This was cross-posted on my new professional, self-titled blog.
A few years ago, I wrote a piece about Bill Gates in response to an article in Alliance magazine, by global health pundits Laura Freschi and Alanna Shaikh, which argued that Bill Gates had become a “global health dictator” because of the amount of power and influence that his vast wealth gave him in setting global health and development priorities. I took the opposite opinion – that a man is free to do with his wealth as he pleases, and we shouldn’t shoulder him with the responsibility of setting the entire global health agenda just because he has the wealth to fund most of it.
I stand by what I said, but it now appears that potentially more sinister side of Bill Gates and Microsoft is in the spotlight for commentary: dodging taxes. In an editorial in the Guardian, Ian Birrell juxtaposes Gates’s “aid gospel” with the fact that Microsoft, on whose board he still sits, goes to great lengths to avoid paying billions of dollars of taxes.
He made his name as a sharp-elbowed businessman who rode the technology revolution with such style. But these days he is far more famous for his philanthropy, as a saviour of the poor who has made it his life’s mission to change the world for the better. So it was something of a shock to see he is still the richest person on the planet, boosting his fortune by another £9.6bn last year to an astonishing £48bn after a big rise in the Microsoft share price.
Clearly, he relishes his latest role, becoming increasingly influential and outspoken. He loves to lecture nations on how they should give away more of their taxpayers’ money, urging them to hit the arbitrary and anachronistic target of handing over 0.7% of gross national income in foreign aid. He has applauded David Cameron for Britain’s embrace of the target, even condemning a Lords’ committee that criticised this cash cascade, while constantly telling other countries to do the same.
But like those other aid apostles Bono and Bob Geldof, he risks being perceived as a rank hypocrite. For he sees nothing wrong in complex tax avoidance schemes while telling nations how to spend their revenues, notwithstanding the growing body of opinion that aid undermines development and democracy by propping up poorly run regimes. The latest expert to highlight this “aid illusion” is Professor Angus Deaton, the leading expert on measuring global poverty and a former true believer, in his fine book The Great Escape.
It seems a given that Gates will be a controversial figure – obscenely wealthy people almost always are – but he has made a name for himself in the last decade
as a tireless advocate for combating disease, developing sustainable agriculture, and advancing technological solutions to problems of poverty. He spent most of 2011 pushing his Giving Pledge with Warren Buffett, an attempt to persuade the wealthy of the world to donate half of their fortune to charitable causes. He is an almost guaranteed presence at big-name aid conferences and confabs, and now he and his wife are almost considered experts in their pet project areas – vaccination campaigns and green agriculture for Bill, and family planning for Melinda.
With such high visibility, it is highly discouraging to learn just how extensive Microsoft’s tax-dodging practices are:
Moving earnings through low corporation tax countries such as Ireland, Luxembourg and Singapore means the company saved itself, according to one estimate, almost £3bn annually in tax. A Harvard law professor pointed out that Microsoft’s divisions in three low-tax nations employed fewer than 2,000 people, but supposedly recorded about £9.4bn of pre-tax profit in 2011 – more than the 88,000 employees working in all its other global divisions.
In Britain, Microsoft reported revenues of £1.7bn in a single year for online sales on which it paid no corporation tax. This is why if you look at the small print when buying software through its British website, you find you are dealing with a Luxembourg offshoot. A newspaper investigation found a small office there with just six staff handling online sales from around Europe.
It is well-documented that the shuffle of corporate profits through tax havens hurts those in poverty by sheltering tax revenue that would go toward food aid, education, and medicine. What kind of aid champion does that make Bill Gates, if his own company circumvents tax responsibility totaling 3% of the global aid budget?
I still maintain that “global health dictator” is not the right label for Mr. Gates, but perhaps Ian Birrell is right – maybe “hypocrite” fits better.