'Google IS a capitalist country... er, company'
Plus: 'Apple execs, I apologise for this theatre of the absurd'
QuoTW This was the week when the tax row shifted into high gear, with politicos on both sides of the pond railing at Google and Apple, while respective chiefs Eric Schmidt and Tim Cook presented defences that amounted to yelling "If you don't like it, you fix it" and running away.
Schmidt started it off with an op ed at the start of the week saying that Google wanted to do the Right Thing, but these pesky tax laws needed to be sorted out and that's what governments should be focusing on. Not on any kind of corporate irresponsibility at modern multinationals, of course.
Our hope is to move the debate forward, with everyone engaged constructively in developing a clearer, simpler system – one in which companies that abide by the law know that the politicians who devised the rules are willing to defend and commend them.
But one of last week's whistleblowers came forward and outed himself to the media as ex-Googler Barney Jones. He claimed to have hundreds thousands of documents that he said proved Google employees in Blighty were actually sales staff, contrary to what the Chocolate Factory had been saying. Jones said:
[Google] uses a concocted scheme to avoid tax. It’s a smoke-screen to distort where the substance of its economic activity is really taking place.
And then opposition leader Ed Miliband said at Google's Big Tent event in London that Mountain View's attitude to corporation tax was just plain "wrong":
I can’t be the only person here who feels disappointed that such a great company as Google, with such great founding principles, will be reduced to arguing that when it employs thousands of people in Britain, makes billions of pounds of revenue in Britain, it’s fair that it should pay just a fraction of one per cent of that in tax.
So when Google does great things for the world, I applaud you. But when [Google exec chairman] Eric Schmidt says its current approach to tax is just 'capitalism', I disagree.
When Google goes to extraordinary lengths to avoid paying its taxes, I say it’s wrong.
Schmidt had the chance to reply at the Big Tent and fluffed it, letting slip this beauty of a Freudian slip:
Google is a capitalist country... company.
But mostly Schmidt just stuck to the party line:
We're trying to do the right thing, not the wrong thing... Google is following the international tax regime ... Virtually all American companies operate like this.
UK Prime Minister David Cameron said at various points during the week that he wanted to tackle the tax problems while the UK held the leadership of the G8 this year and even wrote to Crown dependencies like the Cayman Islands to ask them to share more info about their shady clients:
I respect your right to be lower tax jurisdictions. But lower taxes are only sustainable if what is owed is actually paid – and if the rules to achieve this are set and enforced fairly to create a level playing field right across the world. There is no point in dealing with tax evasion in one country if the problem is simply displaced to another.
I very much welcome the commitments you have made to automatic tax information exchange, both on a bilateral and multilateral basis, which will help us to reach our goal of setting a global standard in tax transparency.
But dealing with tax evasion is not just about exchanging information. It is also about improving the quality and accuracy of that information. Put simply, that means we need to know who really owns and controls each and every company.
In a result that shocks no one, business reacted badly to their tax bills becoming the latest scapegoat for everything that's wrong with capitalism. The president of the Confederation of British Industry (CBI) Sir Roger Carr accused politicians of using the hot button topic to pander to the public:
Tax avoidance cannot be about morality – there are no absolutes. It is about responsible judgment, finding the balance between shareholder fiduciary duty, stakeholder responsibility, social awareness, and corporate reputation for acceptable behaviours.
As politicians pursue fairness it is important that any criticisms are grounded in fact and hasty solutions or political point-scoring do not trigger long term unintended consequences.
And while Cameron looked like he was taking a hard line one day, he was fairly lacklustre the next. As Miliband pointed out, once he had Schmidt in his office as part of the Business Advisory Group, he failed to directly quiz him on tax. In fact, apparently the most he said at the government's BAG meeting was that firms should respect the low taxes for which they are liable by paying the tax that was due.
In the US, Apple was also defending its low tax bills at home when compared to the huge Scrooge McDuck-sized swimming pools of cash it keeps overseas. The fruity firm was called in front of the US Senate's Permanent Subcommittee on Investigations to justify the bags of greenbacks it holds outside America.
In prepared remarks he read out, chief exec Tim Cook played the same tune as Google, saying that Apple paid its dues.
Apple complies fully with both the laws and spirit of the laws. And Apple pays all its required taxes, both in this country and abroad.
He also urged tax reform, in particular, lowering the rate on repatriated earnings from 35 per cent to a "single digit number":
My proposal is that we eliminate all corporate tax expenditures and get to a very simple system and have a reasonable tax on bringing money back from overseas.
Some senators accused the company of being tax-resident "nowhere" and having a corporate structure that allowed it to avoid taxes in more than one country at a time. But others were more inclined to defend Apple, particularly Senator Rand Paul (R-KY), who kept saying he was "offended" that the fruity firm had had to defend itself to the committee. He tweeted:
I am offended by a $4 trillion government bullying, berating and badgering one of America's greatest success stories.— Senator Rand Paul (@SenRandPaul) May 21, 2013
To the Apple executives here, I apologize for this theater of the absurd.— Senator Rand Paul (@SenRandPaul) May 21, 2013
Meanwhile, in non-tax-related news, computer industry pioneer Ted Nelson has claimed that he knows the identity of Bitcoin inventor “Satoshi Nakamoto”.
In a rather odd 12-minute long YouTube video, Nelson, in imaginary dialogue with Sherlock Holmes and Doctor Watson, comes up with the solution that the crypto-dosh's inventor is none other than Japanese mathematician Shinichi Mochizuki, research professor of mathematics at Kyoto University.
Nelson reckons Mochizuki is smart enough, has a habit of going public with his ideas rather than having them peer-reviewed and has a work rate that would fit with the online cash. He said:
Now combining that with the formidable Japanese English and his formidable mind… we see a man who seems to do what for others would be a lifetime of work, every three years or so, and presents it richly and subtly to the English-speaking world, where most science happens.
I cannot say QED to that because I have not proven it [however, the theory is] consistent, plausible, and I believe, compelling.
If you're aware of my work, you're aware that I've often been the first to know something, but have had a lot of trouble getting credit for it.
And finally, an IT manager has spent seven years of his life mapping the call centre menus of Blighty so you don't have to. Nigel Clarke, "call centre menu enthusiast", has started a website - pleasepress1.com giving cheat sheets to help folks bypass the long minutes of listening to call menus on premium rate phone calls. He said:
Everyone knows that calling your insurance or gas company is a pain but for most, it’s not an everyday problem.
However, the cumulative effect of these calls is really quite devastating when you’re moving house or having an issue. I’ve been working in IT for over 30 years and nothing gets me riled up like having my time wasted through inefficient design.
This is why I’ve devoted the best part of seven years to solving this issue.
Clarke reckons 40 million adults ring call centres 24 times a year, making a total of 960,000,000 calls. If they each save a minute on each call, assuming a cost of 10p a minute, they could make a saving of £96m. For now, because he's only running the site because of how annoyed he was at call centres, the service is free. According to his mission statement:
What really annoyed me was that I had bought a product or service from them but, now they had me as a customer they didn't care - they were wasting my time making me work through a maze of menu options in the hope that I might eventually get to speak to someone who could help me...
Was this making life easy for me or for the company? Did this show they cared about keeping me as a 'happy' customer? Was this the 'customer experience' they wanted me to have?
Or were they deliberately trying to stall me on the phone and make more money out of me from the premium rate number I was calling? ®