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Date: 2022-06-30 Page is: DBtxt001.php txt00018162

Media / News
21 Hats Morning Report

21 Hats Morning Report ... January 23, 2020


Peter Burgess
How Big Corporations Avoid Taxes. Why FICO Scores Will Get Worse. And How SmileDirectClub Manages Its Reputation Inbox x 21 Hats Morning Report via How Big Corporations Avoid Taxes. Why FICO Scores Will Get Worse. And How SmileDirectClub Manages Its Reputation TAXES A fight between Microsoft and the IRS offers a view into how corporations avoid paying taxes: “Microsoft had shifted at least $39 billion in US profits to Puerto Rico, where the company’s tax consultants, KPMG, had persuaded the territory’s government to give Microsoft a tax rate of nearly zero percent. Microsoft had justified this transfer with a ludicrous-sounding deal: It had sold its most valuable possession—its intellectual property—to an 85-person factory it owned in a small Puerto Rican city.” “In one document, a Microsoft senior executive celebrated the company’s ‘pure tax play.’” “In another, KPMG plotted how to make the company Microsoft created to own the Puerto Rico factory—and a portion of Microsoft’s profits—seem ‘real.’” “The outcome of the audit remains to be seen—the Microsoft case grinds on—but the blowback was effective. Last year, the company’s allies succeeded in changing the law, removing or limiting tools the IRS team had used against the company.” READ MORE FINANCE The creator of FICO scores is making changes that will make it harder to get loans: “The changes will create a bigger gap between consumers deemed to be good and bad credit risks, the company says. Consumers with already-high FICO scores of about 680 or higher who continue to manage loans well will likely get a higher score than under previous FICO versions. Those with already-low scores below 600 who continue to miss payments or accumulate other black marks will experience bigger score declines than under previous models.” “The changes are an about-face from recent years, when FICO and credit-reporting companies made changes that helped increase scores for some consumers, such as removing some negative information, including civil judgments, from credit reports.” “Average FICO scores have been rising steadily following some of these changes and an improving economy.” “The new FICO changes reflect a shift in US lenders’ confidence in the economy, which has been expanding for more than 10 years.” READ MORE REPUTATION MANAGEMENT SmileDirect Club is limiting the exposure of customer dissatisfaction: “[When] the aligners did not correct Taylor Weakley’s teeth as promised, she asked for a refund. After a lengthy back-and-forth, SmileDirectClub said she would get her money back if she signed a nondisclosure provision as part of a general release form. In September, Ms. Weakley, 25, agreed. ‘Going forward, I can’t say anything,’ she wrote in an email.” “What [Taylor] Weakley experienced was part of SmileDirectClub’s methods to limit information about customers’ dissatisfaction with its products. Seven people who ordered teeth aligners from the company described to The New York Times how the products did not fix their teeth; four said the aligners had created new problems that required traditional dentistry to correct. When some of the customers requested refunds, SmileDirectClub asked them to sign the confidentiality provision.” “In addition to linking confidentiality to refunds, the company sued the parent of the productivity site Lifehacker last year for defamation and libel over an article that outlined the risks of its products. It also sued several state dental boards, the bodies that regulate dentistry, after they took steps that would have made it harder for SmileDirectClub to operate.” READ MORE REGULATION The plastic-bag industry is winning the fight over single-use bags: “After years of environmental lobbying in the US, only eight states—California, Connecticut, Delaware, Hawaii, Maine, New York, Oregon and Vermont—ban plastic bags. Fourteen others, including Florida, have moved in the opposite direction, adopting laws to tie the hands of local officials, according to the National Conference of State Legislatures. Last Monday, New Jersey's much-anticipated plastics bill died.” “US plastic bag sales are projected to reach $1.4 billion this year.” “Leading the charge against bag bans is the American Progressive Bag Alliance, which represents the plastic bag industry, which employs nearly 25,000 workers in 40 states.” READ MORE HUMAN RESOURCES A survey indicates younger employees feel lonely at their job: “More than 80 percent of employed members of Generation Z—many of whom are just entering the workforce—and 69 percent of employed Millennials are lonely, according to a survey of more than 10,400 people, including about 6,000 workers, in the US from health insurer Cigna Corp. Older workers have lower rates of loneliness; they are also less likely to say they feel alienated by their co-workers or emotionally distant from colleagues, the survey found.” “According to Cigna, lonely workers take twice as many sick days as non-lonely workers—9.5 days, compared with 4.2 days—and miss more days of work because of stress.” “Other research from Sigal Barsade, a management professor at the University of Pennsylvania’s Wharton School of Business, has found that lonely workers are less committed to their organizations and have lower performance ratings from supervisors.” READ MORE An aging workforce brings opportunities (and some challenges) to small businesses: “‘Approximately 10,000 Baby Boomers a day will reach retirement age between 2011 and 2029, but only about 5,900 a day are retiring,’ says Susan Weinstock, a vice president at the American Association of Retired Persons. ‘In 2020, 26 percent of the US workforce will be 55 years old and older, compared to only 14 percent in 2002. Nearly nine million Americans aged 65 and older were still employed in 2016, up 60 percent from a decade earlier.’” “‘Older workers bring a level of expertise, tenure, and proven skills that are valuable to smart companies,’ says Elliott Eiseman, president and co-founder of Express Employment Professionals.” “Many smart business owners are realizing the need to adjust their company’s benefits to address the needs of both younger and older workers. ‘The work-life balance is a big thing for everybody now,’ says Eiseman. ‘Benefits for a young person might be maternity leave, benefits for a senior might be significant-other care leave, but it's leave.’’” READ MORE STARTUPS Loliware makes disposable goods from kelp as a plastic alternative: “The company makes straws primarily, with other products planned, out of kelp matter. Kelp, if you’re not familiar, is a common type of aquatic algae (also called seaweed) that can grow quite large and is known for its robustness. It also grows in vast, vast quantities in many coastal locations, creating ‘kelp forests’ that sustain entire ecosystems. Intelligent stewardship of these fast-growing kelp stocks could make them a significantly better source than corn or paper, which are currently used to create most biodegradable straws.” READ MORE By relying on subscription revenue rather than advertising revenue, The Athletic stands apart from other digital media companies: “Investors say they remain bullish on the company's ability to keep growing, because it's been able to grow its subscriber base quickly, especially overseas, while retaining existing customers. … The company expects to become profitable in 2020 and says it will soon hit a million subscribers worldwide, according to The Athletic co-founder Adam Hansmann.” “The company now has over 500 full-time employees across the world, with the vast majority based in editorial. It's nearly tripled the number of people at its headquarters in San Francisco since 2018 to 85 people. Its engineering team has grown by nearly 300 percent since that time.” “The Athletic's strategy for the past three years has been to hire top-talent sports journalists in local markets and to get people to pay for high-quality journalism content.” READ MORE CANNABIS For the second year in a row, there’s a Cannabis House at the World Economic Forum in Davos: “The goal is to get delegates from the World Economic Forum to pop in and learn about the industry, said Richard Carleton, chief executive officer of the Canadian Securities Exchange, another sponsor. ‘What was particularly interesting to me last year was how many European institutional investors, everybody from family office managers, hedge funds, right up to some of the largest pension funds in the world’ stopped by Cannabis House, Carleton said. ‘They hadn’t invested yet but were there to learn.’” “Cannabis House will feature a two-day conference focused on the themes of Davos 2020, including sustainability, climate change, social equity and impact investing.” “The rout in pot stocks hasn’t dampened interest in the event, which will also include ‘a professional capital markets discussion,’ [Jason] Paltrowitz said.” READ MORE -- Loren Feldman and Matt Gillick Please send comments and suggestions to and Follow on Twitter Friend on Facebook Forward to Friend Our mailing address is: 21 Hats 18 Broad Street 3rd Floor Charleston, SC 29401 unsubscribe from all emails update subscription preferences

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