Time: The Coming Corporate Crackdown

The following is an excellent article from the June 3, 2013 issue of Time magazine on page 20 witten by Rana Foroohar, the Curious Capitalist titled “The Coming Corporate Crackdown” and I quote
“The Coming Corporate Crackdown”
By Rana Foroohar Monday, June 03, 2013
Washington has a love-hate relationship with Big Tech. Witness Apple CEO Tim Cook’s recent testimony on Capitol Hill, where Senators praised their favorite iGadgets while also accusing the world’s most valuable company of being one of its biggest tax avoiders, laying out how Apple jumped through loopholes to save some $44 billion of otherwise taxable income. As Democrat Carl Levin, chair of the Investigations Subcommittee, put it, Apple “sought the holy grail” of tax avoidance by funneling vast earnings to overseas subsidiaries. Cook responded that Apple paid $6 billion in U.S. corporate taxes last year. Aside from the fact that Apple has amazing tax lawyers, what does it all mean? Here are four key things you need to know:
1 Corporate tax reform will be the big issue in Washington now that the deficit is off the front burner. American firms have some $2 trillion in cash on their balance sheets stashed abroad, in large part because they don’t want to bring that money home and pay America’s 35% corporate tax rate. (Ireland, where Apple stashed a lot of its cash, has a 12.5% official rate–though Apple paid less than 2%.) With unemployment still high and wages still flat, the government wants companies to bring that cash back to the U.S. and create jobs at home. The investigation into Apple’s finances is clearly a warning shot to other U.S. multinationals.
2 It isn’t just the U.S.–tax reform is coming in other major developed countries. Large government debts and shrinking public budgets mean all rich nations will be looking more closely at corporate tax avoidance. This year the U.K. is leading the G-8 under the group’s rotating presidency, which added to the drama of British Prime Minister David Cameron’s remarks at Davos in January that multinational tax avoiders should “wake up and smell the coffee.” It was a pointed reference to Starbucks, which had recently volunteered to pay more tax in the U.K. in response to an investigation into its tax avoidance there. On May 20, Cameron announced he had written to leaders in tax havens asking for their help with this initiative. Look for this to be a big topic at the G-8 summit in June.
3 Major corporations will be pressed to do their part. In an economically bifurcated world, where companies are flush but workers are not and the historical relationship between corporate profits and local economic growth looks broken, big companies are going to be under a lot more pressure to do more for the countries in which they operate. Walmart’s response to the garment-factory fire and devastating factory collapse in Bangladesh recently is an example; the U.S. retailer is now funding Bangladeshi government efforts to improve labor standards. There is a growing sense that many companies have been flying 35,000 feet over the economic troubles of the countries where they operate–and they should be forced back down to earth. Apple’s tax troubles are just the beginning of a very big fight between the world’s richest companies and its governments.
Read more: http://www.time.com/time/magazine/article/0,9171,2144112,00.html#ix…4 Tech firms in particular will feel the heat. A year ago, when the investigation into Apple’s tax avoidance got under way, I wrote of other Big Tech-vs.-government battles that were shaping up. One was the push to get Internet retailers like Amazon to pay local sales tax. (A bill to do just that passed the Senate.) Another was the FTC’s antitrust investigations into Google (which ended without charges). Bottom line: when you have a lot of cash and can move much of it abroad easily, as the biggest tech companies do, everyone will start watching you more closely. As Steve Jobs once said, “It’s more fun to be a pirate than to join the navy.” But when you are the world’s most valuable company, it’s harder to play the rebel. The truth is that Big Tech is as corporate as it comes, and since Big Tech is also where most of the new growth and income creation in the U.S. are right now, there’s little doubt that it will draw more and more attention from regulators, tax collectors and social activists.
How well the industry defends itself may depend on how many new jobs it can account for. As Cook stressed in his testimony, Apple is “an American company” that created or supports some 600,000 jobs in the U.S. And it’s true that technology has historically created more jobs than it has destroyed. But the periods in which the creative destruction happens aren’t pretty and tend to be characterized by high levels of inequality and social discontent. A number of academics, including folks at tech-friendly places like MIT and Stanford, believe we’re in one of those periods. That’s why it will be crucial for Big Tech to prove it’s enriching the 99% as well as the 1%.
Read more: http://www.time.com/time/magazine/article/0,9171,2144112,00.html#ix…”
(THIS ARTICLE TIES IN REAL WELL WITH THE ARTICLE THAT I PUBLISHED YESTERDAY THAT WAS ALSO WRITTEN BY RANA FOROOHAR, THE CURIOUS CAPITALIST. IF THE CAPITALISTS WANT TO CONTINUE TO OPERATE, THEY CAN’T BE JUST CURIOUS BUT REAL SMART BECAUSE US TAXPAYERS THAT ARE FINANCING THE GOVERNMENT, ARE TIRED OF FINANCING THE CORPORATE TAX-DODGERS. GRANTED, THE TAX DODGER IS MORE SOPHISTICATED NOWADAYS BECAUSE OF THE MODERN TECHNOLOGY, SUCH AS COMPUTERS, WHERE ITS A LITTLE HARDER NOW TO PIN DOWN WHERE THEY ARE SUPPOSED TO RESIDE BUT IT CAN BE DONE BECAUSE THOSE TAX LOOPHOLES THEY WROTE INTO LAW, FAVORING THOSE RICH CORPORATIONS ARE STARTING TO SHOW UP WITH SOME NEW PROBLEMS THEY HAVEN’T EVEN CONSIDERED YET. THAT IS, HOW TO GET AROUND THE IRS. CONGRESS IS STARTING TO ASK QUESTIONS AND ONE THING IS GOING TO LEAD TO THE NEXT AND IT’S GOING TO LEAD TO WHAT IS THE ROLE OF THE HEDGE FUNDS, PRIVATE EQUITY, AND VENTURE CAPITALISTS AND THE ROLE OF UNREGULATED TOXIC DERIVATIVES. AS HARD AS THE 3,000 FINANCIAL LOBBYISTS ARE WORKING TO COVER UP THE GROWING TOXIC DERIVATIVE MARKET, THE MORE IT’S POPPING UP SOME OTHER PLACE, MAINLY BECAUSE OF JUST THE HUGE SIZE OF THE UNREGULATED DERIVATIVE MARKET ITSELF AND THE FACT THAT DERIVATIVES ARE NOT AN ASSET. NO WAY SHOULD COUNTERFEIT MONEY, BETTER KNOWN AS TOXIC DERIVATIVES EVER BEEN ALLOWED INTO THE MARKET OF COMMODITIES, AND BE COMPARED TO COMMODITIES SUCH AS GOLD, SILVER AND LAND. IT’S JUST MAKING A BAD, BAD NAME FOR CAPITALISM WHOSE NEW NAME MIGHT BE DYING CAPITALISM. HOPEFULLY, WE CAN GET THIS MESS STRAIGHTENED OUT BEFORE IT GETS TO FAR OUT OF CONTROL.LaVern Isely, Overtaxed Independent Middle Class Taxpayer & Public Citizen & AARP Members

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About tim074

I'm a retired dairy farmer that was a member of the National Farmer's Organization (NFO). Before going farming, I spent 4 years in the United States Air Force where I saved up enough money to get my down payment to go farming. I also enjoy writing and reading biographies and I write about myself as well as articles and excerpts I find interesting. I'm specifically interested in finances, particularly in the banking industry because if it wasn't for help from my local Community Bank, I never could have started farming which I was successful at. So, I'm real interested in the Small Business Administration and I know they are the ones creating jobs. I have been a member of Common Cause and am now a member of Public Citizen as well as AARP. I have, in the past, written over 150 articles on the Obama Blog (my.barackobama.com) and I'd like to tie these two sites together. I'm also on Twitter, MySpace and Facebook and find these outlets terrifically interesting particularly what many of these people did concerning the uprising in the Arab world. I believe this is a smaller world than we think it is and my goal is to try to bring people together to live in peace because management needs labor like labor needs management. Up to now, that hasn't been so easy to find.
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