Global Glance: Aug 24, 2015
A quick look at intriguing international stories
By John Bostwick, Managing Editor, Radius
Welcome back to Global Glance. This week we look at:
An article in last month’s New York Times provides a good overview of the fast-growing industry known as daily fantasy sports. The current leaders of the field are FanDuel and DraftKings, both US-based (and, apparently, averse to using spaces in company names). Though each is just a few years old, they are now “a nearly ubiquitous presence” and have attracted big-time investors such as the NBA and NBC Sports (FanDuel) and Major League Baseball (DraftKings). The Times mentions at least one reason for the companies’ successes: “unlike season-long fantasy games, which can be a slog, daily fantasy exploits desires for instant gratification and easy money.”
In a press release last Monday, DraftKings announced that it is not content to capture just the US market. It plans to have a new London-based office operational by the end of this year, “with launches in additional markets, including Europe, Asia Pacific and Latin America, planned for 2016.” A subsequent article in Bloomberg Business reported that while DraftKings has received a UK gaming license, it has no plans to operate a traditional betting operation, or “sports book.” The company’s strategy seems to be a simple matter of recognizing the importance of operating effectively in the global marketplace. DraftKings CEO Jason Robins explains in the Bloomberg piece, “Like it is in the US, this is a race, and now that race is global.”
Donald Trump, Bernie Sanders and Actual Economists on Corporate Inversions
Last September, the US Department of the Treasury announced that it was “taking action to reduce the tax benefits of — and when possible, stop — corporate tax inversions. This action will significantly diminish the ability of inverted companies to escape US taxation.” That same press release explained the concept of inversion like this: “A corporate inversion is [a] transaction in which a US based multinational restructures so that the US parent is replaced by a foreign parent, in order to avoid US taxes.”
The Treasury may have started taking action last year, but corporate inversions in this country continue. As The Economist reported last week: “American companies are on the move. On August 6th CF Industries, a fertiliser manufacturer, and Coca-Cola Enterprises, a drinks bottler, both said they would move their domiciles to Britain after concluding mergers with non-American firms.” According to the article, the Treasury’s efforts to stop inversions have largely been ineffectual. It concludes: “So long as America’s tax code is out of kilter with the rest of the world, its firms will find reason to sail for fairer shores, whether the IRS likes it or not.”
Republican presidential candidate Donald Trump agrees. In this month’s Meet the Press interview — the highest-rated MTP episode since 2014 — he says, “We have a huge inversion problem in this country … We have to lower the tax.”
Fellow presidential candidate Bernie Sanders (who also had had an interview on MTP) is on a different end of the ideological spectrum from Trump but also regards inversions as a problem for the US. Perhaps not surprisingly, Sanders does not want to lower corporate taxes in response, but rather wants to close what he regards as the tax loophole of corporate inversions. As he said in a statement last year announcing his Corporate Tax Dodging Prevention Act: “Companies that have received billions in corporate welfare and have made billions in profits should not be allowed to renounce their US citizenship to avoid paying US taxes.”
As a Huffington Post article last Thursday explained, economists and global finance ministers at the Independent Commission for the Reform of International Corporate Taxation (ICRICT) want to dismantle the current global corporate tax system in favor of one that “[taxes] multinational corporations as single entities at a minimum rate globally, regardless of where they’re officially headquartered. Revenues would then be distributed to individual countries based on factors like sales, employment and resource extraction.” The ICRICT’s June declaration calling for the overhaul urged, “International corporate tax reforms should be considered from a global public interest perspective rather than national or corporate advantage.”
Istanbul’s Coddled Alley Cats
In a post last month, I mentioned a Turkish photographer’s excellent Instagram account. Last week, one of his pictures was reprinted in The Wall Street Journal. The article — “Why Istanbul Should Be Called Catstantinople” — was the most popular in the Journal’s online Wednesday edition. It contains some intriguing information about the history of cats in Istanbul and the close, enduring relationship the city’s residents have with them. Cats were bred in the city to reduce rats when the sewer system expanded in the 19th century, and before that they helped minimize the spread of the bubonic plague (also by killing rats).
Today, cats roam and lounge freely in the metropolis, and one resident is quoted in the Journal article as saying, “Being a cat in Istanbul is like being a cow in India.” The article notes that the phenomenon is now captured digitally, and the hashtag “catsofistanbul” has over 50,000 posts on Instagram.
Here’s another intriguing tidbit: Cats hold an esteemed place in Islam. From the Journal again: “Muslim lore tells of a cat thwarting a poisonous snake that had approached the Prophet Muhammad. One teaching tells that he found a cat sleeping on his shawl and opted to cut the fabric rather than disturb the animal.” Mentioned (and filmed) in the accompanying video, Istanbul’s famous mosque, Hagia Sophia, “has its very own celebrity cat named Gli who sometimes upstages the architecture.”