All Sorts of Things

Random posts on all sorts of things designed to inform and provoke.

Global Economy: Should a Corporation not Act like a Corporation?

tax-protestIn the current partisan climate, it’s rare to have a sensible argument about any topic let alone one that involves taxes. As we all saw during the most recent presidential election, financial success can be an effective weapon in diverting attention from substantive issues. Governor Romney, much to his chagrin, found out that complying with legal requirements is not enough as he was taken to task for paying a “low” tax rate. Incidentally, while his critics were quite vocal in stating what the governor had done wrong, they provided no options as to what he should have done. On the other hand, some could argue that this criticism was justifiable since Romney was running for the highest office in the land and, had he been elected, would have had an inordinate influence on the country’s tax direction.

Even if one buys that argument, it still does not justify expanding it to multinational corporations such as Amazon, Google, and Starbucks. This criticism can be summarized by comments by British Members of Parliament who have blamed these corporations for “immorally” minimizing their tax returns. In response, Starbucks recently announced that it would pay $32 million in fees/back taxes/fines to the British government over the next two years. Google’s Chairman Eric Schmidt, however, has taken a different stance by stating that he sees nothing wrong with his company’s tax practices since they are legal and capitalistic.
Google, by the way, is being blamed for transferring $9.8 billion from its 2011 international revenues to Bermuda in order to reduce its tax bill to under $10 million and saving over $2 billion. I am no fan of Google – especially its lax record on protecting the personal information of its customers – but, regardless of my views, it does not make any sense to blame a corporation – or anyone – for taking advantage of legal deductions.

So what is the reason behind this criticism which reflects the current anti-corporate mood pervasive throughout the western world? I believe the reason is the attitude that corporations get away with a number of things that regular, hard working people, do not. This is a legitimate criticism but blaming corporations for taking advantage of legal mandates makes no sense and is hard to sell to the public. What is easy to sell is the argument that an ordinary individual has no control of his/her destiny. This is patently untrue as has been shown by the Tea Party. If a person or a group wants a corporation to pay their “fair” share of taxes than they should force their representatives to change their country’s tax structure. However, that may involve getting off the couch and doing something, and that is unlikely to happen since its much easier to blame someone/something than actually getting out there and making a difference.

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This entry was posted on December 13, 2012 by in Global Economy and tagged , , , , , .
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