Our heroes! Those smarty-pants techie gurus!
So corruption laden with even greater big $$$$$$ dreams running amok.
And serious people still say these sweet-assed techie honchos can't really want to bankrupt their native country (that provided them with so much of their stake at their beginnings).
According to Securities and Exchange Commission filings, Apple, Microsoft and IBM accelerated their overseas profit hoarding in 2013 more than their counterparts, adding $37.5 billion to the pile. Over the past three years, Microsoft’s cash stash has more than doubled, and Apple’s has quadrupled. In all, seven tech companies – the three mentioned above, along with Cisco Systems, Oracle, Google and Hewlett-Packard – have $341.3 billion sitting in offshore accounts.
At current tax rates, the companies would have to pay $119.45 billion of that to the IRS if they repatriated it. Much of this money is held in segregated U.S. bank accounts, solely for the purpose of avoiding taxes by nominally keeping it offshore.
Sure enough, tech firms are among the companies lobbying for a repatriation tax holiday, which would allow them to return that money home at ultra-low rates.
The LIFT Coalition (short for Let’s Invest for Tomorrow), run by former Obama administration communications director Anita Dunn, advocates for the repatriation holiday, and includes Intel, Cisco, Hewlett-Packard, the Semiconductor Industry Association, and “TechNet,” a separate lobbying coalition that counts as its members Google and Facebook.
These lobbying coalitions claim that repatriating the money will allow companies to invest and spur economic recovery, although the last repatriation tax holiday, in 2004, did nothing of the sort. The top 15 companies that made use of that holiday to move money home actually cut 20,000 jobs in the aftermath, while increasing their executive compensation and stock buybacks, according to a report from the Senate Permanent Subcommittee on Investigations (Hewlett-Packard and IBM were among the 15 companies benefiting the most).
Sadly, both the recent Republican tax reform proposal and the Obama administration’s budget call for a repatriation tax holiday along the lines of the lobbying coalition’s wishes, so their efforts could bear fruit.
But it’s actually worse than all this. A report from the Bureau on Investigative Journalism shows that these tech firms are actually taking government payments on the money they have parked overseas to avoid taxation. That’s because that money isn’t sitting under a mattress somewhere in Bermuda or the Cayman Islands; it’s invested, and the No. 1 investment these firms use is the ultra-safe, ultra-liquid instrument of U.S. government debt.
SEC filings show that Apple, Microsoft, Google and Cisco have $163 billion invested in various forms of interest-bearing U.S. debt.
If they were a country (Silicon Valleyistan), that would be the 14th-largest holding of our debt in the world, more than the sovereign wealth funds of Singapore and Norway.
Despite the investments in things like Treasury notes and agency debt, the money is still considered offshore, avoiding taxation even as it collects interest from the U.S. government.
The annual interest payout to just these four firms is $326 million.
Silicon Valley has mobilized to ensure this gravy train continues into perpetuity. Though the G-20 group of countries has discussed a unified effort to close international tax loopholes, a lobbying coalition made up of tech firms called the Digital Economy Group (DEG) has fought them almost single-handedly.
In a letter to the Organization for Economic Cooperation and Development, the DEG argued that any tax avoidance is “purely coincidental,” adding that “enterprises that employ digital communications models do not organize their business operations differently as a legal or tax matter.”
This is completely absurd, given the facts, and represents a hidden effort to subvert tax reform while publicly endorsing the concept.
The fight for low taxes almost looks good compared to Silicon Valley’s securing of cheap labor, the nasty details of which have spilled out in a federal lawsuit.
Google, Apple, Intel, Adobe and several other tech firms were charged with colluding to artificially keep down labor costs among engineers and other workers.
Basically, companies made illicit agreements not to poach each other’s employees, which eliminates labor competition and suppresses wages. This violates federal anti-trust laws, the workers alleged. Emails between the likes of Google’s Eric Schmidt and the late Apple CEO Steve Jobs provided the evidence for the allegations.
The companies even shared salary data for their employees to ensure that nobody overpaid. Recruiters who called into other Silicon Valley firms searching for talent were summarily fired.
Some tech giants, like Intuit, settled with workers for an undisclosed sum, but Google and Apple tried to get the class action suit thrown out of court. A district court judge and the 9th Circuit Court of Appeals dismissed that attempt, however, letting 60,000 workers continue to pursue the case. The trial is slated for this May.
None of this is particularly surprising. Tech firms are in the business of making money, regardless of the shiny products and Web apps and social media diversions that supply their revenue stream.
They cut all the corners that the rest of corporate America cuts to maximize their profits, skirting the edges of the law and sometimes going over it. You may not want to believe that the companies that give you the iPad and help you in your search for cat videos operate like a two-bit hustler, stealing the wages of employees and setting up dummy tax shelters. But that’s the sad reality.
They can cry all they want, but from the 2009 Inauguration on, Obama and the Democrats systematically ignored the needs of the country in favor of pushing ACA, for which there was no real urgency. Now, having missed their FDR moment, they're stuck defending a right-wing corporate welfare plan for the health care industry, and they wonder why the people don't think Democrats have their backs. Sure, it's better than what we had, but so what?
It's the economy, stupid. It's always been about the economy.
And the political economy today is largely in the hands of plutocrats who would love nothing more than to hear Democrats and Republicans continue to argue about ACA and of course "minimum wage, and immigration, and LGBT rights, and voting rights, and equal pay and the Koch brothers, and so on" while their real neoliberal and neoconservative agendas are completed right under the people's noses. We'll never have a serious conversation about banking, debt-money, fractional reserve banking, corporate personhood, financial regulations, or free trade as long as we continue to vote in politicians from either of these two corporately-owned political parties.
Here's another question: Should companies that make stuff overseas using cheap labor in countries with weak labor, environmental, and safety laws be allowed to sell into our markets, thereby displacing US workers, and if so, do you approve of reducing wages and environmental, labor and safety standards here in the U.S. to the same levels as those enjoyed by the overseas-based operations? How low are you willing to let your wages go? Half? One quarter? One tenth? Are you willing to tolerate Beijing-level air quality?
We have abandoned our sense of community in pursuit of greed and selfishness.
blue @blsdaniel @Jimbo11@imhumanru
It's a 2 tiered sense of community if it's a sense of community at all. It's wealthy corporations using the labor of impoverished people around the world while throwing people in their home countries into poverty. It's exploitation at it's finest. It's not as if the workers at the Apple factories in China are getting into the middle class. They're still poor because Apple and other companies like them will pay only what they have to pay and not one cent more. It's a community where the wealthy elite from wealthy countries get to use the poverty of other countries to benefit their bottom lines. There is nothing altruistic about it.
R. Simms @dukeitout
If current law is unfair to us little people, change it to assure the rich guys pay their fair share.
With the electoral process inundated in tsunamis of $$$$, there is no chance that the little people can change anything. Our representative democracy's pillars of support are rotting out and will soon fail totally. Unless we (the collective we) can establish publicly funded elections with absolutely no "private contributions," it's game over for the little people. We managed to get out of similar dismal circumstances at least twice before in our history, but in this era no hero has emerged. Our society is rife with Morgans and Mellons, but Teddy Roosevelts are in mighty short supply.
damspahn @Frank Knarf
We have 'debt' because we allow corporations who do business in the country to skirt paying taxes here. They pay the politicians to keep it that way. Serfs lose again. If were weren't stone stupid, or just plain corrupt, any business that wants to sell or operate in this country must pay taxes here, period. Taxes are not just for the little people.
Reform? This Congress can't even cut the 4 billion in yearly grants to the big oil companies. It's the corruption, plain and simple. Fixing our tax codes would have been far simpler in times before these days of deep, institutionalized corruption, aided and abetted by 'Citizens United' and the Koch-fueled tea party.
(David Dayen is a contributing writer for Salon. Follow him on Twitter at @ddayen.)