Photo: World Economic Forum
Martin Sorrell, CEO of ad agency holding company WPP, stopped by the Reuters media conference yesterday to chide U.S. and European governments for not being responsible enough about their debts and deficits. Everything he said was perfectly reasonable — “I think America is kicking the can down the road in terms of deficit reduction,” for instance — until you remember that Sorrell has made sure it pays hardly any tax at all. WPP, infamously, has gone to greater lengths than any other agency holding company to lower its corporate tax rate.
In the first half of 2011, WPP expensed just 2 per cent of its revenues in taxes. In all of 2010, it recorded just 1.6 per cent of revenues as taxes. WPP is the largest ad agency holding company in the world. It owns Ogilvy & Mather, Young & Rubicam and other venerable Madison Avenue names.
Here’s what Sorrell said about debts and deficits, per Reuters:”America really still has to deal with the deficit problem … And whilst the situation in Europe is very serious, I believe it’s a sideshow in a sense to what America has to do in dealing with its deficit.
Debts and deficits aren’t just about profligate government spending, of course. They occur because governments see declines in what they can collect in taxes. Over the last couple of years, Sorrell has made sure that the U.K. government has collected as little tax as possible from the erstwhile British WPP, even though it enjoys annual revenues of £9.3 billion (about $14.5 billion).
Photo: Google Street View
In 2008, Sorrell moved the official corporate headquarters of WPP (employees: 101,000) to this improbably tiny townhouse in Dublin in order to enjoy lower Irish tax rates.
He then demanded the Conservative Party lower the U.K. corporate tax rate if it won the next election. Finance secretary George Osborne, the man in charge of Britain’s austerity program, said at the time, “The return of WPP would be a fantastic first step,”
WPP expensed $115.8 million as taxes on $544.1 million in taxable profits in the first half of this year, about 21 per cent, but still just a tiny fraction of its $7.6 million in revenues.So, yes, Mr. Sorrell. You’re right about tackling those debts and deficits. Pity you didn’t match your talk about sovereign debt with some words about sovereign revenues, however.
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