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Better Capitalism

Entry 1528, on 2013-05-13 at 19:28:16 (Rating 4, Comments)

I think there is little doubt that the corporate world is out of control. They are drunk on their own power and they are arrogant enough to use that power in the most cynical and self-serving ways. And even after they complete their immoral activities they still expect the rest of the world to admire them for their cleverness.

I'm not denying that many corporations have some positive aspects as well as negative. But the same could be said about any group or organisation. I could make a case for some positive aspects of Nazi Germany (they created a great rocket program used by both the US and USSR after the war) or Stalinist Russia (Stalin was a strong leader which made the defeat of Germany possible), for example. It is the balance which really matters.

For example, take one of the most admired big corporates in the world: Google. I think Google's search engine is brilliant. I use it in preference to all others. And while I cannot get enthusiastic about their Android platform (I am an iPhone and iPad user) I still recognise it as a valuable basic operating system, especially for cheap devices. And Google Glass shows some promise although I think it is so far from being genuinely usable that it's future is very uncertain.

But that's where it ends: an excellent search engine, an adequate operating system, and a new technology with some potential. But what is my complaint? Well the main one (but certainly not the only one) would be that, like all big corporates (as far as I know), Google is very good at avoiding their tax responsibilities. Not only do they use every dirty trick imaginable to avoid paying tax but they are proud of their achievements in that area.

At the end of last year the Eric Schmidt, the chairman of Google, defended their tax avoidance strategy and said he was proud of the steps they had taken to cut their tax bill, and that it was just "good capitalism".

In the UK (the country this particular story applied to, although similar strategies are used everywhere) Google generated 2.5 billion pounds in sales but paid only 6 million pounds in corporate tax. That is a tax rate of 0.24% which is practically zero.

I understand that many people don't like tax and don't like the way the tax they do pay is used, but that's not really the point. Those of use who can't afford to pay experts to help us avoid tax still pay it, and at a rate a hundred times higher than Google. And quite honestly, even if I could afford to avoid it I wouldn't because, even though I know the tax system has a lot of faults, it is still the best system we have to fund many essential services.

But when I see Google not paying their fair share I do feel a lot more resentful about paying tax myself. Google have more money than they could ever use, and certainly a lot more than they deserve for what they do, yet they fail to participate in a system the rest of us do contribute to.

And yes, I now that technically their avoidance practices are legal, but it is also legal not not hide profits in Bermuda and to pay the full tax which you know you are responsible for. And which is moral? Schmidt trots out the same old tired excuse: that they are responsible to their shareholders, but that is just a feeble justification and a way to shift the blame to someone else.

He also says "It's called capitalism. We are proudly capitalistic. I'm not confused about this." Well if he is proud of a system which is so deeply flawed and unfair then maybe it's the system we should be trying to change, not those who exploit it. And of course that is the answer: capitalism in it's current form simply doesn't work and we need either a better version or an entirely new system. Since I'm not sure what that new system would be I guess I have to regretfully recommend a new form of capitalism!

Remember that I am only using Google as an example here and I know that other corporates, including Apple, are just as bad. But I think Google deserves a little bit of extra criticism because of their arrogance in saying "no, we don't pay tax and we're proud of it" especially after their original catchphrase which was "don't be evil".

Well I'm sorry but refusing to participate fairly in a society which can only operate the way it does because of the tax the rest of us pay, and which has made you very rich, is evil!

Comment 1 (3529) by Rick Harvey on 2013-05-13 at 22:45:25:

Big Business Taxation - - -
That actually means - our accountants WILL find a way to prevent us paying any tax at all.

As I see it, there are too many ways for the avoidance of taxation.

Perhaps a "turnover" tax might work - with NO Cop-outs.

Turn over the cash, and pay the tax.

As opposed to the current system, turn over the cash, and reduce the taxables by fair means or foul.

It really annoys me as well, paying half or more of my income in taxation of some kind, when businesses and others seem to be able to do the opposite - and pay practically nothing.

Comment 2 (3530) by OJB on 2013-05-15 at 12:52:34:

There will always be issues with people trying to avoid paying tax but that doesn't mean we shouldn't try. I think a lot of the avoidance happening now occurs because governments *want* businesses to avoid paying tax. They think this will create jobs, stimulate the economy, whatever else.

I think a capital gains tax would be good, plus get rid of the abhorrent GST - the most evil blight on the average person ever!

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