Movable Clouds Migrate To Chase Tax Breaks 151
1sockchuck writes "State legislators have been offering huge tax incentives to attract data center projects from cloud-builders. But what happens if the political climate changes and the tax break disappears? If you're Microsoft, you can just take your cloud and move it someplace else. The infrastructure for the Windows Azure platform is being migrated out of a facility in central Washington after the state ruled that data centers no longer qualify for a tax exemption on equipment. Mike Manos, a key player in site selection for many major data centers, predicts that future cloud platforms will move often to chase lower taxes or cheaper power."
Corporations externalize costs (Score:5, Informative)
It's what they do.
the Corporate structure was created to benefit society (just like copyright).
however, they have become extremely adept at hiding their true cost by externalizing costs to the rest of society.
I.e. health care for Walmart, Security for Oil Companies (if they had to pay $3 trillion to defend their oil directly-- how much would oil cost per barrel-- that true cost is hidden in our taxes), etc.
Cloud computing is doing nothing different in this regard.
We pay for the power setup, the roads, the police force-- they pay none of these costs. So whatever cloud computing's true costs are remain hidden.
Never make a deal with management or a corporation that involves cost to you today in return for profit in the future-- they will always renege at that point (be it pensions, promised future taxes or jobs, etc.).
Microsoft's Tax Snit Jeopardizes Azure Users (Score:5, Informative)
Microsoft has put its Azure customers on notice [msdn.com] that 'all applications and storage accounts in the 'USA - Northwest' region will need to move to another region in the next few months, or they will be deleted'. So much for not diverting you from your core duties [microsoft.com]). BTW, Microsoft seems to think it's entitled to a 100% sales tax exemption [seattlepi.com].
Re:Corporations externalize costs (Score:3, Informative)
The courts ruled that the tax breaks did not apply to this facility. It's mostly just a case of posturing after an attempt to exploit a loophole that was opened for another project. Microsoft pays almost nothing to Washington state relative to their revenue, which is fine as Olympia has invited this kind of relationship. They employ a lot of people, and really are used to getting what they want from the state.
However, I don't think this action isn't even so much about the taxes on the site as much as letting our legislators know they're ready to leave wholesale as soon as it suits them.
Re:Corporations externalize costs (Score:1, Informative)
The corporate structure was not created to benefit society. It was created to protect the corporate officers from liability and maximize profit.
And copyright does not benefit society, it degrades it. (A good book to read on copyrights and other IP related matters would be Boldrin and Levine's Against Intellectual Monopoly.)
Corporations pay taxes for the "services" you describe. But really, it's hard to call it a service because with any service you have a choice to subscribe to it or not, with taxation, there is no choice. If you don't pay, you get fined and possibly even receive jail time. Government services are monopolies. As with any monopoly, shortages happen, service is bad and prices are out of wack. The only difference is that, since it is government, you have no recourse.
If those services didn't exist and there were no taxes to pay for them, you'd see other corporations and individuals taking up the slacks. Security services, private arbitration courts, irrigation, power generation, distribution, etc would all be taken care of by people that see a need and fill it. The major difference would be that it would be a voluntary choice based on private contracts. Only the people that actually wanted the service would pay, those that didn't use it or didn't want it would be free of the expense. (Most can imagine water and power as private entities, but roads and security is harder because they've been raised to believe in a monopolistic government service. See Walter Block's The Privatization of Roads and Highways, for how those services would work and The Machinery of Freedom by David Friedman for how private defense agencies would work.)
As far as making deals goes, make as many as you want. For every reneged deal, there are thousands that went through just fine. The overwhelming majority of companies that exist today exist because they don't screw people. It's only a small criminal group that causes harm and gets the most press. These are the ones that commit fraud (renege on a contract) or use use government regulation to prevent competition from occurring. These are the Enrons, the Goldmans Sachs, the Blackwaters (Xee,) the GM's of the world-- true ciminals.
The cloud-builders are correct to leave. If the government is eating too much into their livelihood, people vote with their feet. History has shown this pretty regularly.
Re:What does this have to do with "the cloud"? (Score:3, Informative)
Unless by "the cloud" you mean "anything you can run in a colo". But that's kind of diluting the term to the point of meaninglessness, isn't it?
That is what is meant by "the cloud". "Cloud" computing is just another way of saying client/server, except that "cloud" computing usually means that the Internet is involved somehow. The only difference between "cloud computing" and client/server architecture is that in "cloud" you don't pay any attention to where the server actually is (whereas in traditional client/server you might, although not necessarily).
Re:Corporations externalize costs (Score:2, Informative)
Re:Corporations externalize costs (Score:1, Informative)
Corporations hire the employees which pay state and city taxes. The incentive was the have the company come here and develop where as they could have built it almost anywhere. The company comes and develop the area and now you have the government pull their support from the business? Now if govt were smart to use their tax dollars responsibility rather than run stupid deficits, every government runs it for some reason. I can't find a govt, city or state without massive amounts of debt. They tax us every year or businesses every quarter but they never seem to have any left over at the end of the year.
Businesses
Re:Corporations externalize costs (Score:3, Informative)
Yes [dklevine.com]