To illustrate how Microsoft effectively dodges its corporate tax obligations, The Seattle Times followed the money. In the case of a purchase at the Microsoft Store in Bellevue square, the money went from Bellevue to Nevada, then off to Puerto Rico. From there, money is sent to Ireland and, finally, Bermuda. Small local taxes are paid along the way, and Bermuda is an ideal resting place — there’s no corporate tax there.
As reporter Matt Day points out, this practice isn’t uncommon among large corporations. The largest U.S. firms have a tax rate of 35 percent. By planting profits offshore, Microsoft’s tax rate (for foreign operations) is about 4.5 percent. Boeing’s tax rate averaged 2.8 percent over the past decade. Amazon’s was 10.7 percent over a decade; Starbucks, 30.5.
International firms move money around like this consistently. Some see it as poor corporate citizenship, others view it as indicative of a flawed tax system in the U.S. But no matter how you spin it, Microsoft and its peers are avoiding billions of dollars — between $77 billion and 111 billion in 2012 — in tax payments to the federal government.
Amazon to take air cargo into its own hands
You’ve probably bought something off Amazon in the last month, as have millions of others, and logistics companies like UPS are struggling to deal with the volume. So, Amazon is taking matters into its own hands.
The company is reportedly in talks with Boeing to lease 20 767 jets to start an air delivery service. As Robert W. Baird & Co. analyst Colin Sebastian told the Times, “Amazon is pretty fed up with the third-party carriers being a bottleneck to their growth.”
Amazon, apparently, is so disenchanted with UPS, FedEx, and the like that it’s considering handling deliveries for other companies, which would make it a competitor to the companies it’s trying to supplant in its own operations.
Will Seattle be the next Detroit?
One geographer thinks so. Jim Russell argues that the largest economic revolutions in history were usually tied to one company and one city. From 1880 to 1920, it was U.S. Steel in Pittsburgh. From 1920 to 1960, Ford in Detroit changed the way Americans lived and moved. Intel made Silicon Valley the economic juggernaut of 1960-2000.
Today, Russell’s Ford is Amazon. He compares the way the two companies have altered American social geography. Before Ford, folks clustered near railroads and had limited travel options; the Model T blew that wide open. To Russell, Amazon’s cloud is doing the same thing today by removing barriers to where we can live and work.
It’s a compliment to Seattle’s and Amazon’s significance. Let’s just hope things work out better here than in Detroit.
Boeing, Sea-Tac, Alaska ramp up on biofuel
The aviation industry is pretty fond of biofuel as a method of greening up operations, and Northwest companies are at the forefront of that push. To further increase use of biofuel at Seattle-Tacoma International Airport, the airport, along with Boeing and Alaska Air, are embarking on a $250,000 study to assess the airport’s biofuel infrastructure.
Biofuel, which is made from plant matter — often forest-industry waste — is a renewable fuel that can help reduce the aviation industry’s emissions. Alaska, Sea-Tac, and Boeing are hoping the study shows that the demand and infrastructure are in place for biofuel, thus inciting more production.
Elsewhere on the Web
The ban on oil exports has been lifted, so expect more oil trains coming through the Pacific Northwest.
Bloomberg released its annual Jealousy List, which is perhaps the best reading list of the year.
Engineers wanting to impact the next wave of technology might want to bone up on their transportation chops.
Washington’s Clean Energy Fund, a darling of Gov. Jay Inslee, is under scrutiny after companies led by former Department of Commerce employees received assistance.
When the startup bubble goes kaput, employees are the ones who will lose the most.