Intel's Barrett Slams US Tech and Tax Policies

Hindustan Times ^ | May 7, 2005 | Daniel Sorid (Reuters)

[nickcarraway]

Attacking US government policies on taxes, immigration and Internet access, Intel Corp chief executive Craig Barrett warned that the United States could be left behind when technology companies decide where to make their next big capital investments.

With less than two weeks left as CEO of the world's largest chip maker, the outspoken proponent of free trade and low corporate taxes said in an interview that Intel could save as much as $1 billion in taxes over 10 years by building its next factory outside of the United States, in a country such as Malaysia.

Such a decision, which would be worth $5 billion or more to the host nation, could come in the next year, Barrett said, unless the company decides to upgrade one of its sites in the United States.

"That weighs heavily on our minds, our directors' minds, on our shareholders' minds," Barrett said during a visit to Reuters Times Square offices. Though Intel has been criticized for seeking corporate welfare, Barrett said the company was pushing for the United States to give incentives that lower tax rates for companies that invest in the country.

"My opinion is it's unlikely the government will overcome its current position," he said.

"There are many locales that you can go to that have much lower corporate tax rates, even tax holidays for a period of time, and also capital incentives or training incentives at a national level," he said.

The 65-year-old Barrett, who is set to become Intel's chairman on May 18 at the company's annual stockholder meeting, has long highlighted what he views as the shortcomings of US policies. Though based in California, Intel derives most of its revenue from overseas.

Heaping scorn on policies that keep green cards out of the hands of foreign graduates of US universities and make truly high-speed Internet access a rare luxury, Barrett minced few words about his distaste for the federal bureaucracy.

"I challenge you to find anything coming out of Washington that smells like a digital initiative to increase US competitiveness," he said, contrasting that with e-government initiatives in the United Kingdom, France and Germany, and smaller places such as the United Arab Emirates.

Turning away educated people who want to immigrate to the United States "has to be the dumbest thing in the world," he said.

"We allow people in the United States who are either here illegally and at the lower level of the value-add or work-force chain - the weak, the sick, the infirm," he added. "We allow everybody in but the value-add people who have educational capabilities and the ability to contribute to the economy."

"If we haven't got it bass-ackward I don't know what we're doing," he said.

Saving his kind words for foreign capitals, Barrett said Intel was increasingly looking at India, which he said was becoming an attractive place to set up an assembly and testing facility, the lower-tier of Intel's manufacturing operations.

Earlier in May, India's information technology minister said he would travel to the United States to meet with Intel about setting up such a factory. Barrett said the comments were news to him. "As far as I know, none of them has an appointment yet with us," he said.

"That's beside the point," he said. "India is actually becoming more competitive as a location for assembly-test."

Europe, meanwhile, is also contributing to what he called the leapfrogging of the United States. "If you were to look at Old Europe - UK, Germany, France, Italy - each one of those governments has officially announced major programs to increase their compute infrastructure," he said.

"It's still a very aggressive place to do business."

[america-rules]

Tellin the truth !

[angkor]

"My opinion is it's unlikely the government will overcome its current position," he said.

Haha.

Anyone else see the prep work being done for a wholesale move to India and SE Asia?

Intel has already made the decision, this is merely transparent PR.

[dsc]

Hey, he's doing business in a country where letting a company keep some of its money--instead of taxing it away--is derided as "corporate welfare."

I hate to see it happen, but how can you fault them for seeking greener pastures?

[angkor]

I'm not faulting their motives, I'm faulting their transparent mea culpa.

They should just say "We've already decided, we're outta' here."

And they should move their tax home to Malaysia or India while their at it. Low taxes and no bureaucracy there, eh? (/sarc)

[carl in alaska]

Intel's not going to make a major move to India or SE Asia for one big reason: although our tax policies discourage investment here, the United States has much greater political stability than India or any country in SE Asia (except perhaps Japan.) When corporate leaders invest $2 billion into a factory, they certainly don't want a revolution to happen and some dictator or socialist party taking power who may seize their factory or tax them much more than they're taxed in America. Also, I've seen more quality control problems in distant offshore factories than I've seen in American factories, and quality problems are very costly in Intel's business. Sometimes local factory management breaks down overseas because of a language barrier with Americans or poor education of some employees. I've heard some Indian executives say that American software engineers are six times more productive than Indian engineers.

[angkor]

You just provided about 5 good reasons why Intel shouldn't plan to move its operations abroad.

But that's what they say they'll be doing.

[Cronos]

"We allow people in the United States who are either here illegally and at the lower level of the value-add or work-force chain - the weak, the sick, the infirm," he added. "We allow everybody in but the value-add people who have educational capabilities and the ability to contribute to the economy."

Quite correct -- why do we take in Mexican low level, unskilled workers and not take in highly skilled personnel from India?

[Cronos]

And they should move their tax home to Malaysia or India while their at it. Low taxes and no bureaucracy there, eh? (/sarc)

I think you're wrong -- India and Malaysia are bending over backwards to invite these companies in -- giving them nearly decade long tax holidays and/or very low corporate taxes after that.

[angkor]

I stand corrected.

[America's Resolve]

I don't see his words in the same light that most on this thread do.

I see him saying: We don't want to pay any taxes, so we're going to move.

i see him saying: We don't want to pay any but the most meagre salaries, so we're going to move.

i see him saying: We do want to sell here though since this is the richest market in the world.

I see him saying: We want low wages, low taxes, maximum profitability and an open market.

I see him as a greedy sob and screw America and Americans.

[Zathras]

You should try working for him.

He drove out of the company some of our finest minds and hardest workers.

[Logophile]

I see him saying: We want low wages, low taxes, maximum profitability and an open market. . . . I see him as a greedy sob and screw America and Americans.

You apparently believe the man is greedy because he doesn't like high taxes or high expenses, and wants to be free to do business without heavy government interference.

Tell me, do you ever complain that your taxes are too high? Do you shop around for the best bargain when buying goods and services? Do you dislike spending time in goverment offices (say, the Department of Motor Vehicles) filling out forms and waiting to be served? If so, then by your standards you are greedy too.