(2/10) Pay your fair share of taxes

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This is the second of ten themes in Nigel Cameron’s open letter to Mark Zuckerberg, exploring obstacles to him seeking the US presidency. Click here for whole series. 

Like most Americans, I love the idea that companies make money, and I’m no fan of the IRS1. But much as we hate paying taxes, we know we will end up paying more if your company and others like it don’t pay a fair share. You may have noticed that retirement, health and other programmes are under threat, that the deficit continues to grow, and the nation’s infrastructure is not exactly the envy of the world. At some point voters will get angry and they’ll get angriest with the tax dodgers.

At the moment Facebook appears to be doing more than just take advantage of general deductions, but is playing hardball. Last year there was a story that the IRS had issued Facebook seven summonses within one month, and got no response. Did that get sorted out?2

Then there’s the rather dramatic way the company has used Ireland – a famously low-tax economy – as a base for international operations.  As a result, it is not just the US treasury that has suffered. Fortune magazine reported that in the UK “Facebook Pays Astonishingly Little in Corporate Taxes.”3

Jack Schofield reports from ZDNet that the IRS is after Facebook for these international tax games:  “America’s IRS is chasing Facebook for back taxes starting in 2010: Facebook opened its international headquarters in Dublin in 2009. Other American tech giants, including Apple and Google, are already under pressure from European tax authorities for channelling revenues through Ireland, which has a 12.5 per cent corporate tax rate. The US rate could be as high as 35 per cent.”4

Oh I know, you have top-end tax advisers and follow their advice. And I’m also aware that corporate leaders have a fiduciary responsibility to investors (including you) to make as much profit as they can. But there’s a lot of scope for discretion in these matters, as the image of the company is itself enormously valuable. You might want to exercise it in a manner that leaves Facebook in the clear with tax authorities at home and abroad – and looking good with the public in the many nations in which you now operate.

If you’re wanting to be president it’s not enough to say you’re only acting like all other companies. Because, Mark, public service is very different from maximising your own bottom line, whatever the consequences for the wider nation.

How about firing your tax advisers and putting out a statement that you want Facebook to be a model corporate global citizen? So your plan is to start over, and pay tax in rough proportion to the average, standard rates in the nations that you operate – and which schools, police services and other public amenities require.

Part 3: You are taking a lot out of the news industry – perhaps it’s time to put more than a little something back

FOOTNOTES
  1.  The Internal Revenue Service, the US federal tax-collecting agency, is famously unpopular among Americans.
  2.  Seth Fiegerman for CNN, 29 July 2016. “Facebook could owe $5 billion in taxes.”
  3.  See David Kravets, 12 December, 2016. “Facebook tells IRS it won’t pay billions over Irish tax maneuver.”
 and Michael Addady, 21 January, 2016.
  4.  Jack Schofield, July 30, 2016. “IRS wants more tax cash from Facebook, while Europe’s tax collectors target US tech.” and for more details on Facebook’s tax behaviour in the UK, Ireland, New Zealand, and elsewhere, see Liat Clark, Wired UK, May 4 2017.