Taxing Amazon and Starbucks: Seattle Passes Corporate Wealth Tax to Fund Low Income Housing

According to the The Guardian, Seattle City Council has passed a new tax that will charge large corporations $275 annually per worker to help address the city’s growing homelessness crisis.

About 60% of the tax revenue will go to new housing projects for low and middle-income Seattle residents. The remainder would go to homeless services, including shelter beds, camps and overnight parking.

Source: Tax Amazon: Seattle Passes Corporate Wealth Tax to Fund Housing

The Art of Cult Branding

The Persuaders

PBS Frontline (2005)

Film Review

Unlike The Century of the Self, The Persuaders focuses more on contemporary public relations techniques. This PBS documentary begins by examining growing industry concerns that consumers are becoming “immune” to the unconscious messaging Edward Bernays perfected.

Pseudo-spiritual and Cult Branding

Pseudo-spiritual and cult branding are two of the latest mass marketing techniques. Pseudo-spiritual marketing is designed to convince consumers that brand loyalty will provide identity and meaning in their lives. The stellar success of Starbucks and Nike are given as examples. Starbucks (allegedly) creates meaning in peoples’ lives by offering them a “third place” (not home or work). While Nike offers consumers “transcendence”* through sport.

Inspired by Starbucks’ and Nike’s phenomenal “branding” success, marketing analysts went out and interviewed cult leaders to understand how they won the loyalty of their followers.

Volkswagen, Mac, Harley Davidson, Linux and Saturn are the leading examples of cult brands. By offering a sense of belonging and community, they successfully pitch their brands to consumers longing for the community values which have been lost in contemporary society.

I find this incredibly ironic. First the corporate public relations industry connives to systematically dismantle labor unions and other community groups and institutions. Then they cynically package and market luxury consumer goods to satisfy our unmet needs for civic engagement.

Aiming for “Visceral Appeal”

One of the marketing gurus the film profiles is Frank Luntz, a political consultant renowned for his expertise in using language to promote the “visceral appeal” of political campaigns. His goal is to hit voters at an emotional level that motivates them to act.

Luntz’s credits include helping Newt Gingrich devise the Contract with America to help the Republicans win control of Congress in 1994. Luntz is also responsible for helping Republicans win points on specific issues by reframing them, e.g. by changing “tax cuts” to “tax relief,” “estate tax” to “death tax” and “global warming” to “climate change.”

The Technique of Narrow Casing

The Persuaders concludes by examining “narrow casing,” a campaign technique first developed by John Kerry’s 2004 presidential campaign. Narrow casing is largely credited for Obama’s victory in 2008. It involves data mining the vast amount of information corporations collect on our purchases (mainly via loyalty and credit card records). This data is used to categorize people into demographic groups based on specific issues (health, education, immigration, gun control) that are most likely to appeal to them. This allows campaign teams to beam issue-related advertising to specific groups (via email, direct mail and doorbelling), rather than relying on the more general messaging of mass marketing.

Republican political consultant Karl Rove has been highly successful in using narrow casing around issues such as gun control, immigration and the confederate flag to persuade blue collar white males to vote Republican.

*Transcendence is defined as existence or experience beyond the normal or physical level, as in spiritual transcendence.

 

 

How Big Corporations Avoid Tax

The Tax Free Tour

Film Review

VPRO-Marijee Meerman 2013

The Tax Free Tour is an hour long Dutch documentary (in English) about the highly specialized field of corporate tax avoidance. I found it astounding how many American corporations use overseas tax havens to avoid paying tax in the US. Some of the better known names include Walt Disney, Wells Fargo, Google, AT&T, Apple and even companies that promote themselves as socially responsible, like Starbucks and Amazon.

Apple, one of the worst offenders, pays only 1.9% of their annual income in corporate tax. As a US company headquartered in Silicon Valley, Apple should be liable to the standard 35% corporate tax rate. Their secret is diverting nearly all their income to a subsidiary in Ireland (which has one of the lowest corporate tax rates) – after first passing their royalty income through a Netherlands subsidiary (the Dutch charge virtually no tax on intellectual property revenue), a company listed in Virgin Islands and back to Ireland. In the accounting trade, this is known as a Double Irish with a Dutch sandwich.

The filmmakers calculate that profits offshored for tax avoidance purposes totaled more than $20 trillion in 2010. Approximately 100 of the world’s largest companies have subsidiaries in the Netherlands, owing to their low taxes on intellectual property royalties. Walmart has six Dutch companies, even though they don’t have a single Dutch store. Starbucks also diverts all their royalty income to the Netherlands. Because they have a trademark on “frappuccino,” they declare a certain percentage of the price as a “royalty” (and pay no tax on it).

My favorite part is near the end when a British Select Committee challenges a Starbucks executive on his claim that their British coffee houses have been running at a loss for fifteen years. After asking why they don’t close their British stores, she gets him to admit they avoid $1.6 million pounds in corporate taxes by diverting their UK income to the Netherlands. He won’t tell her how much tax they pay the Dutch government. Allegedly Starbucks and the Dutch government have a secret agreement not to disclose the amount. The committee chair sternly reminds the executive of all the free public services Starbucks receives in the UK, at the expense of other taxpayers.

Amazon avoids corporate tax by diverting a sizable portion of their revenue to Luxemburg. Google shelters their profits in Bermuda. Other favored corporate tax havens include Cyprus, the Cayman Islands, Mauritius, Singapore, Hong Kong, the UAE and Kenya.

The irony is that most of this income can’t be transferred to shareholders. Paying it out as dividends would necessitate repatriating the revenue to the company’s home country – and paying the prevailing corporate rate. Thus much of this money is loaned (as treasury bonds) to deeply indebted western countries – who struggle to balance their books owing to the trillions of dollars lost from tax avoidance.

Crossposted at Daily Censored