"The baying mob is in full throat." So opens today's Lex column in the Financial Times about Starbucks' (NASDAQ: SBUX ) decision to pay more tax in the U.K., and I couldn't agree more. The company has followed all existing tax laws there, yet is being accused of tax avoidance. In response, the green mermaid has agreed to pay more taxes just to shut the whingers (British for "whiners") up.
When full compliance isn't enough
Just to be clear, those are my choice words, not the company's. Troy Alstead, Starbucks' CFO, put it more gently, telling the Times that complying with U.K. tax law "isn't enough right now."
So the company will pay $13 million-plus in taxes over the next two years, regardless of profitability. And that was at the heart of Starbucks' claim that it paid just $11 million in corporate income taxes since 1998: It isn't profitable in the U.K.
Oh, the immorality of it all
Amazon.com (NASDAQ: AMZN ) and Google (NASDAQ: GOOG ) had better watch their step across the pond, as well. Like Starbucks, they were recently named in a damning report by British lawmakers as engaging in "immoral" tax avoidance. George Osborne, Britain's Chancellor of the Exchequer, just announced plans for a $13 billion "tax-dodging clampdown."
Starbucks is a healthy company. It has $2 billion in the bank and just $550 million in debt, and 11% year-over-year revenue growth for the most recent quarter. Starbucks can afford this absurd tax payment, but it shouldn't have to.
Everyone knows Amazon is the big bad wolf in the retail world right now, but at its sky-high valuation, most investors are worried it's the company's share price that will get knocked down instead of competitors'. We'll tell you what's driving the company's growth, and how to know when to buy and sell Amazon in our new premium report. Our report also has you covered with a full year of free analyst updates to keep you informed as the company's story changes, so click here now to read more.