In a recent speech before the National Education Summit on High Schools, Bill Gates spoke of the dismal state of U.S. public schools. He called for action: "We'd better do something about these kids not getting an education, because it is hurting us" and " ... because it is hurting them." He was speaking as co-chairman of the Bill & Melinda Gates Foundation, where high moral purpose is combined with analytical skill to accomplish crucial work in world health and U.S. education.
As chairman of Microsoft, however, Gates is responsible for a business policy that actively harms public schools. Microsoft maintains a small office in Reno, Nev. -- a state with no corporate income tax. Sixty billion dollars in licensing fees for Windows and Office software has passed through that office, and an estimated $300 million in taxes has been lost to Washington for the sale of products produced in Washington.
Interestingly, the Gates Foundation funded a study not long ago that documents the decline of Washington public schools. Per-student funding is falling. Our class sizes are the fourth-largest in the country. Our teachers have the lowest salaries on the West Coast. An initiative to reduce class size passed overwhelmingly but remains unfunded. Class sizes continue to grow. And now Seattle Public Schools has a budget crisis.
What do we make of this contradiction between Gates the philanthropist and Gates the corporate officer? A smart and generous man works to change the world for the better and yet runs a corporation at which the sensible obligation to pursue "the best interests of the corporation" is sometimes interpreted to mean "seek every possible financial advantage" -- even if that advantage comes at the expense of the community to which the corporation belongs.
It is not that Microsoft should become magnanimous -- that is the proper (and admirably accomplished) role of the Gates Foundation. But Microsoft, and Gates, should understand that it is not in their best long-term interest to distort the honest relationship that can exist between a community and a corporation. This relationship is not always easy to assess; sometimes there will be honest disagreement about what community and corporation owe each other. But there will be other times when distortion is crystal clear. We can use the duck test: If it walks like a duck and quacks like a duck, it is a duck. The office in Reno walks like a tax evasion; it quacks like a tax evasion; it is a tax evasion.
Microsoft's familiar advertising slogan, "Your potential, our passion" is undercut by every transaction made in that Reno office. With every transaction, and with every unpaid tax dollar, Microsoft's (business) passion reduces children's potential, by making it harder to adequately fund our schools.
Microsoft should do two things:Close the Reno licensing office, give up the tax shelter and henceforth pay its fair share of taxes.Repay the tax money it owes to the state of Washington.
Gates has twice had a powerful effect on the world, once with Microsoft software and, more recently, along with his wife, in the work of the Gates Foundation. I ask Gates to be visionary one more time. I ask that he chart a new course for Microsoft and, by example, chart a new course for corporations everywhere. I ask that he adopt business strategies that accomplish his corporation's best interests and show responsibility toward our communities and schools. Close the Reno office, refund the lost tax revenue, pay taxes honestly: These steps will make an excellent start.
Paul Shannon lives in Seattle.
© 2005 Seattle Post-Intelligencer