Investors who used to feel guilty about having their retirement savings invested in pariah companies that did not reflect their values now have a choice. They can channel their investments into “ESG funds,” which supposedly focus on companies that stack up well against a list of Environmental, Social, and Governance criteria, and rest assured that the companies they own a stake in are environmentally responsible, operate according to high ethical standards, and act as responsible citizens of their communities.
A long, long time ago, I learned in business school the difference between tax evasion and tax avoidance. Simply, one is legal, one is not. I learned more about the distinction from my first employer, when the company deferred indefinitely the payment of a full year of income tax by essentially forming a partnership with itself. That was avoidance. And it was entirely legal at the time. So was Donald Trump’s claiming of $916 million in business losses to shield his income from taxes for subsequent years, even though the majority of the losses had been absorbed by his bankers, not by him or his companies. So was Apple Inc.’s parking of the bulk of its income in low-tax Ireland, by claiming a corporate residency of…nowhere. So is the wholesale reduction of corporate tax by tech giants Google, Facebook, Microsoft, etc. by housing their IP assets (and hence reported income from those assets) in tax havens. It’s not a stretch to suggest that the most creative, innovative people within these companies are not involved in product design and development – they’re in the tax department. Continue reading “Tax reform, the hard way. How Morneau and Trump screwed it up”