Faulty Intel

Former Intel exec Craig Barrett yesterday became the latest from the microprocessor company to pitch the dubious claim that the US tax policies are decimating the industry.

Just a month ago, Barrett’s successor and current CEO Paul Otellini criticized the US government for a range of what he called anti-business approaches. And Intel cofounder Andy Grove touched off the pressure with a piece in Business Week in July, in which he tackled the issues of growth with more political savvy than did his colleagues but equal conviction.

While Grove was sensible enough to couch his plea in terms that relying on startups to innovate the US back to the center of tech universe isn’t a panacea, each of the Intel execs put the onus on the US government to fix the industry’s woes.

To be sure, government policy should be designed to promote growth, job creation and innovation while at the same time not screwing over the little guy. In fact, however, conceptualizing and executing the perfect is far from easy.

There are certain contradictions in the Intel PR campaign. Barrett and Otellini want government to loosen the chains, while Grove asserts the US policy of a free market penalizes domestic companies. Further, Grove’s thesis centers around creating jobs in the US, while his colleagues seem more concerned with generating greater profits for Intel (and no, the two don’t necessarily go hand-in-hand). The troika agree, however, that tax policy must change, insisting that the US corporate tax rate is the highest in the world. What this omits, of course, is that more than 67% of American businesses pay no taxes (for the record, UP Media Group isn’t one of them. Perhaps we need better accountants.)

As Forbes pointed out in May, General Electric had an  2008 effective tax rate of 5.3%, and while its 2009 pretax income was $10.3 billion it not only paid no US tax, it recorded a tax benefit of $1.1 billion! Intel’s own tax rate was about 23% last year and in 2007, and 31% in 2008.

What Intel is suggesting is intellectually dishonest, and unbecoming one of the great American tech success stories. And, not to be too cynical, but it’s impossible not to note that while Intel’s stock price is listing, plenty of its competitors seem to be doing just fine.

It’s time Intel looked inward, and stopped blaming everyone else for problems that are largely self-created.

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About Mike

Mike Buetow is president of the Printed Circuit Engineering Association (pcea.net). He previously was editor-in-chief of Circuits Assembly magazine, the leading publication for electronics manufacturing, and PCD&F, the leading publication for printed circuit design and fabrication. He spent 21 years as vice president and editorial director of UP Media Group, for which he oversaw all editorial and production aspects. He has more than 30 years' experience in the electronics industry, including six years at IPC, an electronics trade association, at which he was a technical projects manager and communications director. He has also held editorial positions at SMT Magazine, community newspapers and in book publishing. He is a graduate of the University of Illinois. Follow Mike on Twitter: @mikebuetow