A Taxing Question: Are Apple and Google Acting Ethically?

By Annie Burnham

If you thought April 15 would bring the end of discussion about taxes, you were mistaken. In addition to the IRS being in the news for scandal, several global corporations are under scrutiny for evading taxes in the United States. Apple and Google are both in the spotlight because of their global presence and the huge amount of tax money they allegedly haven’t paid. Americans are now asking if it is ethical for these global organizations to house their money in areas with lower interest rates to avoid paying 35 percent of their profit in taxes, or if avoiding the corporate tax rate is unethical and hurting the American consumer.

Apple is accused of avoiding paying California state taxes for the last several years by housing an investment office in Reno, Nev. California has an 8.84 percent corporate tax rate; Nevada has no corporate income tax. Apple also has many subsidiaries in Ireland, Netherlands, Luxembourg, and the British Virgin Islands, where they keep large amounts of revenue and avoid paying the United States’ 35 percent corporate tax rate.

Google puts a lot of its money into accounts in Bermuda, which in effect cuts its tax rate in half. Google chairman, Eric Schmidt said, “It’s called capitalism. We are proudly capitalistic. I’m not confused about this.” The company defends its decision as a way to earn the most profit for their shareholders, and the way they go about that is completely legal.

The governments of the countries in which these corporations work feel they are being cheated, particularly European and American governments. But some argue that these global companies could end up being taxed twice or three times if they paid taxes in all countries of which they are a part.

According to Thomas Baekdal, an online magazine publisher, these large corporations have no choice in evading taxes. He uses an example, which is illustrated in the diagram below, of how Google could be taxed multiple times if they did nothing to protect their assets. Google has a consulting office in the UK; Google Europe is based in Ireland; and Google’s headquarters are in the US. If each country taxed the profit earned by Google, it would end up losing 66 percent of its profit to taxes. Approximately two thirds of Google’s profit could be taken away for tax purposes in three separate countries.

from http://www.baekdal.com/opinion/the-other-side-of-amazons-apples-and-googles-tax-evasion/

Others argue that Apple’s avoidance of paying more than $44 billion in taxes over the last four years is unethical. Apple and Google are not the only corporations that have accounts in countries with lower corporate income taxes. Hewlett Packard, Microsoft, Starbucks, Amazon, and many others have also avoided the corporate tax rate in the United States by having offshore accounts.

One major issue with these companies skipping out on paying taxes, argue some, is that the countries’ citizens must make up the difference. Therefore, higher tax rates or cutting of services are the only options to counter balance this.

Here at the College of Business, the Daniels Fund Ethics Initiative helps establish a commitment to ethics and integrity. Based on the principles set forth by Bill Daniels (honesty, integrity, and fairness), do you think Apple and Google have acted ethically? Leave your thoughts in the comments below.

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A Sendoff to the Class of 2013

By Tim Pate

College of Business graduates enjoy commencement

College of Business graduates enjoy commencement

This week’s post (by virtue of the title alone) runs the risk of being a bit sappy and sentimental, so I’ll do my best to keep it professional. You all have probably shed and seen enough tears for all the graduation hullabaloo,  and I don’t intend to contribute to the melancholy any more than I have to. That being said, here begins my blog post reflecting on my time as an undergraduate student at Colorado State University.

Two weeks ago, I sat in my room, putting the final touches on a school project, when I realized that the work I was completing was not just another college project – it was the final project. When it was done, there would be no more. For some reason, this simple fact hit me harder than all the well-wishings and congratulations I had received from family and friends in the preceding days and weeks. And suddenly I began to cherish that last project – I began to enjoy it.

This insignificant experience gave way to my realization of how representative my final project was of the conclusion of my college experience. Under any other circumstances, that project would have been just another part of college life – another small hurdle on my way to the finish line. On some level, I think that’s how I’ve viewed too much of my college experience. The classes, the events, the involvement, the mishaps were all part of a means to a grander end.

What this last project taught me was that I need to remember to take the time to appreciate those stepping stones that lead to the ultimate finale. Those awkward roommate situations freshman year; the nights spent in Old Town; the class presentations; the once-in-a-lifetime extracurricular events – all of these things were special in their own right.

Looking forward, I know that I will have the opportunity to take advantage of more small moments that culminate in something big. Life in the real world appears a bit daunting – I’ll admit that – and I know that I’m going to fail a few times before I find what works for me. However, I’m going to try to do my best to make my failings and my successes count and to take the time to acknowledge them individually.

There are a lot of naysayers out there who don’t believe in the potential of our generation. I think they’re wrong. I think that we’re going to make a difference that probably none of us can even foresee at the moment. But I hope that whatever happens along the way, we do our best to appreciate the little things that lead to whatever changes we make. I’m going to try to start appreciating those mundane class projects like I did the last one.

Congratulations to the Class of 2013!

Follow-up on JC Penney: Will their mea culpa commercial work?

By Annie Burnham

Last month, I posted a blog on the firing of former JC Penney CEO, Ron Johnson, due to his failure to turn around the company’s plummeting sales. Johnson created problems by pushing away loyal customers and ignoring their needs. JC Penney has existed for 111 years and has a large customer base. Johnson treated JC Penney customers like he treated Apple’s customers, despite the differences between the companies and their customers. The failure to recognize those differences coupled with the sudden and vast number of changes helped lead to Johnsons failures as CEO.

Mike Ullman, the old JC Penney CEO reinstated as interim leader, wasted no time in sending out a plea to former JC Penney shoppers. The struggling retailer released a 30–second commercial asking customers for forgiveness:

It’s no secret. Recently, JC Penney changed. Some changes you liked, and some you didn’t. But what matters with mistakes is what we learn. We learned a very simple thing: to listen to you. To hear what you need to make your life more beautiful. Come back to JC Penney. We heard you. Now, we’d love to see you.” The spot ends with the full JC Penney name, and the lines “Come back to see us” and “We’re listening on Facebook.”

While the commercial has garnered some attention for JC Penney, experts have differing opinions about what its outcome might be. Daniel Gross, writer for The Daily Beast, said that the firing of a CEO in such a short amount of time is an emerging trend. The speed at which changes in technology, social media, the market, and investing take place contributes to shorter tenures for CEOs.

“Over the past five years, an average of nearly 1,300 CEOs have resigned, retired, or been fired each year,” said John Challenger, CEO of Challenger, Gray, & Christmas, a Chicago-based executive coaching firm. “Patient money is nonexistent in the age of immediacy in which we live. JC Penney provides a case study of what happens when impatient money meets a turnaround that is likely to take time.”

Some critics say that there is no hope for JC Penney. According to Douglas A. McIntyre, a writer for the blog 24/7 Wall St, “JC Penney would not only have to reach millions of them with its new message. It also would have to compel these consumers to come back to an experience they abandoned because they did not like it.”

Whether customers return or not doesn’t seem to have deterred Goldman Sachs from approving a $1.75 billion loan for JC Penney this past week. One problem JC Penney now faces with the broadcast of this commercial is to live up to what it has promised. Gaining back its consumers and developing brand loyalty isn’t going to happen just because of an apology in the form of a 30- second TV commercial. Shoppers need to see changes that they like. So, what does the future hold for retailers —particularly JC Penney? Only time will tell.

How have you responded to JC Penney’s recent changes? Is the apology enough to bring customers back? Be sure to leave comments below.

What to do while you’re living in your parents’ basement

By Tim Pate

What NOT to do as a job-seeker

Graduation is looming, and you don’t have a job in line yet. No need to fret; you’re not alone. Plenty of college students spend a little time unemployed before finding that elusive position. Graduates who find success in their job search aggressively seek opportunities and make the connections that others miss. So instead of becoming a master video-gamer during your time off, here are some tips for finding that job as quickly as possible. You and your parents will thank me.

1. Improve your social media presence.

Facebook and Twitter have been fun channels through which we have interacted with friends throughout college, but now it’s time to use these platforms and more to your advantage. First, clean up your personal sites: take down your party pics, commit yourself to clean and sophisticated language, use a professional photograph for your profiles, and sculpt your biographies so that they reflect the best version of yourself.

Then start posting content that is relevant to your interests and the career you want to pursue. Employers want to see that you actually care about your career – demonstrate your passion over social media.

Once you’ve done that, think about exploring other social media sites and learn how they can further serve you in your job hunt. Use LinkedIn as an online resume. Post pictures relevant to your career goals on Pinterest. Showcase your photography on Instagram. Keep a blog that documents your job-seeking activities. Do whatever you think might help you stand out in the eye of a recruiter.

2. Continue self-educating.

Just because you’re done with college does not mean you’ve finished learning. No matter how great your education, remember there is a world of information waiting to be discovered. Read industry magazines and blogs (and share and comment – see advice above!). You can also read up on fields that are only peripherally related to your focus – you may end up diversifying your knowledge and skills.

Another great way to learn and stay fresh on what you learned at Colorado State University is to pass your knowledge along. Offer to tutor students studying what you studied and you’ll retain that information. Tutoring also gives you experience to add to your resume, thereby making you a more desirable candidate for recruiters.

3. Freelance or volunteer – it’s all about networking!

You can also add experience by doing freelance work or volunteering in your desired industry. Say, for example, you’re a marketing graduate but you haven’t found a full-time marketing gig. Who’s to say that new restaurant in your hometown couldn’t use some discounted marketing work? There’s no harm in offering to work a freelance job, and you might even make a few dollars while you’re at it.

More importantly, you continue to build that ever-important “Experience” section of your resume. Doing freelance work shows initiative to employers. You may even make a connection through your freelance work that leads to the full-time job of your dreams.

4. Make applying a full-time job.

As I said at the beginning of this post, jobs come to those who work for them. If you are not actively and determinedly reaching out to employers, they won’t notice you. While some people are lucky enough to find a job with the first company to which they apply, it takes others dozens of applications and interviews before opportunity knocks. Don’t get discouraged. Your hard work and your investment in an education are on your side. Being patient can be hard, but complacency won’t make the time pass any faster. Go find the job you want and don’t stop proving why you deserve it.

Remember that the College of Business has resources to help you find your first job. The Career Management Center is a great place to find job postings and other tools to help you showcase yourself for employers.

How is your job search going, graduating seniors? What are you doing to prepare for the real world? Do you have any advice for underclassmen that you wish someone would have told you? Share your thoughts in the comments below.