Over the past couple of years I’ve watched a few TED videos, they are often educational, always informative and sometimes even entertaining as well. This one showed up in a Yahoo most watched/recommended list on a sidebar on a web search… I’d never heard of Nick Hanauer, but wikipedia and google search have, and he is is an American entrepreneur and venture capitalist and author of the book, The True Patriot.
Nick adds a great link to the chain in so much as I’m able to explain why the current argument over tax in the US positions the 1% incorrectly, but it also adds to my position about the UKs ongoing problem with its’ service economy and my analogy that it is like “eating your own children”. Nick makes the point that the 1% aka the super-rich are not job creators, the middle class are job creators. “Jobs are a result of an ecosystemic feedback loop between customers and businesses”. If the middle class collapses, then there is no one to buy goods; if there is no one to buy goods then the super-rich can’t create businesses to make, sell goods.
Nick also makes a good point that the super-rich really only add jobs as a last ditch effort, not as a first choice. Watch the whole video, it is only 5:50 and well worth your time.
Early this month I posted this entry on “fiscal fairness” about paying taxes. This week two items have come up that show why the tax avoidance situation has become unsustainable here in the US and in the UK.
First up in the US in the story that Facebook founding backer Eduardo Saverin’s renunciation of his U.S. citizenship. It really doesn’t matter what he says, Eduardo benefit from the system in place here in the US, and now he is about to get billions of US$ from the Facebook IPO, On advice of counsel, he’s established residency in Singapore, where there is no capital-gains tax. Eric Liu has a good piece on time.com
Then there is Vodafone in the UK. In the UK Private Eye, satirical and investigative magazine #1312, the Eye has uncovered evidence of what it says is total collusion between Vodafone and the head of the Tax authorities in the UK. There has been lots of coverage of the let-off of Vodafones tax bill, but this is the first news of a link that shows how they did it. They’ve managed to get of billions of UK pounds in taxes by using an offshore tax haven in Luxembourg, and making billions in interest and paying little or no taxes. The problem with this for the US, is that Vodafone owns 45% stake in Verizon Wireless. Private Eye isn’t online, but here is a summary.
The problem with both these examples is that although they may be legal, although thats questionable, in both cases it is in essence asset stripping the economies that enabled to make the money in the first place. If everyone did the same thing, then the countries that are target of this manipulation prohibit the next generation from benefiting the same infrastructure you did.
Eric includes on his article a saying attributed to Bill Gates sr. You can read it in full here. Eric write this as “Bill Gates Sr., the father of the father of the first great high-tech fortune, often points out that there is no such thing as a self-made man. We need a country where the dream isn’t to escape to a tax-free island but to be like the elder Gates: responsible, reciprocal, and a citizen of the United States”.
Think of it this way, paying tax is buying civilization.
A number of people on my facebook stream have been posting and commenting on the ruckus over Apples tax avoidance, especially as it relates to iTunes, which even a Luxembourg Government official has jumped in to defend the iTunes tax evasion scheme. The other thread that has been running is commentry on the so called “Buffet Rule”, a proposed tax code change to force millionaires and up, to pay a tax rate that is comparable to the average middle income family, or some such.
I think this is all losing perspective though, although both cases are dissimilar in practice, at their core, the complaints are about the same thing. While Apple is a worldwide corporation, with many share holders, to whom it owes a fiduciary responsibility to maximize profit, how it does it is the same as Buffett.
Changes in laws, it shouldn’t be needed. The billionaires and big companies are master of their own empires, they are not beholden to their accountants and tax advisors. They should move their investments on shore, make sure they are paying a fair wage to all their employees, provide decent health care etc. thats all everone else expects of them. Forcing the goverment to try to inact a law/rule change that is divisive purely because of the polarizing because of what it is trying to do, is just BS. when said billionaires and companies should know that they’d never had made their money in the first place in a weak, unhealthy country that was racked with division, decaying infrastructure, pollution, poorly educated children. JUST PAY YOUR TAXES, don’t avoid them.
Companies recently have spent a lot of time and effort dressing up their annual reports to show their environment and ethical efforts, it is time they did the same for fiscal fairness.
Yesterday I wrote about This American Lifes “What Kind of Country do you want?” at which as was surprised at how much disdain and distrust there was of the US Government. As if by magic, when I got home I had missed a certified mail delivery from the IRS. I collected the letter this morning, it was a demand for $2434.04 with no explanation.
After 18-minutes on the phone, I spoke to one operator who could tell me only that it was late fees and interest. I asked for a statement that I could file with my tax attorney ans she said she couldn’t provide that, she’d have to put me through to some advanced dept. After another 20-mins on hold, a man answered, was polite, asked if it was ok to hold, came back 6-mins later, said his software was slow, and then said “oh there you go it’s come back now I’m talking about it”. He asked if he could put me back on hold, came back eventually and said he’d have to submit a paper request and it would take 30-days.
Note, the fact that I’d only been given another 9-days to pay before the US Government would exercise their intent to seize my property, meant I should just pay it. I submitted the payment via a 3rd party for the $3.49 fee and gave the guy on the phone a payment confirmation number.
I told him I was the Director for Software engineering at Dell; I’d be happy to hang up my boots and come fix their software, my fees were a very reasonable $1,000 per day. He said they have lots of software but his computer was an HP, I passed on the chance to make fun of that. Total call time 58-minutes, 38-seconds.
I’m starting to see that if you grow up and these are the sorts of tales, inefficiencies and hopeless situations, you do indeed become skeptical about big government. I’m going to see the US Customs and Immigration Service (USCIS) tomorrow for my permanent immigration application. Wish me luck.