The “Silicon Six" Are Doing A Great Job Avoiding Taxes
The “Silicon Six" - Facebook, Apple, Amazon, Netflix, Google and Microsoft. Collectively, they had 2018 revenues in excess of $800 billion and currently have a combined market capitalization of more than $4.5 trillion.
The "Silicon Six" have avoided over $100 billion in taxes between 2010 and 2019, according a report from Fair Tax Mark, a British organization that certifies businesses for good tax conduct. They analyzed 10-K filings to compare tax provisions, which is the amount corporations set aside to pay taxes, to cash taxes, which is the amount actually handed over to the government.
The aggregate tax contingencies of the six companies has increased from $8.9 billion at the end of 2010 to $47 billion in 2019. An additional $5.7 billion in interest and penalties has been accrued over the same period.
"The international tide is turning on the acceptability of corporate tax avoidance. The idea of countering the profit-shifting of Big Tech multinationals via the introduction of digital sales taxes has taken root in many countries. Investors need to look afresh at the future impact that this will have on company valuations and income flows," said Paul Monaghan, Chief Executive of the Fair Tax Mark.
The report singled out Amazon as having the poorest tax conduct. Amazon paid just $3.4 billion in income taxes since 2010, or 12.7% of profits, while the federal tax rate in the U.S. was 35% for seven of the eight years analyzed. "The company is growing its market domination across the globe on the back of revenues that are largely untaxed and can unfairly undercut local businesses that take a more responsible approach," said the report.
Facebook, which the report ranks as having the second-poorest tax conduct, paid taxes on just 10.2% of profits since 2010, the lowest cash tax paid of the six companies. Facebook also had the lowest foreign current tax charge at just 5% of profits since 2010.
The "Silicon Six" appear to be taking advantage of tax loopholes overseas more than at home. The report finds the majority of the shortfall came from outside the U.S., as the foreign current tax charge was just 8.4% of identified foreign profits since 2010. Fair Tax Mark points out profits continue to be funneled to tax havens such as Bermuda, Ireland, Luxembourg and the Netherlands.
While none of this is entirely surprising, and certainly not limited to the "Silicon Six," it is just another example of the lengths corporations will go to generate value for shareholders.
Just last week they were in the "final throes of a very important deal." U.S. President Donald Trump killed speculation a trade deal was imminent after he told reporters yesterday "In some ways, I like the idea of waiting until after the election for the China deal. But they want to make a deal now." Trump, who has tweeted the keyword "stock market" 107 times since his inauguration, then said "If the stock market goes up or down — I don’t watch the stock market. I watch jobs. Jobs are what I watch." Equity markets didn't like the slew of news, but according to Trump the recent losses are "peanuts."
How long before short selling is outright banned? The world’s largest pension fund, Japan’s Government Pension Investment Fund (GPIF), will no longer lend shares for short selling, calling the practice "inconsistent with its responsibilities as a long-term investor." "The current stock lending scheme lacks transparency in terms of who is the ultimate borrower and for what purpose they are borrowing," the GPIF said. Unsurprisingly, none other than Tesla CEO Elon Musk cheered the decision, tweeting "Bravo, right thing to do! Short selling should be illegal." One of the most notable complaints about short selling came from Enron's founder, Kenneth Lay, who believed short sellers coordinated an attack on Enron which drove the company into bankruptcy protection.
That's an average of more than $6.5 million per minute. Online shoppers spent a record $9.4 billion on Cyber Monday, an increase of nearly 20% from last year's Cyber Monday, according to Adobe Analytics. Along with last week's Black Friday, the two days now represent the two-largest online shopping days ever. Adobe is predicting online sales to hit $143.8 billion for the entire holiday season. Thus far, online shoppers have spent $81.5 billion since November 1, implying that just over half of all online holiday shopping has been completed so far.
That's a noticeable impact. U.S. tariffs on imported panels could be costing the U.S. solar industry 62,000 jobs and $19 billion in investment, according to a report by the U.S. Solar Industries Association (SEIA). The $19 billion in lost investment is equal to 10.5 gigawatts in missed solar installations, which is enough to power about 1.8 million homes. "Solar was the first industry to be hit with this administration’s tariff policy, and now we’re feeling the impacts that we warned against two years ago," Abigail Ross Hopper, president of SEIA, said in a statement.
It's time to move on. Google co-founders Larry Page and Sergey Brin are relinquishing their day-to-day control of Google parent Alphabet to current Google CEO Sundar Pichai. The two co-founders, who combined control more than 51% of Alphabet's voting shares, will remain on the board of directors. The two wrote in a letter "Today, in 2019, if the company was a person, it would be a young adult of 21 and it would be time to leave the roost. While it has been a tremendous privilege to be deeply involved in the day-to-day management of the company for so long, we believe it’s time to assume the role of proud parents—offering advice and love, but not daily nagging!"