Friday, May 31, 2013

IT tax mess - the carbon tax solution

There is plenty of discussion about the tax rates for IT companies. Since the Congressional Inquiry on May 21, 2013 when Apple boss Tim Cook acknowledged the company's $100 billion untaxable money pot to US Senators, there's plenty to think about for American innovators. 

Here are notes on Senator Carl Levin according to The New York Times blogger:

Mr. Cook repeats that all profits made in United States are taxed in the United States. But Senator Levin says Apple made a decision and signed an agreement in 2008 and 2009 to shift most of its profit so that it was not taxed. The result is most of the profit is in Ireland. Senator Levin says “in order to change it, we need to understand it, not deny it.” He says the committee needs to recognize that what is going on is “a huge loss of revenue.”  Senate hearing blog - record     

The tax rate in Ireland for the sweetheart IT deals is anywhere from 1% to 12.5%. See The Guardian story for some excellent journalism - Apple's low tax hub: Knocknaheeny, Ireland Inside Ireland

Chris Farrell on Bloomberg (On Tax Reform: It's Time To Change the Debate) has come up with a fantastic idea: a carbon tax. For this to work it would need to be made the equivalent of the Universal Declaration of Human Rights! Why not some UN action on this idea?

I would like to see the carbon tax for Information and Communication Technologies attached to my Cultural Digital Facilitation for telecommunication firms so there are no loop holes and it is applied across the board by all nations - no exceptions, a universal human preservation code. (ACDF post)

Add an International Court of Carbon Justice...

Here is Chris Farrell, May 24, Bloomberg Business Week.

The second strategy is far more ambitious and intriguing: Change the terms of debate. Drive the corporate tax rate down to single digits with dramatic simplification. Then, to avoid starving the U.S. Treasury of money, substitute a carbon tax. The corporate rate should be low enough that loopholes would no longer be worth spending political capital defending. The substitution of a carbon tax would also ensure that the federal government isn’t in need of revenue, the pitfall of supply-side calls for simply cutting corporate income taxes. Federal fiscal conservatism is a critical long-term budgeting goal. Why not raise government revenue by taxing something we agree isn’t good—environmental damage—and tax less something we like, corporate profits? Worth a try, no?


Thursday, May 30, 2013

Ethical IT business - The Gartner approach and a Harvard Business School story

The headline might suggest an oxymoron. Ethics and IT business do not sit well together. This is the conclusion to be drawn from the shenanigans of Apple in its tax evading, virtual non-state status. What a crock of a company.

You could say there are Americans and there are Americans. There are two categories.

Type 1: Apple Americans. Their business is always business. They embody the phrases US President Calvin Coolidge is alleged to have said in the 1920s: "The business of America is business."  Their specialization is to cut corners, crush competitors, take no prisoners, act as a monopoly whenever possible... that is the story from Standard Oil / Rockefeller to Microsoft / Gates. (It is not only an American story, but if you claim righteousness and world leadership, you are going to suffer intense scrutiny.)

Type 2: Innovative Americans. In most cases they share the same ethic as the Apple folk with clear provisos.They accept the rules. The primary one being that as Americans they gain benefits from society, such as the governance the Government provides in the form of contract law, intellectual property protections, investment in universities for research purposes, and development of civil society through productive employment.

The second type are a class above. Why? Because they act in more than their own self interest. They do that because they know that to act only in their own interest is to unleash barbarian instincts that they have been taught to suppress, redirect and regulate. Of course this is not to suggest that they are soft when it comes to business. This is often misunderstood about innovators. Toughness - intellectual and personal. Probably always flawed.

So why Gartner? As a former employee who had two+ wonderful years as a consultant and researcher in the Raleigh, North Carolina office, I follow the company's plus progress with affection and some pride. It was at Gartner I learned to defer to genuine brilliance in work colleagues who knew American business inside out, but were never bullies, bigots or bastards. Not all the employees were like this, not at all. Some of them were Apples and then some.

I learned lessons about independent perspectives, about keeping your nerve and being supported by the corporation because they believed in their employees. I participated in analyst and researcher meetings where software specialists would crucify Microsoft, describing it as the worst thing that had ever happened to computer software because it held innovation back... oh and it was a monopoly, and thus undermined the aspirations of contemporary capitalism to offer opportunities for innovators. The advent of Google and the rapid shift in computing since Google has shown my colleagues to be correct. They'd say in 2001 that Microsoft has held back innovative software computing by 15-20 years!  

This represented independent thinking and business acumen rolled into the best brains in the business.

The second example that comes to mind also highlights the difference between Apple and Innovative Americans.  This was an anecdote told to me when I was chairing the Melbourne-Boston Sister City Association. In 2009 the chair of that organization Rob Trenberth went to a Harvard reunion. The global financial collapse was well advanced. According to Rob, the Professoriate at Harvard were in crisis, perhaps even horrified by the realisation that much of the illicit activity undertaken on Wall Street that caused the crash was due to the actions of Harvard Business School graduates. As a result ethics became a key part of the curricula and training at Harvard Business School. (They already had the envious reputation of having had Enron's Jeffrey Skilling graduate from HBS - it doesn't get much worse than that!)  

It's a fine line between Apple Americans and Innovation Americans. The concepts that makes Innovation appealing are those where the angels of a better business nature are inscribed in the American belief in redemption through renewal and reinvention.

Wednesday, May 29, 2013

Australia moves on IT business-as-unusual: "shifting profits into the ether"

Thank goodness for US leadership on corporate malfeasance, because without the US lead it is unlikely that anyone in any government elsewhere would ask the hard questions. What has happened in Australia this week is evidence for this incredible claim for US public interest exceptionalism in Congress. (Wow, did I just write that?)

The link Closing in? indicates that Apple has not told the entire story about its financial arrangements, its corporate structure, its unpublic culture or its active duplicity in poisoning civil society ideals.

As they say on the streets: pay your taxes you bastards! As they do not say enough in university political science departments, this is the time when interdisciplinary political theory is needed - bringing together IT business, industry policy, cultural policy and convergence-technology theory, with organisational theory, accounting, finance, ethics, history and criminal justice. "Secrecy jurisdictions" used by Apple and other IT firms, according to the article, include research on subsets of all these disciplines.  

There is no kind way to discuss Apple. It has been engaged in tax avoidance within an illegal corporate structure for years. Will we get a story about how Steve Jobs was part of this scam? He has been sainted by true believer fantasists on technology as part of the blind spot associated with technology promotion. For an uncompromising view on corporatisation through technology see Michael Adas Dominance by Design.
Furthermore, theorists of neo-liberalism will recognise the long tail unmaking social democracy in the actions of Apple and according to Adas, the role of the technology industry in diminishing public social life in favor of private interests.

On the same continuum, charity promotion by technology mavens who spend their massive wealth deciding on their pet projects - often freighted with emotion by appealing to suffering children, which makes their opponents seem mean spirited - is part of the larger picture of corporate malfeasance.  Billionaire IT gurus avoid discussion of privilege, poverty at home or the matters that should be dealt with in everyday life in the US or elsewhere, as they promote private choice as superior to public decisions making. It is degrading public culture by any other name.  

The culture of deceit that accompanies Information Technology is an unfortunate part of global corporate business culture. As I note in my recent article about drones, there is a distressing default  of wilful neglect in the culture.Killing The Thing You Love As long as we are not directly impacted by events, we are encouraged not to care.

Life mediated by digital devices constructs disinterest in participating in the lives of others, even while we "observe" with more intensity than ever before. We are more interested then ever.

The is the key philosophical move that the internet has produced. The contradiction extraodinaire, if you like.

The Internet allows pixilated people to populate the everyday. The visual turn that manifests every human attribute on the computer monitor, allows us to see with intense detail. Yet what we do is diminished. Those who have benefited most from the rise of the industry decide who gets a share in their riches - it's bye bye to the state as IT funded charities step in. Should the term charitiers be invented if it does not already exist?  

It is a mirror of the worst of Corporate America. It has taken the public for a ride. Corporate acolytes, sycophants and business school copy cats around the world follow suit. They offer computer users the "luxury" of more intense pixiliation in digital technology, then take the money and refuse to contribute to governance. Apple is just another corporation, cut from the same cloth as the rest of the double talkers, scam agents and monopoly players. (Hi, Bill Gates).

Banana republics are made of this. It would be correct to assume some US politicians do not like that option. Curiously, some Australians politicians and politicians elsewhere are pleased to follow the US lead in asking questions about the rotten apple.

Wednesday, May 22, 2013

IT companies and tax evasion - what can be said?

A stunning story about the Information Technology industry. Those of us who have followed the industry, indeed been a part of it, are right to feel cheated and sullied by knowing that the corporations we have assisted and in some cases developed from the ground up, are not paying their way. Apple has $100billion USD stored outside the US with no plans to repatriate it for taxation purposes. This article Apple is non-tax indicates that this non-taxed revenue kept by Apple in Irish tax havens will not be going anywhere near the US or countries that apply standard economic policy settings.

This is a major challenge to civil society. It may also prove to be a major consideration to all those holier than-thou people using Apple in the belief that it was a virtuous enterprise. Clearly it is not.

One fascinating complication is the suggestion in the article by Rand Paul, the libertarian Republican, that the US Senators opposing the Apple strategy were somehow unreasonable in their challenges to Apple's tax avoidance scheme.As more  is understood about the political theory driving libertarianism, it is possible to gain insights into the ideals of freedom that informs this philosophy. In particular, the belief that the state should not have a role in financial transactions, indeed the strong view that the state should not tax profits or revenue, suggests a world turned upside down.

Information Technology has been an engine for advanced economies and the global economy for a couple of generations now. That it has generated the parallel universe of non-statism as a default position is its business problem. Much more work is required to hold the light of democratic interests on the IT industry, as the US Senate has done this week.

That David Cameron the Tory Prime Minister of Great Britain has also spoken out about the impoverishment of national accounts because of non-tax paying corporations says something about the impact of avoidance.  At Davos in January 2013, Cameron said tax avoidance is "not appropriate." Cameron video He has a way to go, but raising what he calls "moral questions," was not a bad start for a Tory.

The IT industry was never pristine. Now it is known as sleezy for not contributing to the public good. An appropriate public response is difficult to imagine.  

Tuesday, May 7, 2013

The Public Interest and Architecture - Contest in Sydney

Discussions about The Public Interest usually revolve around communication and media policy and rightly so, as I have noted on this blog on a number of occasions. In Uprising I made the following points:

As liberal democratic governments around the world stepped away from their
claims to represent “the public interest,” private interests came to dominate
the Internet in a broad ranging social and economic discourse that was and
is new, driven by the forces of unregulated economic interests and entrepreneurial
ideology, largely sponsored by business innovators and their promoters
in political parties of all persuasions. (8)

later in the book I suggested that:

The public interest became a sort of de facto ideological system of meaning
for citizen idealism in the US. (121) 

The application of Public Interest principles was given another helpful iteration recently when Joe Agius the New South Wales President of the Australian Institute of Architects criticised a proposed Sydney casino building  at Barangroo. According to Joe Agius, the casino would amount to "an assault on the public interest."

Why? Because according to Agius, the proposed new buildings were "unconscious of their context." They had no claim to be like the Sydney Opera House, "a public cultural building that is highly responsive to its context."  Sydney Opera House reference

The complete comments from Agius offer a strong statement on this topic. Agius Statement

For those of us who have a stake in theory around this subject, it is reassuring to see ideals from The Public Interest being contested - at least.