Category Archives: us politics

Congratulations, Mr. President — Parte Deux

As I sat glued to my computer screen earlier this week watching the election results from each state stream in, I realized that this was something I had done once before … four years ago, as again, in China, I waited anxiously in a tucked-in Internet cafe in the heart of Beijing to see what larger direction the United States of America would be headed. But this time, instead of just reading the news passively and sharing amongst a smaller group of friends, there was a real opportunity to ENGAGE, to participate or at the very least observe dialogues from not just all over the country, but all over the world, via Facebook and Twitter-streams that were often embedded right alongside interactive media units designed and put together by media organizations like Huffington Post, The Guardian, and CNN, regardless of your physical location.

It is incredible to see what can change in four years, and the type of reporting and data visualization that was available during this year’s election was a reminder of how quickly we innovate in today’s age of computing, and thankfully, how user-centered design and experience has become a key part of the conversation.  Four years ago, there was no ‘like’ on Facebook, there were no apps/open Facebook authentication that allowed you to easily share articles and stories with your Facebook networks.  And somehow 2008 seems to have pre-dated the explosion of Internet memes. Twitter was not the same global medium it now is, with over 41 million unique visitors monthly (and 32 million tweets alone on Election Day), compared to just 4.5 million unique visitors a month at its peak in 2008. If anything, these past four years can be surmised into the shift towards the ‘connected economy’, enabled by social media.

For all of the innovation there has been, however, in some ways the world has become less connected. Facebook and Twitter which had once been openly available across China were now accessible only behind VPN — 1 billion people who by and large, are not part of this digital global square.  As governments continue to grapple with how to address the rise of social media, the number of countries that now censor the internet continues to grow.   (I did a study on this in 2010 … I wonder how it’s changed since).  And this week, China’s infamously slow internet was only made slower driven undoubtedly by the series of meetings being held in Beijing at the 18th Communist Party Congressional Meetings.

President Obama — this week we rejoice with you in celebrating the American Dream and moving forward together as a nation in preserving the vision that makes this country so, so very unique. And for the next four years, let us continue to innovate, listen, and collaborate in creating a fair and neutral digital environment, being sensitive of the cultural and historical concerns each nation may bear in this dialogue.  “The best is yet to come.”

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Transfer Pricing 101

Every few years (or months as of late), the area of “transfer pricing” surfaces itself, even if the term never (or rarely) appears anywhere, as was the case with last week’s 60 Minutes segment on the world’s “new tax havens”. Part of it is the skewed taxonomy of the word itself, evoking implications of price structuring (i.e., determining how much a product is worth (albeit partially true)) versus its actual practice, determining the internal market cost of services rendered between company subsidiaries.

But a large part of it is the complexity of the practice itself, despite a very simple and innately intuitive objective — companies should compensate their internal business units for services rendered the same way they would with any external service. In this way, according to theory, companies would be prevented from shifting profits to lower tax jurisdictions.

As an example, Apple, which makes its famed iPods and iPhones predominantly in its Shenzhen, China factories, managed by third-party FoxConn and its own Apple-owned site.  Apple pays FoxConn the equivalent of a cost plus 5% margin but could choose to “charge” its own privately held subsidiary a cost plus 15% amount. Because Apple only has to pay a 25% tax rate in China, versus the 35% in the US, Apple would automatically gain a 10% cost savings for all business expenses incurred in China.  (all numbers, except for the corporate tax rates, are made up)

Transfer pricing tries to prevent this through a principle known as “arm’s length”, and while each tax jurisdiction has its own definition of what is considered arm’s length, it’s generally accepted that companies may compensate their internal business units at a margin that is roughly equal to those realized by third party companies.

While most reports like the recent 60 Minutes special are quick to tack onto the $60 billion of tax dollars that flow overseas every year, and the questionable practices that surround it, this fundamental principle remains largely untouched and unspoken for.  Rather than calling for this practice to be done away with (which is not possible; if anything, the number of countries that have enacted transfer pricing in recent years is steadily on the rise), emphasis should be placed on creating less ambiguity. What entails a sales and marketing service? What third-party companies should be considered as comparable in determining arm’s length? Are public companies, which are often the only companies with publicly available financial statements, even the right benchmarks to use?

And perhaps the foremost challenge and threat governments, particularly the US, should consider is the question of intellectual property transfer.  Especially among Silicon Valley companies, the ongoing trend has been to shift valuable technical IP developed in the heart of California’s Silicon Valley to the corporate-friendly business environment of Dublin, Ireland (tax rates range between 10% and 12.5%), where English is also the lingua franca.   According to an article by BusinessWeek, Google has been able to save more than $3 billion in taxes by housing the company’s search advertising IP in Dublin.

More than just profits, however, what happens when a paper-based transfer of IP translates into talent-based IP transfer?  Then, while the numbers won’t be as quantifiable or seem as impactful as $60 billion in tax savings, the implications will be far more substantial. Rather than asking the question of how we need to crack down on corporations to retain tax savings, the more pivotal question will be what we can do to ensure that IP developed within the borders of any one country need not move simply based on tax merits.

views expressed are only my own, and are by no means comprehensive. i am not a transfer pricing practitioner or expert, just a passerby thinking aloud  🙂

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palin, palin, palin …

thank you, sarah palin, for showing me who my vote should go to in november. thank you, sarah palin, for shedding light on what the next four years could be, and what the next four years SHOULD be.

i have always been an admirer of john mccain because he seemed to represent something that i believe washington — and any competitive nation — desparately needs. someone who IS his own person, who answers to his own morals, someone who i could trust to try to do the right thing and thinks with the heart as much as he/she thinks with the mind.

in spite of obama’s eloquence, inspirational nature, and sheer charisma, that was the one trump card i felt mccain held over obama.

with sarah palin, however, all doubts were removed as to who should be the next president — barack obama.

i admire her for being ambitious and adding more cracks in that glass ceiling that clinton had already chiseled away at with 18 million of her own. i admire her for being a spirited individual who isn’t afraid to speak her mind and isn’t scared to get her hands dirty.

what i don’t agree with, however, is this overconfidence in religion to go so far as to say that the iraqi war was an “act of god.” to go so far as to say that humans are helpless and are unaccountable in the face of global warming.

these are fundamental issues that will inevitably underscore the pulse of the nation, the pulse of the world, in the foreseeable future. we NEED a president who understands the urgency of a collaborative world, despite differences in ideologies and faith. we need a president who understands that seeking alternative energy sources is an imperative, and that global warming is no joke.

i know there have been so many accusations thrown at sarah palin since her nomination about her questionable and ruthless methodologies, but i don’t really care as much about palin’s tactics in getting to where she is today, because i also recognize that in politics, nothing is truly as ideal as the rhetoric that echoes from our television sets. rather, for a future potential vice president who can be so naive and so singularly minded on issues as crucial as global warming, as the environment, as global collaboration and foreign affairs — particularly with the middle east — is something that i find particularly frightening.

and to the republicans, perhaps it is time to stop with the blatantly ugly politicking and campaigning and duke it out honorably with the “angry Left.”

sorry, john – nothing personal, but you lost me when you took on palin.

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“Foreigners are ruining America”

What can I say — Riding on Berkeley buses is like a box of chocolates, never know what you’re going to get.

Today, it would be a Democratic Party volunteer discussing with the bus driver how foreigners were the root cause of all problems in the United States. Essentially, to paraphrase, she blamed the bulk of the credit crisis on those who came to the United States, “took advantage of the laws here,” borrowed money to finance the high-roller life, claimed precious spots in the US higher education system, and then defaulted on their loans by leaving the country. Those who did stay, she claimed, showed only apathy for America, let alone the American political system and values.

Her solution?

Stop opening the doors of immigration. Saying that she had lived in London for 25 years, it was “clear” to her that places like the UK and France did not want any foreigners in their countries anymore. And that if the US went to Japan or China and started taking over the resources that were meant for people there, there would be immediate protests.

Hmmm … funny — I always thought that the US was the largest FDI, and Europe generally much more compassionate with immigrants. Starbucks in the Forbidden Palace? Higher refugee quotas in Europe despite less resources? Yeah, there are too many things about this argument that are flawed, but that is not the point I want to get at.

While I’m sure she doesn’t know all the facets about this issue she speaks so passionately about, what bothers me is that this is probably a generally held view among the public. And as politicians, do either members of the nation’s two leading parties ever truly make an attempt to shift this perception? I’m not saying that there is no shard of truth in it, but the extremes of these views may drive America to a state that is simply not sustainable.

Especially in an election year as critical as the one we are in now, where the economic future is uncertain to say the least, it is so easy to pass the blame from party to party, when what we really need is a more holistic and balanced understanding in striving for a global solution.

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