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The Internet The Almighty Buck

Movable Clouds Migrate To Chase Tax Breaks 151

Posted by Soulskill from the overcast-overcost dept.
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."
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Movable Clouds Migrate To Chase Tax Breaks More

Movable Clouds Migrate To Chase Tax Breaks

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  • Corporations externalize costs (Score:5, Informative)

    by Maxo-Texas ( 864189 ) on Saturday August 08, 2009 @12:47PM (#28996501)

    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.).

    • Re: (Score:3, Insightful)

      by XanC ( 644172 )

      Not that I am at ALL a fan of these sweetheart deals, but isn't it the government that's reneging here, not the corporation?

      • Re: (Score:3, Informative)

        by earnest murderer ( 888716 )

        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 lettin

    • I would only add that the weirdest part is there is a contingent of people caught under the wheel that will vociferously defend the right of the corporation/government to grind your bones to make their bread.

      I suppose some people must have structure, even if it is wholly self destructive.

      I'm not anti-corporation, but corruption has reversed the role of corporations as a tool of the people.

      • Re: (Score:2)

        by Toonol ( 1057698 )
        Corporations can and often are corrupt, so I'm not defending them; I have all sorts of issues with the legal fictions surrounding corporate rights.

        But still, it is moral clarity, not weakness or foolishness, that would lead somebody to defend the right of someone else even though it's detrimental to themselves. It's a good thing that I support the right of somebody to compete with me, even though that takes away my sales; the right of an employer to fire me, even though it might hurt me. The right of s

        • A corporation is not a person. I think you are reading a whole lot of inaccurate data into what I wrote.

          I have no idea how you even get forbiddance out of what I post.

        • Re: (Score:2)

          by rtb61 ( 674572 )

          Well in this case not only is it wrong but likely immoral and evil. The corporation is essential laying all of it's social burdens, those it accrues from the social benefits it gains, upon everyone else in the state. It basically blackmails state after state, continually pursuing a corrupt agenda, it's unwillingness to pay it's fair share of taxes.

          It does this by specifically creating boom and bust economies in states, financial protectionism of the organised crime variety. Do give a tax holiday and they

      • Weird indeed. I am continuously baffled by the hordes of sheep that can be so easily whipped up into a fearful frenzy that they will repeatedly act (vote) against their own best interests.
        As for corruption, that's a strong word, and while it is quite often appropriate when applied to corporate behavior, let's not forget that it is the corporation's job to produce profit for it's shareholders. If a corporation can funnel money into politics to gain favorable treatment, and get away with it (legally or not)

    • Re: (Score:1, Informative)

      by Anonymous Coward

      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, the

      • Re:Corporations externalize costs (Score:5, Insightful)

        by MightyYar ( 622222 ) on Saturday August 08, 2009 @01:42PM (#28996891)

        It was created to protect the corporate officers from liability

        Which in turn benefits society. Who in their right mind would make a commercial aircraft if they weren't shielded from liability?

        • Re: (Score:2, Informative)

          by plnix0 ( 807376 )
          Someone who is confident that the aircraft will work.

          • "Someone who is confident that the aircraft will work."

            And doesn't find anything with a higher short-time benefit return.

            And that's exactly the point: under such circumnstances nobody would build aircrafts if they could manage mom-n-pop's stores at better short-range profits.

        • Re: (Score:2)

          by lennier ( 44736 )

          "Who in their right mind would make a commercial aircraft if they weren't shielded from liability?"

          Someone who doesn't care if they sell products that kill lots of people?

          • Lol, true. But they'd also have to not care that they'd be personally ruined by lawsuits.

            • And the problem with corporations lately is that the officers seem to have realized that if they structure their pay so that they get several lifetime's worth of pay, then they are legally protected when the corporation fails and reneges on cleaning up toxic waste/paying pensions/taxes due on incomes, etc.

              I suspect that what they are doing is a form of fraud, but they've figured out a way to phrase it so they can't be legally prosecuted for it.

              Look at all the "bankrupt" financial firms-- some of whom are pa

              • And the problem with corporations lately is that the officers seem to have realized that if they structure their pay so that they get several lifetime's worth of pay,

                If there was no such thing as a corporate structure, those "officers" would be "owners" and the entire revenue of the company would flow through their personal bank accounts. How would this improve matters?

                then they are legally protected when the corporation fails and reneges on cleaning up toxic waste/paying pensions/taxes due on incomes, etc.

                While I can agree that this happens more frequently than is desired, you can't ignore that the government changes the rules on these corporations. For instance, if there was no corporation structure, some guy who polluted a plot of land 70 years ago would be dead. Now, you have a corporation who did it 70

                • No, the officers are not the owners.
                  The shareholders are the owners.
                  Often the officers who loot the companies own way less than 1% (way less) of the companies.

                  Most often, if the money to be recovered 70 years later is significant, the corporation simply goes bankrupt or worse, structures the liabilities to another corporate structure which then goes bankrupt.

                  But I agree, they do get dinged sometimes.

                  Small businesses are owned by the person-- if they are owned by investors, then yes- unscrupulous folks do ri

      • 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.)

        Are you aware the everyone has a copyright automatically when they create a creative work in certain jurisdictions? Copyright protects you and me from having our work misused or used for profit by other party without permission and compensation. From the tone of your post, you seem to be blissfully unaware that average people either have automatic copyright or can apply for copyright for a small fee for any work they created depending on where they live. This would even include slashdot posts like these. Of

        • The purpose of copyright is to protect the rights of content creators which could very well be an individual for a period of time to allow them to either sell their work directly or to distributing party for financial compensation. Without this protection, there would be very little incentive to create new creative works.

          Only in theory... and that exact same theory says nobody will ever use BSD-like licenses, or the WTFPL, or such. So it's obviously incorrect, besides not accounting for the production of creative works before copyright was invented.

        • Re: (Score:1)

          by plnix0 ( 807376 )
          Copyright was not the main point of GGP, which I would guess is the reason GP did not spend more than a brief pair of sentences on it (into which you somehow read a degree of ignorance not shown by GP). I'm reasonably confident based on GP's comments that he is in fact aware of the facts you refer to. But how is this relevant? Are we supposed to support copyright out of selfishness, simply because we ourselves can partake of it, too? Nonsense. Some people, yourself apparently excluded, believe in absolute m

        • Copyright was created so people would create items which would enter the public domain.

          Not so people who create things would get paid.

          Corporations were created so people could safely run a business with limited liability-- so society would benefit by having those types of businesses exist.

          Both have been corrupted.

          When neither benefit society any more but only small groups of people-- it's time for society to eliminate them and create new rules.

          Underlying every law is an attempt to manage hobbe's leviathan--

      • A good book to read on copyrights and other IP related matters would be Boldrin and Levine's Against Intellectual Monopoly.

        Is there somewhere I can download that book for free?

        • Re: (Score:3, Informative)

          by Plunky ( 929104 )

          A good book to read on copyrights and other IP related matters would be Boldrin and Levine's Against Intellectual Monopoly.

          Is there somewhere I can download that book for free?

          Yes [dklevine.com]

      • 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.

        Yes, we have no input into our government. W

      • It was created to protect the corporate officers from liability and maximize profit.

        Actually they were created to protect the corporate owners from liability. While it is true that in some jurisdictions, such as Nevada (even there is isn't a complete liability shield for corporate officers), corporate officers are also protected from liability, this is not true of all jurisdictions. What is true in all jurisdictions, which I am aware of, is that the corporate owners have no liability beyond their shar

    • Re:Corporations externalize costs (Score:5, Insightful)

      by Iyonesco ( 1482555 ) on Saturday August 08, 2009 @01:49PM (#28996959)

      "We pay for the power setup, the roads, the police force-- they pay none of these costs"

      Firstly, "they" pay 40% corporation tax - the second highest in the world. What more do you want? Do you really want to see the total collapse of the US economy as corporations buckle under an even heavier tax burden?

      Secondly, who are "they"? A corporation is composed of three groups of people - employees, shareholders and customers. In reality "they" is in fact you, me and everyone else here and it's us who pays the costs of higher taxes on corporations.

      If you tax a corporation the money has to either come from raising prices, cutting the workforce or taking a hit and suffering a reduction in share value. In all of these situations it's the public who pays the cost, either through higher prices of goods and services, losing their job or a suffering a reduction in the value of the shares in their retirement account.

      When corporations get taxed it comes out of your pocket and it's you that suffers. Quite why you'd want to see them taxed more I don't know.

  • Responsibility to society or shareholders? (Score:4, Insightful)

    by BadAnalogyGuy ( 945258 ) <BadAnalogyGuy@gmail.com> on Saturday August 08, 2009 @12:47PM (#28996505)

    When you decide to skirt tax laws, you are able to directly benefit from the greater net income at the end of the day. Shareholders of companies that skirt tax laws benefit greatly because of the greater net revenues. So it seems that everyone should be happy, right? More money to the private sector and we (the private sector) know how to best spend our money.

    But what about social services that are necessary to protect the least among us? Rousseau described a social contract which requires each citizen to give up some rights in order to preserve order and safety. John Rawls describes a theory of social justice which demands a safety net which can protect those who are the most unfortunate, at the cost of additional taxes on those most able to pay.

    Aren't these companies who take advantage of these ethically questionable tax shelters 1) not paying their fair share to support the social safety net, and 2) putting the onus on the individual citizens/employees who cannot easily move to tax-free states?

    • Re: (Score:1)

      by cellurl ( 906920 ) *
      Pruett described the notion that best intentions mask guilt buried in the past. That "trying equals succeeding". Pruett also describes publicly traded companies as evil. No one wants health care. Its just a flag that some think must be planted in the ground to show that "trying equals succeeding". ------- Just tell State Farm that in order to do business in California, they have to cover 95% of the people. They will tax the fat or regulate expenses. State Farm, not the government will make health-services

      • Re: (Score:2)

        by Forbman ( 794277 )

        Except the choice will be (or perceived to be, or lobbied TO be, by the insurance company...) "either cover 95% of the people or you can't do business in CA". Guess which option they'll take?

    • Re:Responsibility to society or shareholders? (Score:4, Insightful)

      by cryfreedomlove ( 929828 ) on Saturday August 08, 2009 @01:04PM (#28996633)
      The best social contract is one that creates jobs for the 'least among us'.

      In general, I agree with you but I have come to realize that there really is no corporate tax that is not simply passed on to consumers in the form of higher prices. I'd prefer no corporate tax at all, accompanied by the individual flat tax with no allowable deductions. Simple, clear, enough to fund the social safety net.
      • RE:"there really is no corporate tax that is not simply passed on to consumers in the form of higher prices"

        then in turn the higher income garnered from the higher prices should raise their taxes, you see how it can easily spiral out of control? the USA should change the state taxes to a more centralized system to level the field so the tax is the same no matter where they move their cloud to, and if they leave the country then put a tarif on them for it. why should the consumer pay extra because the top
        • Your solution is a job killer, for sure. If a corporation knows that there is a tariff for moving their data center outside the USA then they will never build it here in the first place. The data center and it's attending jobs will be built in another country.

          Thanks FudRucker, thanks a lot. Welcome to the 3rd world USA.
          • did i mention i am a communist? drink the koolaide comrade, the rest of us are and it tastes fine
            • Did Uncle Joe Stalin taste fine? How about Pol Pot?
              • oops forgot the /sarcasm tag on that one, actually capitalism worked just fine for ages before Reaganomics came along, just ask anyone over 40 or 50.

                • oops forgot the /sarcasm tag on that one, actually capitalism worked just fine for ages before Reaganomics came along, just ask anyone over 40 or 50.

                  I'm over 50, and I can tell you for sure the reason Reagan got elected was because under Carter capitalism had stopped working. Assuming you want to call what we had under Carter capitalism, that is.

                  You might want to remember the economic boom that started in the late 80's and ran right through the 90's. Would you call that "not working"?

                • Capitalism still works great for me. I just hope the current President and Congress don't do any more damage since they seem to be opposed to it.

        • Re:Responsibility to society or shareholders? (Score:5, Insightful)

          by zippthorne ( 748122 ) on Saturday August 08, 2009 @01:56PM (#28997027) Journal

          Yeah, that'll really encourage businesses to establish operations in the first place.

          There are a few basic principles which I wish people, especially politicians would take into account when setting up these things.

          1. The Laffer Curve [wikipedia.org]. It's certainly more complicated than that, but the basic argument that there is a maximum revenue possible at some optimum tax rate shouldn't be simply scoffed at and ignored. Further, the more general idea is that, for any given level of required revenue (below the maximum, wherever it may lie), if there is more than one level of taxation which would generate that revenue, it is immoral to choose the higher rate, as it needlessly restrains the activity which lifts everyone's standard of living.
          2. If you want to play social games, have higher taxes on things you want to discourage and lower taxes on things you want to encourage now. If you change your mind later, don't be surprised or upset when people doing those things decide to move somewhere where the state wants those things done.
          3. Don't demonize people or organizations for taking advantage of your tax structure to minimize their taxes. You had lower taxes on certain things because you wanted to encourage that behavior, didn't you?
          4. No special cases. There is too much opportunity for graft if your politicians can make special deals on an individual basis and claim credit for those very visible jobs. If the deal is good for one company, it's good for every company. Make that the policy.

          Your plan is every bit objectionable as the cable company's sleezy "super low introductory rate for six months, with unspecified but much higher rate for the remainder of your twenty-four month commitment." Except that when the government does it, there are guns or the threat of guns involved.

          • exactly right on, thats what needs to be done, the government needs to quit playing games with taxes, set a reasonable level and keep it there, and it should be the same all across the board for all states, or else it will be the same old struggle that never really gets any long term benefits for anyone, not the companies wanting to do business, not the government needing the tax revenue and especially not the working class that need the jobs/income...

          • Your plan is every bit objectionable as the cable company's sleezy "super low introductory rate for six months, with unspecified but much higher rate for the remainder of your twenty-four month commitment."

            Much sleazier, actually. It's more like a cable company that offers a low teaser rate but also says that if you don't buy the service, then you'll be responsible for cableman's children's starving .

          • RE:"then in turn the higher income garnered from the higher prices should raise their taxes, you see how it can easily spiral out of control?"

            i think you misunderstood the intent of my sentence, did you not see the question mark at the end of this sentence, it was to show an example, i am not sure of a flat tax would fix this or not, i have a feeling a flat tax would but i just dont know for sure, i really dont think anyone has all the answers and if anyone claims they do have all the answers they are t

            • Yeah, yours wasn't the comment I'd intended to post under. Either slashdot messed up or I hit the wrong reply button.

                I can't find the comment I intended to post under, but it was from someone who saw no problem with luring business in with low tax rates then bumping them up after the businesses are established, and having some kind of law to "recover" the "tax break" if the businesses decide to leave when they change the law.

      • I've aways thought that corporate income tax rates are less than individual income tax rates; effectively a corporation paying taxes reduces the individual stockholders income taxes! Corporates income taxes are much more flat than individual and so more regressive, one would think that Liberals would be against corporate income taxes.

    • Re:Responsibility to society or shareholders? (Score:4, Insightful)

      by PPH ( 736903 ) on Saturday August 08, 2009 @01:11PM (#28996677)

      Rousseau described a social contract which requires each citizen to give up some rights in order to preserve order and safety.

      Fine. But the terms of the contract were changed. Unilaterally. The state offerd tax incentives to attract business and then withdrew them once the business is up and running. Why not just charge the going tax rates from the outset?

      For every company that has the foresight to use portable infrastructure [slashdot.org], there are hundreds that have sunk costs and can't afford to move easily. But they serve as warnings to other potential investors as to the ethics of the particular jurisdictions that they are considering. Companies avoid that state and the population suffers, not only from a lack of funding for social services, but a lack of jobs.

      • Re: (Score:1, Interesting)

        by BadAnalogyGuy ( 945258 )

        Many Christians believe that those who will enter the Kingdom of Heaven are already named in the Book of Life. God is omniscient, therefore he already knows who will spend eternity in Glory and who will burn forever in the Lake of Fire. Calvinists hold this concept of preordination.

        However such a concept flies in the face of a loving Creator for many Christians. So these subscribe to the concept of Free Will. The choices you make in life actually affect how you will be judged in the afterlife.

        What it boils

        • "What it boils down to, though, is whether God is omnipotent and omniscient. If he is, then he knows that a vast number of people will die and enter the flames of Hades"

          Hell of current mainstream christianity is incorrect reading of the bible, for those who are not christian and but are interested in christian history and whatnot it's wonderful that other unknown and small christian denominations have done quite a job debunking modern christianity from within their own ranks and much has been known for a lo

    • Re: (Score:3, Insightful)

      by Robin47 ( 1379745 )

      Aren't these companies who take advantage of these ethically questionable tax shelters ...

      I actually went back and RTA thinking I missed something. I'm still scratching my head trying to think of a way this can be characterized as "ethically questionable tax shelters". No one is doing anything ethically challenged here except maybe the government trying to change the deal to generate a new revenue stream. Yeah, Microsoft, sit there and take it.-Not! I can't blame them in the least.

      • No one is doing anything ethically challenged here except maybe the government trying to change the deal to generate a new revenue stream.

        This is a common meme, but it disregards the fact that the government exists to implement the will of the citizens. Many of those Microsofties who voted in the last election voted for the winners, and those winners are now making the laws. Call it the tyranny of the majority, but it is the will of the majority.

        • I used to think that way but have changed my thinking to government seems to implement the will of government, no matter what they promise in the campaign.
        • Call it the tyranny of the majority, but it is the will of the majority.

          It's only the will of the majority if was passed as proposition that actually have >50% of eligible voters vote in favor of it. Anything else is the will a minority, and usually a very, very small minority since most states only have a few hundred law makers.

    • Sorry, but it isn't about being a good citizen. When you invest $600MM-1B in any facility, sales tax becomes a huge cost, and at a different scale than consumer sales tax.

      It used to be that sales tax just ht the final transaction, now it is every step in the process. This doesn't help buld the economy, the schools, or roads in an equitable relationship between payees and users. (Taxation without representation?)

      For a project in California, the state actually takes in more cash from a major construction pro

  • First data moves up into the massive cloud from all over. Then the cloud moves. Then somebody does a dance of sorts. All our data crashes to the ground. (Erm..this step is reserved for Microsoft's clouds)
  • The first thing on my mind after reading the topic was a government run development of stealth flying apparatus chasing innocent citizens for not paying taxes.

  • Basic economics (Score:4, Insightful)

    by Hawthorne01 ( 575586 ) on Saturday August 08, 2009 @12:58PM (#28996585)
    Businesses treat taxation as damage and go around it. Or something like that.

    • Re: (Score:2)

      by DaveGod ( 703167 )

      Businesses treat taxation as cost and minimise it.

      That's how I'd rephrase your point (while still saying roughly the same thing).

      In Microsoft's case this is quite literal, as the tax adds 7.9% to the cost of their equipment.

      Companies exist to maximise shareholder wealth. This is done by increased share price and through dividends. Tax reduces shareholder wealth, it is the company's duty to it's shareholders to minimise it - but legally. Three usual terms divide up the spectrum of minimising tax:
      - tax planning, which is simply as described to be tax-effic

  • Tax entities will get wise to this (Score:3, Insightful)

    by davidwr ( 791652 ) on Saturday August 08, 2009 @01:04PM (#28996629) Homepage Journal

    Taxing entities will continue to give tax breaks, but there will be strings attached. Instead of "10 years with favorable tax status if you keep $x in local payroll during those 10 years" it will be "10 years with favorable tax status if you keep $3x in local payroll during the following 30 years, adjusted for inflation, with penalties and the ability to recapture the taxes if you default."

    • Hopefully they will realize that tax breaks is a futile race to the bottom. For every state that gives a rebate there is another one that can undercut you. In the long run it is not sustainable and just wastes tax payer money for everyone.

  • It's the equipment that's being taxed... or not... not the data on them. Moving servers around doesn't get cheaper or more expensive because they're serving Azure or Halo... you still have to move the physical boxes and the people maintaining them.

    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?

    • It's meaningless regardless because companies that aren't running clouds are already playing this game. And by non-cloud businesses, I mean manufacturing. Talk to any Irishman and I'm sure they would be happy to give you a dissertation on how this game works. Then in about two years ask the same question to a Polish man.

    • Re: (Score:3, Informative)

      by Attila Dimedici ( 1036002 )

      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: (Score:2)

        by argent ( 18001 )

        "Cloud" computing is just another way of saying client/server, except that "cloud" computing usually means that the Internet is involved somehow.

        Then I was doing "cloud computing" in the '80s. Oh, hmmm, maybe I was doing "cloud computing" in 1972. Oh, it wasn't "the internet", it was a TDM multiplexed line between Sydney and Minneapolis.

        • "Cloud" computing is just another way of saying client/server, except that "cloud" computing usually means that the Internet is involved somehow.

          Then I was doing "cloud computing" in the '80s. Oh, hmmm, maybe I was doing "cloud computing" in 1972. Oh, it wasn't "the internet", it was a TDM multiplexed line between Sydney and Minneapolis.

          Yes, you were.

      • Except that apparently Azure customers do have to pay attention to where their data is stored?! The article made it sound like there'll be some manual work involved by Microsofts customers for migrating their apps to the San Antonio datacenter. Doesn't sound very cloudlike to me ...

  • Nothing new here (Score:5, Insightful)

    by Robert1 ( 513674 ) on Saturday August 08, 2009 @01:09PM (#28996669) Homepage

    This is a basic business fact, has been known for decades, and is one of the big reasons why people are justifiably against increased taxes.

    It happens on every level of government - city, county, state and finally country. Tax increases at any of these levels tend to drive away businesses, lower taxes and incentives draw them in. The only thing that makes this news-worthy is that cloud-computing is a fairly new industry. Surprise, surprise they react to taxes like any other business.

    Of course, every level of government NEEDS taxes, but tax increases to pay for various social services ultimately have to be finely balanced between driving away business with the need for those services. Heavily taxing business to provide for such services helps the community in the short term, but drives away the business and hurts the community through job loss in the mid to long term. Did the social service help the community greater than the loss of the jobs hurt it? There-in lies the delicate balance that is illustrated by the issue of taxes and business migration. Again, nothing new.

    • And businesses will do whatever they need to do to lower their taxes even if that means exploiting a loophole. MS is not alone here. By the way, MS while its headquarters is in Seattle, all sales are recorded for their office in Utah where there are no corporate taxes. It is estimated that since 1997 MS has earned some $92 billion in profits and avoided $528 million in taxes.

  • Everyone who has ever looked at the sky know that clouds move, and change their movement if the wind changes. And if the cloud gets too big, it starts to lose water by dropping it on the ground, while small clouds tend to evaporate away completely. It's only natural that computing clouds behave the same. Just wait for the first digital thunderstorm in the cloud. And don't be too upset about the data losses.

  • Buzzword comes back to bite you. (Score:3, Funny)

    by SilverHatHacker ( 1381259 ) on Saturday August 08, 2009 @01:18PM (#28996713)
    Yes, clouds move. In the upper atmosphere, air cools and sinks, causing wind currents, which blow the clouds around.
    Wait, what's that you say?
    Oops, my mistake.

  • I'm amazed someone hasn't mentioned it yet... (Score:4, Funny)

    by cpt_drewbie ( 1479889 ) on Saturday August 08, 2009 @01:18PM (#28996715)
    "Mike Manos, and his Hands of Fate, predicts that future cloud platforms will move often to chase lower taxes or cheaper power."

    Slightly edited, bolded for effect.

  • Microsoft's Tax Snit Jeopardizes Azure Users (Score:5, Informative)

    by theodp ( 442580 ) on Saturday August 08, 2009 @01:18PM (#28996719)

    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: (Score:2)

      by nurb432 ( 527695 )

      Why couldn't they do the migration for the users? Other data providers would do that in the event of a data center move.. Sure might be some downtime, but its not put on the user to figure out what to do to keep their business alive..

    • BTW, Microsoft seems to think it's entitled to a 100% sales tax exemption [seattlepi.com].

      Actually it's not that outrageous, A manufacturer gets a sales tax exemption on goods and materials used in an industrial process, Micro$oft's "industrial process" is holding, moving and processing data, seems not too distant an analogy. There is still plenty for property and income taxes. If it were for a development center then, then no sale tax exemptions should apply; a newspaper pays sales tax on office paper, doesn't on newsprint paper.

  • So while Cloud providers are moving their clouds around for the best deal...what restricts them to hosting in the USA at all? And therein lies one of the fundamental problems with cloud computing for company data. I can think of a number of countries in the world where I would *NOT* want my confidential company data stored and some of those countries might be pretty attractive to hosting providers.

    Their sales guys can talk all they want about how wonderfully secure the whole thing is, but if my data physi

  • It only works until every state taxes them the same, once everyone taxes them normally they'll stay where they are or move to where it makes sense for real reasons.

    Or we can just nationalize all taxes and this sort of bullshit will end. We'll have a bunch of new problems, but this sort of moving and wastefulness because they don't want to support their local services will end.

    • Actually after the prices are lower and kind of stable between all the major cloud services/storage providers, doing so would probably force them to move their servers to other countries where the taxes are lower. The other option is to increase the prices. A mix of both will probably happen. Anywhere will become global and those who want it localized in USA will have to pay premium. I'm not criticising either side, the companies or the government. But when doing taxes one has to have in mind how will peop

  • Last one there makes slightly less of a profit in the next quarter!

  • Your data in a cloud over India (Score:5, Interesting)

    by StreetChip ( 870758 ) on Saturday August 08, 2009 @01:47PM (#28996943) Homepage
    Considering the track record of tech companies and their quest to save a few bucks at the expense of American jobs, it's just a matter of time before all of your data in the cloud winds up overseas. Who has access to read through your sensitive documents when that time comes? The article shows how easy it us for one cloud provider to uproot the collective data of thousands of companies and move it anywhere they please. Where will they move the data next? Read this article, "Your data in a cloud over India": http://techclub.mypctechs.com/?p=364 [mypctechs.com]
  • Just as movable customers chase low prices. And movable investors chase high returns.

    • Good point. Just checking, does everyone here claiming MS is unethical for doing this report all internet purchases to your state and local government and pay sales taxes on those purchases? That is required in many states, so if you don't it is unethical and probably illegal.

      I don't, of course, but that's because I'm a right bastard.

  • The genius of shipping container datacenters (Score:1, Interesting)

    by Anonymous Coward

    This is why I continue to maintain that shipping container datacenters (or houses even) are a brilliant idea. It totally screws with the concept of real estate being, well, permanent. But more importantly, it allows you to do things that were otherwise impossible to do.

    Don't like the political climate? Unplug, drop them on trucks and within a week, you could LITERALLY move and reestablish a full data center from start to finish, assuming the infrastructure was in place at the destination (power, cooling, fl

  • Hypocrits (Score:1, Insightful)

    by Anonymous Coward
    I find it ironic that corporations like Microsoft are being criticised for openly lobbying State governments for tax exemptions by a community of people who are extraordinarily likely to buy things off of the internet and simultaneously claim that they have never heard of a "use tax" (or simply refuse to pay it). Bravo to the 95% of you who are tax cheats. Apologies to the 5% who actually paid.

  • Terminology (Score:3, Insightful)

    by michaelmalak ( 91262 ) <michael@michaelmalak.com> on Saturday August 08, 2009 @02:51PM (#28997371) Homepage
    Here's hoping that this "cloud" terminology goes the way of "mashup". "Server farm" and "data center" refer to specific concrete entities. Labeling a data center as a "cloud" does not give it magical capabilities. "Cloud" used to refer to the peer-to-peer nature of the Internet. Now it's being applied to servers from the old client/server days. Talk about complete perversion.

    • Can we go back to calling it timeshare instead?

      Before long, companies will start adding up their 'cloud' costs and conclude that a few rackmount PCs in an air conditioned room would be cheaper, clouds will go out of fashion for a few years, then a bunch of other companies will have a great idea to be an outsourcer for compute time, give it a stupid name like 'cyberether' or some such nonsense and the cycle will start again.

  • can you please mark nonsense like this article under politics as well as "the internet"? the whole anti-humanist-under-guise-of-being-anti-corporate crowd makes it sooooooo not worth reading. i'd like to have an opportunity to block this type of drivel.
  • taxed microsoft the same way microsoft sold windows & office licenses?

  • So tech people are going to be gypsy/circus people moving town to town with their semi's chocked full of servers. They'll summer in alaska and winter in florida or texas.

    • Re: (Score:2)

      by rdebath ( 884132 )

      Google have been thinking about doing this; their data centres are built out of lots of standard containers after all ...

  • Get off of my Cloud...

  • I'm amazed that data centers have yet to acknowledged (as regulated) as heavy industry, what with their power consumption, size, and even pollution via hot air expelled from massive cooling plants. It was rarely surprising when GM, Ford and Chrysler would relocate their plants to capitalize on laxer environmental regulation, cheaper labor, or lower taxes. Somehow it's surprising when Microsoft feels similar motivations to move its massive plants?

    • Heavy industry == large factories,thousands of unionized workers, slamming machines, polluted lakes and land, mountains of waste, grinding, chopping, mincing, steel-on-steel action, a few deaths every year due to "accidents", a corrupt, evil corporation that evades responsibility and criminal punishment by buying off state senators and donating to Republicans, etc.
      Corporate Data Centers== Mid-sized, ultra-clean, very quiet, tens of employees each owning a condo and a TransAm, employed by a corporation whose

  • ...that Washington State could think that they'd call Microsoft's bluff and hit them with an extra 8% on a multi-several-hundred million dollar facility, and not have Microsoft simply move their cloud services elsewhere.

    At the end of the day, what does WA State think they they offer for that 8% that can't be found elsewhere? I can guarantee you that Microsoft did that cost calculation and WA state came up short. WA should have done it too before pushing their argument.

    nb: "Waving forests of green" and

  • Now we finally see the real reason Sun and HP (and probably others by now) have been coming up with those "data-center-in-a-trailer" products. To allow cloud providers to push for tax breaks. If the local politicians don't give you what you want, just fire up the trucks and tow the data center to some other city or state that'll give you what you want. Heck, all it would most likely take for the pols to fall all over themselves offering up more tax breaks would be the appearance of trucks at the data center

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