Wednesday, January 19, 2022

C.E.O.s are our heroes, at least according to them.

An interesting article by Peter Goodman, explains how corporations that claim to be serving the larger common good pay zero taxes. I suggest you read the whole article, which focuses on Marc Benioff, the CEO of Salesforce, and will pass on one passage that particularly struck me:
His philanthropic efforts have been directed at easing homelessness in San Francisco, while expanding health care for children. He and Salesforce collectively contributed $7 million toward a successful 2018 campaign for a local ballot measure that levied fresh taxes on San Francisco companies to finance expanded programs. The new taxes were likely to cost Salesforce $10 million a year.
That sounded like a lot of money, ostensible evidence of a socially conscious C.E.O. sacrificing the bottom line in the interest of catering to societal needs. But it was less than a trifle alongside the money that Salesforce withheld from the government through legal tax subterfuge.
The same year that Mr. Benioff backed the ballot measure, his company recorded revenues exceeding $13 billion while paying the modest sum of zero in federal taxes. Salesforce deployed 14 tax subsidiaries scattered from Singapore to Switzerland, moving its money and assets around in a masterful display of accounting hocus-pocus that made its taxable income vanish..Salesforce repeated the trick in 2020, paying no federal taxes despite reporting $2.6 billion in profit.
During President Bill Clinton’s administration, the Treasury Department opened up a loophole that enabled executives at multinational corporations to set up subsidiaries in foreign countries that beckoned with low taxes — Ireland was a popular choice — and then legally transfer their intellectual property there. Their new international outposts charged the rest of the corporation exorbitant licensing fees to use the intellectual property.
The net effect: On their American earnings statements, the wealthiest corporations looked like money losers, paying taxes accordingly.

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