What nobody’s saying publicly is that U.S. multinationals are already finding legal ways to avoid that tax. Over the years, they’ve brought cash home, tax-free, employing strategies with nicknames worthy of 1970s conspiracy thrillers -- including “the Killer B” and “the Deadly D.” ...
U.S. companies overall use various repatriation strategies to avoid about $25 billion a year in federal income taxes, he said.
“The current U.S. international tax system is the best of all worlds for U.S. multinationals,” said David S. Miller, a partner at Cadwalader, Wickersham & Taft LLP in New York. That’s because the companies can defer federal income taxes by shifting profits into low-tax jurisdictions abroad, and then use foreign tax credits to shelter those earnings from U.S. tax when they repatriate them, he said.
They’re aided by a cadre of attorneys, accountants and investment bankers in the tax-planning industry -- such as a panel of KPMG LLP tax advisers who held forth in a chilly hotel ballroom at a Philadelphia conference last month. There, they discussed a series of techniques for multinationals to return cash from overseas while avoiding or deferring the taxes. KPMG tax advisers Kevin Glenn and Tom Zollo used slides to describe several methods. One diagram resembled a schematic from the Manhattan Project. Another strategy would require certain “bells and whistles” to convince regulators of an actual non-tax business purpose, Glenn explained. ...
President Obama, who campaigned in part against companies’ use of offshore havens to avoid U.S. taxes, asked Treasury Secretary Timothy F. Geithner to follow up on the issue with business leaders, according to a White House official who asked not to be identified because the discussions were private.
The argument that a new tax break for offshore earnings would generate a domestic stimulus “holds no water at all,” said Joel B. Slemrod, an economics professor at the University of Michigan’s school of business and former senior tax economist for President Reagan’s Council of Economic Advisers. U.S. companies are already sitting on a record pile of cash -- $1.9 trillion in liquid assets, according to Federal Reserve data. ...
U.S. drugmakers shift profits overseas far in excess of actual sales there. In 2008, large U.S. pharmaceutical companies reported about four-fifths of their pre-tax income abroad, up from about a third in 1997, according to a March article in the journal Tax Notes by Martin A. Sullivan, a contributing editor and former U.S. Treasury Department tax economist. Their actual foreign sales grew more slowly, to 52 percent from 38 percent. ...
International Business Machines Corp. used a variation on the technique in May 2007, with an offshore unit purchasing the shares from a trio of banks, according to a company securities filing. That permutation wasn’t covered by the IRS in 2006. Two days after IBM’s disclosure, the agency announced plans for additional rule changes addressing stock sales to subsidiaries from shareholders as well as directly from parent companies.
If we care about culture and communication, we can pay people what the market demands based on the importance of their work to our cause -- not based on insulting one-word performance ratings like "Average" or "Excellent." These labels demean the talented people who work with us.
When we demand that every manager designate no more than one-fifth of his team members as Excellent, Above Average, and so on, we say to the world "We don't believe that we hire the best people here, although our Web site says we do. We don't believe that the top people in the industry work here, although we told our shareholders just that. We don't even trust ourselves, the senior leadership team, to hire managers who will hire great people. We assume that 80 percent of our employees don't do great work."
If that's not a message that screams "Fear Over Leadership," what is?
For me, much of our conventional performance-review worldview comes from a baked-in Puritan construct, namely: Everyone Needs Feedback. We Must All Improve.
I don't buy it. An employee who's good at her job at age 45 would be silly to try and change a stripe now (if she even could) to please the whim of a manager whose communication style might be different from hers. Self-improvement at your own direction is one thing.
The trend helps explain why unemployment remains high in the United States, edging up to 9.8 percent last month, even though companies are performing well: All but 4 percent of the top 500 U.S. corporations reported profits this year, and the stock market is close to its highest point since the 2008 financial meltdown.
But the jobs are going elsewhere. The Economic Policy Institute, a Washington think tank, says American companies have created 1.4 million jobs overseas this year, compared with less than 1 million in the U.S. The additional 1.4 million jobs would have lowered the U.S. unemployment rate to 8.9 percent, says Robert Scott, the institute's senior international economist.
"There's a huge difference between what is good for American companies versus what is good for the American economy," says Scott.
American jobs have been moving overseas for more than two decades. In recent years, though, those jobs have become more sophisticated -- think semiconductors and software, not toys and clothes. And now many of the products being made overseas aren't coming back to the United States. Demand has grown dramatically this year in emerging markets like India, China and Brazil. ...
Harvard Business School Dean Nitin Nohria worries that the trend could be dangerous. In an article in the November issue of the Harvard Business Review, he says that if U.S. businesses keep prospering while Americans are struggling, business leaders will lose legitimacy in society. He exhorted business leaders to find a way to link growth with job creation at home.
There is not a career path in consulting for technical people...only for politically-oriented folks in the multiple layers of management.
And many qualified 20 & 30-somethings that LOST their corporate jobs in I/T... and certainly not for lack of talent or technical degrees.
Please stop giving the corporate plutocracy the slip by repeating the campaign of misinformation designed to make offshoring and outsourcing a natural and acceptable outcome. It's the cost of US workers compared to overseas workers, pure and simple. If your job can be done 90% from home, it can be offshored for pennies on the dollar.
It seems Americans are only to happy to repeat the tired mantras of the corporate CEOs. Giving more and more credence to half-truths like "job killing regulations" and "skills-gap". The war is being waged in the media - owned by large corporations that side with the superwealthy interests in this country.
Why does anyone wonder why unemployment remains high? It is clear as a bell.
I recall a teleconference when at IBM, where the HR people were talking about an updated process to create your skills plan. Our annual performance review included skill building efforts, that we build an IDP plan. Another arm of IBM via our management eliminated budgets for any training. There is a clear disconnect within IBM. It is like an unfunded mandate by the US Government - you have to do it, but no one will pay for it. One woman on the call asked the HR person why training in the US was stopped for years now, while those in places like Brazil were getting training? The HR person had no idea. Someone else in IBM was making budget decisions.
I set out immediately and headed across campus for the long walk to Joe's office, all the while wondering why someone with such a bright future would forfeit an opportunity for the dream job that was within his grasp. He was a key player under consideration for at least four vice-president-level positions in the company's recently completed succession plan. The significance of Joe's impending departure was enormous, I realized. He'd grown up in the company, starting first in sales and eventually working his way up to a leadership position in marketing. Losing him would mean a tough blow for the organization, one from which recovery would be difficult and lengthy, if not impossible. With him would go years of irreplaceable institutional wisdom and history.
I arrived at Joe's office and found him looking weary as he packed up his desk. Here I was, one in a long stream of visitors to see him that morning. His decision affected his team members the most; some had left his office in tears, and others felt betrayed. Through it all Joe felt lousy, yet remained committed to his decision.
We sat down at his table as we had so many times before in the years we worked together. I asked why he was leaving. The question hung in the air like thick smoke after a fire, while he pondered his reply. After a long pause, Joe said, "I cannot sit idly by while this company trades the future for quarter-to-quarter results. We're not positioning ourselves for ongoing success, and I just don't think this way of operating is sustainable. I've done everything I can to convince leadership we should adopt a different approach, but they're not listening. They won't even sit down long enough to learn about the suggestions I have for changing things. I want out before this house of cards collapses." ...
Here are 12 signs I've observed in other organizations that you might watch out for in your own business.
Cons: Management changes frequently. You have to prove yourself to a new hierarchy every year. If you don't already have clout, don't count on your voice being heard. Managers move up. Engineers are underpaid and undervalued. If you don't work as much as the workaholics, you will get a poor performance rating because of your "competition". Anyone in my business unit who had a flat screen monitor had to buy it themselves because IBM senior management does not understand the productivity value per square inch of monitor screen. Engineering is understaffed and overworked even when the business unit is making double digit profit for the company. Senior management only cares about the percent productivity rather than the bottom profit line.
Advice to Senior Management: Managers need to listen to the pain points of their employees. Management needs to retain knowledge in large-scale applications. It takes years to learn the tools AND have a good overview of the code. Managers need to actually stick around to help implement change.
Cons: Lots of corporate red tape. While I worked there, they were doing come major cuts and so it was hard to obtain anything (e.g. software licences) unless you filed some forms and proved that you needed it for your job. Hard to get around unless you have a car. Traffic is really bad during rush hour. Too many useless meetings (but this really depends on the team you're on).
Advice to Senior Management: Have teams write wikis on what to do when someone new arrives on the team. It's been twice now (I switched teams) that people were scrambling around trying to remember what mailing lists to put me on, what forms I needed to get licences and equipment, and what software I needed to install.
What makes IBMers in general have strong ties to their firm is that in general most IBMers have had an insular lifetime experience due to the fact that they usually have not been at other firms where they could see and appreciate (or lament) what other business cultures have to offer. As one IBM executive told me once: "We are used up and cast-off brain-washed captives of the brand image, so to speak."
I'm not sure I'd go as far as saying "if you ever have a chance to hire an IBMer - do it. Not only do I believe that, I would do it - wouldn't you? ". Just because a particular individual is an ex-IBMer does not automatically confer on them a high level of skills and education as it used to be of IBM employees of the 70's and 60's when the brand image was defined through extensive training, quality hiring and mentoring of ALL personnel.
From the 90's on, a large number of what I would call "con artists", "word of mouth opportunists", "fast trackers" and "IT gypsies" joined the company, most of them at pretty high levels brought in by the Gerstner outsider team. Some, although very few, of these that fit in this category came from client technical and operations, brought in against their will and cultural fit because of Strategic Outsourcing's negotiations to hire selected outsourced personnel from client accounts or acquisitions.
Many of these folks were problematic at best as management and leadership. I clearly recall one young lady in the late 80's that worked with me who had been let go as an advisory (level 57) SE after a spectacular public display of a failure of inter-personal skills with a client who suddenly showed up as a high-flying influential director in another part of the company in the mid-90's.
There was even one entire operation which was led by these "new fast track outsiders" which was based in Indianapolis (I will refrain to give any more details for a lot of reasons) that essentially allegedly successfully cooked the books for several years until finally someone in Armonk figured it out and shut down the operation. I could give you dozens of names and stories like this. On the other side of the ledger, I was very close to a VP who was brought in fresh as a VP from AT&T where he instilled such good leadership in a then growth area of the business that he made his year's business objectives in 94 business days! He then took it upon himself to keep making money and wound up at 982% for the year but was then demoted because he had exceeded his operations' expense budget by 100%. An entrepreneur at heart, he just couldn't understand why he was being demoted for making 982% of plan at 202% of expense budget. He left to become a very successful competitor in another area of IT.
So it could be construed that the older the ex-IBMer the better chance that the individual was given careful training, skills and mentoring. It also could be that the lower the level the individual served in the firm during their tenure the greater the chance their skills are truly genuine. It could also be said that a more recent tenure at IBM would logically produce a greater chance that they are adaptable and have unusual tenacity and business survival skills.
Trust, but verify. Never assume.
I mention in the "Boeing Plant 2" discussion about Boyd, "spook base", "$2.5B windfall for IBM", "Future System" and having sponsored Boyd's briefings at IBM in the '80s. This is quote supposedly from the dedication of Boyd Hall, United States Air Force Weapons School, Nellis Air Force Base, Nevada. 17 September 1999.
"There are two career paths in front of you, and you have to choose which path you will follow. One path leads to promotions, titles, and positions of distinction... The other path leads to doing things that are truly significant for the Air Force, but the rewards will quite often be a kick in the stomach because you may have to cross swords with the party line on occasion. You can't go down both paths, you have to choose. Do you want to be a man of distinction or do you want to do things that really influence the shape of the Air Force? To be or to do, that is the question." Colonel John R. Boyd, USAF 1927-1997.
The "To be or to do" has somewhat turned into a theme. Note however, the Air Force had pretty much disowned Boyd while he was alive and it was the Marines that were out in force at Arlington in 1997 ... and Boyd's papers and effects went to the Marine library at Quantico.
(Yes, I still have The Basic Beliefs on my wall at work.)
Also lost by then were senior leadership's respect for the company's heritage (deliberately buried as part of the effort to change the corporate culture) and the sense of family that were part of the IBM I joined in the 1970s.
Taken together, the loss of the corporate culture and identity made it much easier to leave. I may occasionally be nostalgic for the "old days" and for old friends, but that's all it is.
You are right about Gerstner. I first met him in 1972, when he was a star consultant at McKinsey and looking for "stranded asset" expertise in the nuclear power biz. I next met him in 1989 while doing consulting for a retail company, which was a sister company operating under the umbrella of KKR. I made a comment to the KKR leadership which made headlines (and eventually became exhibit 1 in a lawsuit) when asked what I thought about IBM's role in their IT. I responded: "Throw the whole damned investment out. They and IBM misled you and it cost you millions." It made quite an impression with the then CEO of RJR Nabisco who was sitting in the room that an IBMer would actually volunteer to testify in court against his own company for the sake of doing the right thing. It wasn't really totally IBM's fault, but that's a long story for another day.
Gerstner was the right man initially but became a problem. Greed overtook him and his team, IMHO. There were 22 levels of management from me to the CEO when he started and within 15 weeks of his arrival it was 4 levels (I reported to Marty Clague for a little while). By the time I called it quits in 2008 it was back to 16-18 levels. The BGC (Big Gray Cloud) of bureaucratic management and inertia won again.
As to the "side sucker" called DISOSS it was built to induce the need for more and more CPU cycles. I have seen and written business plans that used the word "Mipness" as part of the business case. OS/2 was a brave attempt by Jim Cannavino but his temper and personality ruined the show. Jim was a great FE when he worked in Greensboro, and worked hard to be one of the few execs that had white socks underneath his black socks, but his personality finally got the best of him, IMHO. BTW, OS/2 , just like Token-Ring and other so-called IBM "inventions" where not at all invented initially at IBM, but that's also another story. They and many others are also examples of where the better technology lost in the face of better marketing.
As for TCAM, if you're still in the WSC, you know that that product was totally funded by AT&T and BellCORE. It was a great product, and it took years to replace it (unlike VTAM, which was a pig and yes, I saw the loops in that code) but fortunately Hursley finally got it done with MQ which was the child of CCAP which was in turn the child of TCAM. It was tough work and it cost many marriages and destroyed the brilliant minds of some but it lives today in MQ Series and its children re-branded products.
I was brand-blinded as to the integrity bit until I met a brave now ex-IBMer who showed me that not all of us acted with integrity all of the time. I agree with you that the majority of us had integrity but the BCG was built with many examples where integrity failed. The 1999 great pension debacle was, IMHO, for example, driven by one famous case that to this day it is questioned whether we committed tax evasion versus avoidance when it comes to international royalty payments.
In summary, IBM deserved Gerstner because the leadership failed and some may say had a major integrity failure, especially in EMEA. However, the savior's delay in leaving due to Welsh's untimely death will eventually be recognized as corporate disaster.
As to skills, IBM's greatest leadership tragedy is the abandonment of retraining and skills development because most employees, if not all, are looked at as disposable human resources, not human assets.
Ahh the WSC. Such fond memories...every time I showed up in Gaithersburg IBM security was told I couldn't be allowed past the lobby unless the senior management came down to ask what I was up to.
Based on your comments here, you definitely need to write a book. Not so much to put IBM in a bad light but to bring out that in its greatness there were flaws, just like any other company.
At least four GOP congressmen have already announced they will turn down their congressional benefits, and a recent poll found that a majority Americans “think incoming Congressmen who campaigned against the health care bill should put their money where their mouth is and decline government provided health care now that they’re in office.” In an interview with the New York Times published yesterday, Rep.-elect Joe Walsh (R-IL) has said he too will forgo government health coverage.
Just five now, really? How totally hypocritical and not the least unexpected. Just 2 percent of these GOPers are actually willing to stand behind their own beliefs. But, those who do aren't entirely noble either. "Those who have turned down their congressional health plans are either covered by other government programs, such as veterans benefits, or are wealthy, like Walsh, and can afford to pay for their own coverage," writes Alex Seitz-Wald. "Walsh’s wife, however, may have a hard time finding coverage no matter what she’s willing to pay due to her preexisting condition. If only Congress has passed some sort of law barring insurance companies from discriminating against people with preexisting conditions…"
"The great hypocrisy is this is going to the people best able to pay for this stuff," says Nell Minow of the Corporate Library. "Executives should pay for this on their own or be covered by the same plan as everyone else at the company."
Last week, FreedomWorks president Matt Kibbe made this claim in on op-ed published on FoxNews.com. He said that repealing the health care law “is achievable because the American people clearly want and expect repeal.” Earlier this week, CNN/Opinion Research released a new poll that, at first glance, seemed to support Kibbe’s thesis. The poll found that Americans opposed the new law 50 to 43 percent (with 7 percent undecided). Yet as U.S. News & World Report’s Robert Schlesinger finds, the details of the poll results show that most Americans either support the law or oppose it because it is “not liberal enough“:
Do you oppose that legislation because you think its approach toward health care is too liberal, or because you think it is not liberal enough?”
- Favor 43%
- Oppose, too liberal 37%
- Oppose, not liberal enough 13%
- No opinion 7%
These poll results clearly fly in the face of conservative dogma that Americans fear big government and want to roll back the health care law because it involves too much government intrusion into the lives of the public. In fact, polling has consistently shown that wide majorities of Americans favor access to a public plan like Medicare at the very least, if not a Medicare-for-all health insurance system. Additionally, 77 percent of Americans support drug reimportation from Canada, a policy which did not find its way into the health care law thanks to political pressure exerted by the drug industry.
"But dependency on government has never been bad for the rich. The pretense of the laissez-faire people is that only the poor are dependent on government, while the rich take care of themselves. This argument manages to ignore all of modern history, which shows a consistent record of laissez-faire for the poor, but enormous government intervention for the rich." From Economic Justice: The American Class System, from the book Declarations of Independence by Howard Zinn.
The U.S. has 59 million people medically uninsured; 132 million without dental insurance; 60 million without paid sick leave; 40 million on food stamps. Everybody in the European Union has cradle-to-grave access to universal medical and a dental plan by law. The law also requires paid sick leave; paid annual leave; paid maternity leave. When you realize all of that, it becomes easy to understand why many Europeans think America has gone insane.
Wealth, or net worth, is a measure of a family’s total assets, including real estate, bank account balances, stock holdings, and retirement funds, minus all of their liabilities such as mortgages, student loans, and credit card debt. Although economic inequality is often described in terms of income inequality, the distribution of wealth is actually more unequal than the distribution of wages and income. And, while wages and income provide some indication of a family’s ability to afford essentials like housing, food, and health care, accumulated assets, or wealth, can make it easier for them to invest in education and training, start a business, fund a retirement, and otherwise invest in their future. Since accumulated assets also provide a cushion against job loss and other financial emergencies, this growing wealth disparity shows why some households are more devastated by unemployment, illness, and other factors that cause a temporary loss of income.
The US-China Chamber of Commerce is not to be confused with the US Chamber of Commerce in Washington, even though they have similar sounding names and many parallel goals. The Washington group has been heavily involved in political efforts on behalf of mostly Republicans and lobbying that also promotes Chinese interests.
The Chicago-based USCCC gives day-to-day support for American corporations to help them speed their way in setting up shop in China. As Yam writes in the letter, in 2011, they "will be more involved directly in business transactions between the U.S. and China. Whenever we travel to China, we will strive to meet with our members and attend their meetings whenever possible. The travel itinerary will be available on our website www.usccc.org, blog, and other social networking tools." In addition, they will share with their members "new opportunities on the horizon." ...
In a revealing statement and perhaps a warning, Yam states, "China's exports to the US are usually low-value-added products. US manufacturers cannot and should not compete with these low-value-added importers." He continues, "Even if the US did not import goods from China, it would still be importing from other countries. Further, Chinese companies are not doing most of the exporting. Importing to the US is actually originated mostly by companies in the US. Thus, the situation is not one of the Chinese selling products to the US but one of the Americans doing so." It can be inferred that China should not be blamed for high US unemployment. It is the American corporations who moved to China that caused the layoffs.
More than 15 million Americans are officially classified as jobless. The professors, at the John J. Heldrich Center for Workforce Development at Rutgers, have been following their representative sample of workers since the summer of 2009. The report on their latest survey, just out this month, is titled: “The Shattered American Dream: Unemployed Workers Lose Ground, Hope, and Faith in Their Futures.”
Over the 15 months that the surveys have been conducted, just one-quarter of the workers have found full-time jobs, nearly all of them for less pay and with fewer or no benefits. “For those who remain unemployed,” the report says, “the cupboard has long been bare.” ...
Nearly two-thirds of the unemployed workers who were surveyed have been out of work for a year or more. More than a third have been jobless for two years. With their savings exhausted, many have borrowed money from relatives or friends, sold possessions to make ends meet and decided against medical examinations or treatments they previously would have considered essential.
Older workers who are jobless are caught in a particularly precarious state of affairs. As the report put it: “We are witnessing the birth of a new class — the involuntarily retired. Many of those over age 50 believe they will not work again at a full-time ‘real’ job commensurate with their education and training. More than one-quarter say they expect to retire earlier than they want, which has long-term consequences for themselves and society. Many will file for Social Security as soon as they are eligible, despite the fact that they would receive greater benefits if they were able to delay retiring for a few years.” ...
The fact that so many Americans are out of work, or working at jobs that don’t pay well, undermines the prospects for a robust recovery. Jobless people don’t buy a lot of flat-screen TVs. What we’re really seeing is an erosion of standards of living for an enormous portion of the population, including a substantial segment of the once solid middle class. Not only is this not being addressed, but the self-serving, rightward lurch in Washington is all but guaranteed to make matters worse for working people. The zealots reading the economic tea leaves see brighter days ahead. They can afford to be sanguine. They’re working.
That should have been evidence enough that the Republican Party’s one real priority is tax cuts — despite all the talk about deficit reduction and economic growth. But here’s some more...
Most Americans believe that a person should enjoy the full fruits of his or her labors, however abundant. In this light, taxation tends to be seen as an intrinsic evil. It is worth noting, however, that throughout the 1950's--a decade for which American conservatives pretend to feel a harrowing sense of nostalgia--the marginal tax rate for the wealthy was over 90 percent. In fact, prior to the 1980's it never dipped below 70 percent. Since 1982, however, it has come down by half. In the meantime, the average net worth of the richest 1 percent of Americans has doubled (to $18.5 million), while that of the poorest 40 percent has fallen by 63 percent (to $2,200). Thirty years ago, top U.S. executives made about 50 times the salary of their average employees. In 2007, the average worker would have had to toil for 1,100 years to earn what his CEO brought home between Christmas in Aspen and Christmas on St. Barthes. ...
The wealthiest Americans often live as though they and their children had nothing to gain from investments in education, infrastructure, clean-energy, and scientific research. For instance, the billionaire Steve Ballmer, CEO of Microsoft, recently helped kill a proposition that would have created an income tax for the richest 1 percent in Washington (one of seven states that has no personal income tax). All of these funds would have gone to improve his state's failing schools. What kind of society does Ballmer want to live in--one that is teeming with poor, uneducated people? Who does he expect to buy his products? Where will he find his next batch of software engineers? Perhaps Ballmer is simply worried that the government will spend his money badly--after all, we currently spend more than almost every other country on education, with abysmal results. Well, then he should say so--and rather than devote hundreds of thousands of dollars to stoking anti-tax paranoia in his state, he should direct some of his vast wealth toward improving education, like his colleague Bill Gates has begun to do.
In the first half of 2010, impassioned speeches denouncing federal red ink were the G.O.P. norm. And concerns about the deficit were the stated reason for Republican opposition to extension of unemployment benefits, or for that matter any proposal to help Americans cope with economic hardship.
But the tone changed during the summer, as B-day — the day when the Bush tax breaks for the wealthy were scheduled to expire — began to approach. My nomination for headline of the year comes from the newspaper Roll Call, on July 18: “McConnell Blasts Deficit Spending, Urges Extension of Tax Cuts.” ...
So if taxes don’t matter, does the incoming majority have a realistic plan to cut spending? Of course not. Republicans say that they want to cut $100 billion in spending, which is itself small change in a $3.6 trillion federal budget. But they also say that defense, Medicare and Social Security — all the big-ticket items — are off the table. So they’re talking about a 20 percent cut in what’s left, which includes things like running the judicial system and operating the Centers for Disease Control and Prevention; they have offered no specifics about where the cuts will fall.
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