(Reuters) – Starbucks’ coffee menu famously baffles some people. In Britain, it’s their accounts that are confusing. Starbucks has been telling investors the business was profitable, even as it consistently reported losses.
This apparent contradiction arises from tax avoidance, and sheds light on perfectly legal tactics used by multinationals the world over. Starbucks stands out because it has told investors one thing and the taxman another.
The Seattle-based group, with a market capitalization of $40 billion, is the second-largest restaurant or cafe chain globally after McDonald’s. Accounts filed by its UK subsidiary show that since it opened in the UK in 1998 the company has racked up over 3 billion pounds ($4.8 billion) in coffee sales, and opened 735 outlets but paid only 8.6 million pounds in income taxes, largely due because the taxman disallowed some deductions.
Over the past three years, Starbucks has reported no profit, and paid no income tax, on sales of 1.2 billion pounds in the UK. McDonald’s, by comparison, had a tax bill of over 80 million pounds on 3.6 billion pounds of UK sales. Kentucky Fried Chicken, part of Yum Brands Inc., the no. 3 global restaurant or cafe chain by market capitalization, incurred taxes of 36 million pounds on 1.1 billion pounds in UK sales, according to the accounts of their UK units.
Yet transcripts of investor and analyst calls over 12 years show Starbucks officials regularly talked about the UK business as “profitable”, said they were very pleased with it, or even cited it as an example to follow for operations back home in the United States.
Troy Alstead, Starbucks’ Chief Financial Officer and one of the company officials quoted in the transcripts of calls Reuters reviewed, defended his past comments, saying the company strictly follows international accounting rules and pays the appropriate level of tax in all the countries where it operates. A spokeswoman said by email that: “We seek to be good taxpayers and to pay our fair share of taxes … We don’t write this tax code; we are obligated to comply with it. And we do.”
When presented with Reuters’ findings, Michael Meacher, a member of parliament for the Labour Party who is campaigning against tax avoidance, said Starbucks’ practice “is certainly profoundly against the interests of the countries where they operate and is extremely unfair … they are trying to play the taxman, game him. It is disgraceful.”
There is no suggestion Starbucks has broken any laws. Indeed, the group’s overall tax rate – including deferred taxes which may or may not be paid in the future – was 31 percent last year, much higher than the 18.5 percent average rate that campaign group Citizens for Tax Justice says large U.S. corporations paid in recent years.
But on overseas income, Starbucks paid an average tax rate of 13 percent, one of the lowest in the consumer goods sector.
Read it all HERE.
Hey, you all know that yesterday there was a 4.0 magnitude earthquake centered in Maine? Yes, Maine of all places! So a cousin of mine just had to email this one to me.
After the Great Britain Beer Festival, in London, all the brewery presidents decided to go out for a beer.
The guy from Corona sits down and says, “Hey Senor, I would like the world’s best beer, a Corona.” The bartender dusts off a bottle from the shelf and gives it to him.
The guy from Budweiser says, “I’d like the best beer in the world, give me ‘The King Of Beers’, a Budweiser.” The bartender gives him one.
The guy from Coors says, “I’d like the only beer made with Rocky Mountain spring water, give me a Coors.” He gets it.
The guy from Guinness sits down and says, “Give me a Coke.” The bartender is a little taken aback, but gives him what he ordered.
The other brewery presidents look over at him and ask “Why aren’t you drinking a Guinness?” and the Guinness president replies, “Well, I figured if you guys aren’t drinking beer, neither would I.”
And to get your feet a tapping, and to put this tune in your head for the rest of the day:
COMMON SIGHT A man passed out on Roosevelt Avenue. The Corona neighborhood, where bars are plentiful, has one of the highest number of liquor licenses in the city.
WHEN the Metropolitan Transportation Authority decided to get rid of a colony of pigeons that roosted under the elevated subway that runs down the middle of Roosevelt Avenue in Queens several years ago, it installed anti-pigeon spikes and sound machines to drive the birds off. The birds decamped, but only to the trees next to the tracks, where they continued to befoul the street below, according to local residents. When the parks department pruned the trees, the birds headed back to the tracks to another spot. Now, the transit agency continues to power-wash the caked-on debris away.
That’s what the fight against vice is like on Roosevelt Avenue, where efforts by the city to clean up a street that is home not only to pigeons, but also to a host of criminal activities, often play out like the carnival game Whac-A-Mole: go after one form of wrongdoing and it will re-emerge somewhere else in a slightly different form.
Read more HERE.
“You know, Barack doesn’t have a big ego. You know, that’s the thing. He is — you see this in, you know, how he leads the country. I mean, he is very open to other people’s opinions and he’s always to compromise and he’s always, always listening, you know. So that would kind of be the last thing that I would kind of think of when I talk about my husband is his big ego because he just doesn’t have that. So it’s not much to check,” first lady Michelle Obama said in an interview with CNN that aired before the second debate.
After the clip, a CNN panel says they do not believe the first lady and discusses President Obama’s ego.
Refrigerator ads from the April 16, 1933 edition of the San Antonio Light (San Antonio, TX)
When I moved to Los Angeles and began my search for an apartment I was a little surprised by the fact that a refrigerator wasn’t included with most of the units I toured. In every other city where I’ve ever lived, the average apartment always included a refrigerator with the cost of rent. I was only looking for a one-bedroom apartment, but I was expecting that this was the norm everywhere for the most basic of apartments.
When I asked the manager of the apartment building I wound up renting from why there was no refrigerator, she explained that the property only supplies “the essentials.” When I pointed out that the building came with an underground parking space, she just stared at me blankly. It was in her silence that I came to understand a subtle difference between Los Angeles and the rest of the country: parking is essential, keeping perishable food fresh is not.
Elon Musk, one of President Obama’s big-time campaign donors is also the recipient of taxpayer funded stimulus for his “green” business ventures. (Shocking, isn’t it?) The IRS and a federal special investigator are investigating Musk’s SolarCity for potential improper stimulus funding by the Obama administration. The Washington Examiner has the story:
Musk, as he cashes in on his solar investment by taking his company SolarCity public this month, had to make an awkward admission in his financial filings with the Securities and Exchange Commission.
The Internal Revenue Service is auditing SolarCity, the SEC filings reveal, and at the same time the Treasury Department’s inspector general is investigating the company. The question at hand: Did President Obama’s Treasury Department inappropriately give stimulus money to Musk’s company.
Obama’s stimulus transformed a long-standing tax credit for renewable energy investment into a direct grant from Treasury, worth 30 percent of a company’s investment in a renewable project. Musk’s company has applied for approximately $325 million in these stimulus grants, according to the SEC filing.
Treasury found that SolarCity repeatedly overstated the value of its investments, the SEC filings indicate. In those cases, Treasury awarded smaller grants than SolarCity had tried to claim. Now the department’s IG and the IRS are doing a broader audit of the projects for which SolarCity and other large solar companies got stimulus cash. Investigators want to know if the companies regularly overstated the value of their investments and thus got overly generous taxpayer grants.
In case there was any doubt whether Obama believed his own inflated rhetoric, the Obama campaign Tumblr account repost this from leftist propaganda machine Think Progress:
That’s wonderful.. remind people of the moronic promises Obama made and failed to fulfill. Oh by the way, recently released data provides some evidence that “global warming” ended 16 years ago… historically high unemployment levels, on the other hand…