter https://www.somethingawful.com/news/thomas-friedman-metaphors/

#10yrsago Amazon requires publishers to use Kindle DRM https://memex.craphound.com/2013/10/11/amazon-requires-publishers-to-use-kindle-drm/

#5yrsago Amazon trained a sexism-fighting, resume-screening AI with sexist hiring data, so the bot became sexist https://www.reuters.com/article/us-amazon-com-jobs-automation-insight/amazon-scraps-secret-ai-recruiting-tool-that-showed-bias-against-women-idUSKCN1MK08G

#5yrsago Notre Dame and 73 other institutions secretly conspired with the Trump administration to deny birth control https://theintercept.com/2018/10/11/notre-dame-health-insurance-birth-control-trump/

#5yrsago Family separations: the Trump administration stole thousands more children than previously reported https://www.amnestyusa.org/reports/usa-catastrophic-immigration-policies-resulted-in-more-family-separations-than-previously-disclosed/

#5yrsago Dystopia watch: Guide to spotting hidden cameras in your Airbnb https://www.digitaltrends.com/home/how-to-find-hidden-cameras/

#5yrsago Against all evidence, city of Savannah claims googly eyes glued to Revolutionary War statue are “not funny” https://www.buzzfeednews.com/article/davidmack/georgia-savannah-statue-googly-eyes-vandal

#5yrsago Jared Kushner took home millions, paid little or no tax for years https://www.nytimes.com/2018/10/13/business/jared-kushner-taxes.html

#5yrsago Forensics company advises cops not to look at seized Iphones, to avoid facial-recognition lockouts https://www.vice.com/en/article/5984jq/cops-dont-look-iphonex-face-id-unlock-elcomsoft

#5yrsago California ballot measure to reintroduce rent control met with millions in opposition from Wall Street landlords https://theintercept.com/2018/10/12/prop-10-california-rent-control-wall-street/

#5yrsago How trade unions are addressing automation https://www.nytimes.com/2018/09/24/business/economy/hotel-workers-ai-technology-alexa.html

#1yrago US health insurers get more and more federal funding, deliver less and less care https://pluralistic.net/2022/10/13/sicko/#radicalized

#1yrago Shelter in place: Prison for homelessness and lock-ins for home owners https://pluralistic.net/2022/10/11/rene-descartes-was-a-drunken-fart/#out-of-doors

#1yrago Undetectable, undefendable back-doors for machine learning https://pluralistic.net/2022/10/11/rene-descartes-was-a-drunken-fart/#trusting-trust

Colophon (permalink)

Today's top sources:

Currently writing:

A Little Brother short story about DIY insulin PLANNING
Picks and Shovels, a Martin Hench noir thriller about the heroic era of the PC. FORTHCOMING TOR BOOKS JAN 2025
The Bezzle, a Martin Hench noir thriller novel about the prison-tech industry. FORTHCOMING TOR BOOKS FEB 2024
Vigilant, Little Brother short story about remote invigilation. FORTHCOMING ON TOR.COM
Moral Hazard, a short story for MIT Tech Review's 12 Tomorrows. FIRST DRAFT COMPLETE, ACCEPTED FOR PUBLICATION
Spill, a Little Brother short story about pipeline protests. FORTHCOMING ON TOR.COM

Latest podcast: How To Think About Scraping https://craphound.com/news/2023/09/24/how-to-think-about-scraping/
Upcoming appearances:

A Drink with the Idler (online), Oct 12
https://www.idler.co.uk/product/a-drink-with-the-idler-cory-doctorow-on-how-to-smash-big-tech/
The Internet Con at Moon Palace Books (Minneapolis), Oct 15
https://moonpalacebooks.com/events/30127
26th ACM Conference On Computer-Supported Cooperative Work and Social Computing keynote (Minneapolis), Oct 16
https://cscw.acm.org/2023/index.php/keynotes/
41st annual McCreight Lecture in the Humanities (Charleston, WV), Oct 19
https://festivallcharleston.com/venue/university-of-charleston/
Taylor Books (Charleston, WV), Oct 20, 12h-14h
http://www.taylorbooks.com/
Seizing the Means of Computation (Edinburgh Futures Institute), Oct 25
https://efi.ed.ac.uk/event/seizing-the-means-of-computation-with-cory-doctorow/
The Internet Con at the Internet Archive (virtual), Oct 31
https://www.eventbrite.com/e/book-talk-the-internet-con-tickets-730939137637

Recent appearances:

Grim Grinning Ghosts (That Hallowe'en Podcast)
https://thathalloweenpodcast.libsyn.com/grim-grinning-ghosts-with-author-cory-doctorow
1000 w/Ron Placone
https://podcasters.spotify.com/pod/show/1000wronplacone/episodes/Cory-Doctorow—004-e2a420a
An Audacious Plan to Halt the Internet's Enshittification (Burning Man Center Camp)
https://www.youtube.com/watch?v=mu2fzvKxKvU

Latest books:

"The Internet Con": A nonfiction book about interoperability and Big Tech (Verso) September 2023 (http://seizethemeansofcomputation.org). Signed copies at Book Soup (https://www.booksoup.com/book/9781804291245).
"Red Team Blues": "A grabby, compulsive thriller that will leave you knowing more about how the world works than you did before." Tor Books http://redteamblues.com. Signed copies at Dark Delicacies (US): and Forbidden Planet (UK): https://forbiddenplanet.com/385004-red-team-blues-signed-edition-hardcover/.
"Chokepoint Capitalism: How to Beat Big Tech, Tame Big Content, and Get Artists Paid, with Rebecca Giblin", on how to unrig the markets for creative labor, Beacon Press/Scribe 2022 https://chokepointcapitalism.com
"Attack Surface": The third Little Brother novel, a standalone technothriller for adults. The Washington Post called it "a political cyberthriller, vigorous, bold and savvy about the limits of revolution and resistance." Order signed, personalized copies from Dark Delicacies https://www.darkdel.com/store/p1840/Available_Now%3A_Attack_Surface.html
"How to Destroy Surveillance Capitalism": an anti-monopoly pamphlet analyzing the true harms of surveillance capitalism and proposing a solution. https://onezero.medium.com/how-to-destroy-surveillance-capitalism-8135e6744d59 (print edition: https://bookshop.org/books/how-to-destroy-surveillance-capitalism/9781736205907) (signed copies: https://www.darkdel.com/store/p2024/Available_Now%3A__How_to_Destroy_Surveillance_Capitalism.html)
"Little Brother/Homeland": A reissue omnibus edition with a new introduction by Edward Snowden: https://us.macmillan.com/books/9781250774583; personalized/signed copies here: https://www.darkdel.com/store/p1750/July%3A__Little_Brother_%26_Homeland.html
"Poesy the Monster Slayer" a picture book about monsters, bedtime, gender, and kicking ass. Order here: https://us.macmillan.com/books/9781626723627. Get a personalized, signed copy here: https://www.darkdel.com/store/p2682/Corey_Doctorow%3A_Poesy_the_Monster_Slayer_HB.html#/.

Upcoming books:

The Lost Cause: a post-Green New Deal eco-topian novel about truth and reconciliation with white nationalist militias, Tor Books, November 2023
The Bezzle: a sequel to "Red Team Blues," about prison-tech and other grifts, Tor Books, February 2024
Picks and Shovels: a sequel to "Red Team Blues," about the heroic era of the PC, Tor Books, February 2025
Unauthorized Bread: a graphic novel adapted from my novella about refugees, toasters and DRM, FirstSecond, 2025

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Pluralistic: ; The Lost Cause prologue, part 6 (12 Oct 2023)

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