04.30.12

Corporate America Hates You — morning edition

Posted in Culture of Lickspittle, Decline and Fall at 9:50 am by George Smith

Last week Paul Krugman published a few charts showing the fundamental and long-standing problem with the US economy — while productivity soared the benefit went to the very top, the holders of capital. Nothing was shared with the working class. Pay stagnated for almost everyone except the titans of business.

Austerity economics forced big cuts and lay-offs and at the state and local levels across the country.

The next graph shows the national increase in “income security” spending since 2007 — money for unemployment compensation and food stamps, surging for the people put out of work.

On Sunday, the New York Times ran another damning piece on Apple.

Unsurprisingly, Apple — the wealthiest company in the country — is big corporate tax evader. The company’s defense, for most of the piece, seems to be that they’re not alone in this — which is true. Everyone Apple’s size is a tax cheat.

Apple’s hub is in Cupertino, CA. It has a subsidiary in Reno, NV, for the express purpose of legally cheating the state of California out of tax on its business.

From the New York Times:

Apple’s headquarters are in Cupertino, Calif. By putting an office in Reno, just 200 miles away, to collect and invest the company’s profits, Apple sidesteps state income taxes on some of those gains.

California’s corporate tax rate is 8.84 percent. Nevada’s? Zero.

Setting up an office in Reno is just one of many legal methods Apple uses to reduce its worldwide tax bill by billions of dollars each year. As it has in Nevada, Apple has created subsidiaries in low-tax places like Ireland, the Netherlands, Luxembourg and the British Virgin Islands — some little more than a letterbox or an anonymous office — that help cut the taxes it pays around the world.

Of particular interest is Apple’s use of Luxembourg, an insignificant small country in Europe in the Ardennes Forest whose primary industry is financial services enabling legalized tax cheating and money laundering.

To avoid paying tax on the sale of popular music through it’s iTunes store, Apple funnels much of the digital purchasing through Luxembourg.

Again, the Times:

For instance, one of Apple’s subsidiaries in Luxembourg, named iTunes S.à r.l., has just a few dozen employees, according to corporate documents filed in that nation and a current executive. The only indication of the subsidiary’s presence outside is a letterbox with a lopsided slip of paper reading “ITUNES SARL.”

Luxembourg has just half a million residents. But when customers across Europe, Africa or the Middle East — and potentially elsewhere — download a song, television show or app, the sale is recorded in this small country, according to current and former executives. In 2011, iTunes S.à r.l.’s revenue exceeded $1 billion, according to an Apple executive, representing roughly 20 percent of iTunes’s worldwide sales…

The country has promised to tax the payments collected by Apple and numerous other tech corporations at low rates if they route transactions through Luxembourg. Taxes that would have otherwise gone to the governments of Britain, France, the United States and dozens of other nations go to Luxembourg instead, at discounted rates.

It’s no secret I despise everything Apple. But the New York Times points out, repeatedly, how the company actively works to deprive the state, local and national governments of potential tax revenue.

California, Apple’s home state, has a severe budget crisis. It has led to firings and shortfalls across the entire state’s education system, from primary education to college.

The Times describes how tiny De Anza community college, the school which counted Apple founder Steve Wozniak as a student, is struggling:

A mile and a half from Apple’s Cupertino headquarters is De Anza College, a community college that Steve Wozniak, one of Apple’s founders, attended from 1969 to 1974. Because of California’s state budget crisis, De Anza has cut more than a thousand courses and 8 percent of its faculty since 2008.

Now, De Anza faces a budget gap so large that it is confronting a “death spiral” …

But the company’s tax policies are seen by officials like Mr. Murphy as symptomatic of why the crisis exists.

“I just don’t understand it,” he said in an interview. “I’ll bet every person at Apple has a connection to De Anza. Their kids swim in our pool. Their cousins take classes here. They drive past it every day, for Pete’s sake.

“But then they do everything they can to pay as few taxes as possible.”

The Times’ continuing series of investigative pieces on Apple have landed heavy blows. It is now fair to view Apple often as a gigantic, selfish and predatory business, doing everything it can to maximize earning and profit despite the toll it takes on everyone else.

From the exploitation of abhorrent labor practices and lack of environmental and labor law in China, to outsourcing and offshoring, to legalized tax-cheating, Apple — the company that produces the beautiful consumer electronic computing baubles everyone covets like life itself — does it all.

The primary excuse from the company, to repeat — everyone else is into gathering the most spoil immorally but legally, too.

In a response to the Times, one can read it at the newspaper’s piece, Apple points to the jobs it has created in the United States and the taxes its individual employees pay.

Part of this seems to rest on the idea that Apple’s app-based hardware has generated as many as half a million jobs in the US.

This meretricious meme, like everything from Apple, is a bit hard to take. It is akin to believing Jeff Bezos is a job creator because he came up with Mechanical Turk, the service that allows Americans, and everyone else, to bid on human intelligence jobs that pay pennies. Everyone, therefore, who uses Mechanical Turk, can be said to have some type of job, if they want it.

Or to believe that everyone with a channel on YouTube with AdWords/AdSense monetization, has a job created by Google.

In this way the information tech industry which has creatively destroyed jobs claims to be creating new opportunities, pathways to profound systemic un-success, fruitless work for the majority disenfranchised in the great contraction.

Half a million jobs created by Apps. Really? And what, pray tell, is the average salary and benefits package?


Finally, the serial aggravation of columns which interview small business owners, trying to always float the idea that American workers are truly worthless.

I present a series of them, the interviewees nasty and complaining pieces of work, for a variety of reasons shifting all blame to the downright laziness and unsuitability of average Americans.

The Americans want-to-be-unemployed guy, from a business that pays so poorly, a worker — if he had a family in SoCal, would be below the poverty level and eligible for food stamps after a means test:

And we offer a competitive wage: $8.50 to $9.50 an hour. The $8.50 is just the starting wage. After 90 days we increase it to $9.50 to $10 an hour.

But many people add up their constantly renewed unemployment, food stamps and housing assistance and realize that they can make as much not working, as working.

We could raise wages to $100 an hour, fill the positions and then go out of business, taking all our jobs with us.

The man’s all heart, telling CNN that now he only hires people who have worked for a temporary staffing agency for three months, first.

And the Americans-want-to-be-unemployed gal, from a small firm in the aptly named Downers Grove, Illinois, a company that pays its Willy Loman-esque sales force as little as possible:

We hosted a job fair where we hired 40 people. Twenty-five showed up for training. Only two lasted more than a couple of weeks. People work for three months and get themselves fired so they can collect unemployment for another year.

We have learned to document everything we do with an employee. We’ve become sticklers for regulation. Finally, we hired an inside recruiter and created surveys designed to discover who is truly serious about working.

We’ve raised wages from $12 per hour to between $15 and $18 per hour plus commission, meaning a salesperson starts between $24,000 and $38,000.

Again, in SoCal, the starting pay puts you right on or below the poverty line.

And the guy who’s business only exists because of the war on terror.

His firm, AEGIS Finserve Corp., provides payroll services to government agencies.

The lament? Americans fail background checks and — more importantly — they don’t have security clearances.

It’s a pain getting someone a security clearance. Aegis wants them pre-installed, at government expense so to speak, by people already vetted by employment in endless war.

Here:

Since the Patriot Act was passed, the time frame to get a clearance went from 90 days to nine months. While we conduct in-house due diligence, the 32-page trust application is forwarded to government agencies, such as the FBI, NSA, etc., and costs the firm upwards of $25,000 per candidate.

If a criminal record, psychological issue, poor credit or other problem, comes up, a candidate could be disqualified. Aegis then eats the due diligence costs …

As the wars in Iraq and Afghanistan conclude, we are more optimistic about getting qualified people. Former military applicants have held or can get security clearances. We find they make excellent representatives for our company.


From the Center of Economic and Policy Research on such arguments, the assertion that it has always been this way.

Even back in 1935 Americans just didn’t have the right skills:

“[Unemployment] may run into the millions, but as the iron, steel, and metal-working industries improve, a scarcity of skilled workmen is developing, states the magazine Steel this week.”

This shows that technology might change rapidly, but economic reporting at the Washington Post doesn’t. Many of the stories it has written in the last two years about shortages of skilled workers in the midst of mass unemployment could have been plagiarized from this 1935 piece.

It is also striking that this piece, like much current economic reporting, relies exclusively on business sources. The article does not make any reference to any independent experts and of course, no one from a union or any workers’ organization.

1 Comment

  1. Mark Smollin said,

    April 30, 2012 at 12:49 pm

    Very astute comparison of the current economic lose/lose strategies and SOP propagated by Corps and Government, fully intended to keep the general population poor, while increasing entitlements we can’t afford. Very tricky stuff.