Tax Scams, Google Buses Mean Silicon Valley Is #StuckInTraffic

Dave Johnson

Silicon Valley companies dodge taxes and use some of the money to build shiny, luxurious, and private bus lines for their employees. The rest of us are — literally — stuck, because the tax scams these companies engage in have de-funded our — We the People’s — ability to maintain our vital infrastructure.

I live in Silicon Valley. The traffic in Silicon Valley is absolutely terrible. We the People sit in traffic, with few alternatives. The Caltrain line that runs between San Jose and San Francisco is standing room only during the hours people are trying to get to work. The Bay Area Rapid Transit (BART) rail system doesn’t go where it needs to go, and its parking lots are full where there are stations further north. Light rail is limited. The bus system is a few buses on a few of the main roads.

The Silicon Valley area, California state, and federal governments are all underfunded. Actually, a more accurate description is DE-funded. The beast is starved, and drowning in the bathtub. The Reagan Revolution has come home to roost, and America is literally falling apart. The billionaires have even more billions to … do what with? (Seriously, what can anyone do with more than maybe $50 million?)

But companies like Google, Facebook, Apple and others have built their own private bus lines. These are mostly shiny, white luxury buses that bring employees to work and take them home. Locally, we call them all “Google Buses.” There have even been protests because these buses bring affluent tech employees up to San Francisco neighborhoods, causing rents to soar.

There’s a relationship between those “Google Buses” and the rest of us sitting still, stuck in traffic.

Why can’t we afford to maintain our 1970s-level public transportation system? (Never mind bringing it into the 21st century.) Where did the money go? You’ve heard about companies like Apple using schemes and scams like the “Double-Irish With a Dutch Sandwich” to dodge paying taxes. Remember when an Apple executive said to The New York Times that these tax scams are just fine, because giant multinationals “don’t have an obligation to solve America’s problems.”

You’ve heard that Google makes billions of profit in … Bermuda?

And now for your reading pleasure (and blood pressure), here is another recent tax scam. Yahoo needs to sell its Alibaba stake, and is working up a complicated and obvious tax scam. Yahoo previously sold some of its Alibaba shares, and paid the correct tax. Now a big hedge find is demanding that Yahoo engage in tax scams to get rid of its tax liabilities when they sell more of their Alibaba stake. One idea is that Yahoo will spin off a new company that consists of their Alibaba shares. Existing shareholders get stock in the new company, with no tax liability until they sell the stock. The new company will pay a big dividend to Yahoo, which is somehow taxed lower than if Yahoo just sold the shares they own.

Why does the IRS allow this? The company even says publicly that this scheme/scam comes after a search for a way to dodge paying their taxes. Perhaps that should tip-off the Internal Revenue Service that they are dodging their taxes?

Another tax scam: With more than $92 billion stashed outside of the country — avoiding $30 billion in taxes — Microsoft recently borrowed $10.75 billion by selling bonds – instead of bringing more than $92 billion the company is hoarding offshore. Microsoft uses that money as collateral. (Apple recently did the same to borrow $6.5 billion.) Microsoft is expected to borrow another $26.5 billion over the next two years and use the funds to buy their own stock, which increases the stock price, enriching executives.

And these are only the latest tax scams the IRS lets these companies get away with to avoid paying for the infrastructure, schools, military, courts, etc. that these companies depend on to prosper.

The corporate tax rate used to be 50 percent. Corporate taxes used to cover 32 percent of the tax burden. We didn’t have budget deficits, we defended against the Soviet empire, built the interstate highway system, paid for our schools and started exploring outer space. Now the corporate rate is 35 percent. Between that lower rate, these tax scams corporations now cover only 8.9 percent of the total tax burden. Working people make up all of that difference.

Can’t we just make them pay their taxes? Not if you ask the Washington politicians. Various “reform” proposals in front of Congress all suggest lowering the corporate tax rate even more — and letting them off the hook for taxes on the profits they have stashed “offshore.” Have you heard about the Barbara Boxer-Rand Paul bill in the Senate to let the giant multinationals off the hook on the taxes they have “deferred,” because they moved jobs, factories, production, call centers, profit centers, and everything else they could out of the country?

Here’s an idea: Why don’t we just make these companies pay their taxes? Why don’t we tell them they have to pay the taxes they owe on the profits they have stashed offshore? Why don’t we “reform” the system by restoring the 50 percent tax rate? We all know the answer — these companies are able to use their money to buy influence over the politicians and to capture the regulatory agencies. It’s up to us to make enough noise to fix this.

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