Wage Requirements For Interns In Not-For-Profit Businesses: Fill & Download for Free

When and why did providing value in exchange for profit become unethical? What reasonable replacement is there for capitalism that allows for profit based on merit?There’s nothing ethical or unethical about “providing value in exchange for profit”, per se. Ethical concerns arise in context, not in the abstract.It’s reasonable to say that ‘providing value in exchange for profit’ is the ideal function of capitalism, but when people complain about American capitalism they aren’t complaining about an abstract ideal, they’re complaining that American capitalism doesn’t live up to that ideal.See, “providing value in exchange for profit” is not all that happens in a real-life marketplace. Other things happen, too. Like fraud, like monopolism, like anti-competitive behavior, like corruption, bribery, and market failures like externalities and… well, organized crime. Well, those kinds of things happen, and they raise substantial ethical and moral considerations.When people talk about problems to do with capitalism, they’re not arguing that “providing value in exchange for profit” is the problem, they’re arguing things like this:…That it’s problematic when the social contract (particularly, between labor and capital) has been so eroded that most people work more today, more productively, for less buying power than they have in generations, while their employers keep more of the gains from that productivity increase.[For most Americans, real wages have barely budged for decades | Pew Research Center] [Why Wages Aren’t Growing in America] [Opinion | Why Real Wages Still Aren’t Rising]…that it’s a problem when fraudulent loan administrators are able to enrich themselves by driving their ‘customers’ into technical default on their loan obligations, even when they pay on time: [The incredible, rage-inducing inside story of America's student debt machine]…that it’s problematic when profit-driven enterprises save a little money by dumping waste that negatively impacts people (or puts increased costs to those) downstream/downwind: [A Western Ky. Coal Plant Polluted The Water, But Won't Pay Any Fines]…that it’s problematic when in the name of profits and efficiencies, we do things that aren’t in the public interest. If we don’t organize to protect the commons, regular capitalist thinking would instantly ensure that the Tragedy of the commons would be realized.Capitalism is a fine system for organizing capital and labor efficiently, but it has its downsides and problems that definitely require managing. It doesn’t solve every class of problem, because not every problem presents a profit opportunity. Healing sick, poor people? They don’t have money, so markets don’t seek to solve that problem. Keeping the environment sustainable? That doesn’t make anyone rich today.What’s more, every economic system (be it capitalism, socialism, feudalism) has in it the opportunity for actors within it to enrich themselves unfairly at others’ expense. For any of them to work, they need regulation and reasonable care taken to keep the abuse and corruption from causing trust in the system to collapse.It’s interesting that the question is framed in abstract terms like “providing value in exchange for profit”, as if that was what anyone was complaining about. Weasel-language like this is an obvious effort to avoid confronting the issue at hand: there is a deficit in public trust when it comes to today’s regulation and management of markets and capital, not in the abstract ideals of capitalism themselves. By framing the complaint as if it were against the ideal, it pretends that anyone complaining hates the good parts (that by implication there aren’t real problems worth talking about or fixing). An absurd deflection.But since we’re on the subject, there is the strong sense in the American public that the game is rigged, that it is fundamentally unfair enough that it must be confronted. [1] [2] [3]We live in a place and time in which white collar financial crime is not just commonplace, it is pervasive. Despite the presence of laws on the books against it, enforcement of these laws is distressingly lax, and often amounts to a slap on the wrist- a ‘cost of doing business’, if you will. The sense that the folks who caused the financial crisis (and became incredibly wealthy thereby, as millions of people lost their homes and lifes’ savings) will only have learned to do it again, but bigger next time, is a flash-point in what amounts to a crisis of confidence:As we approach the 10th anniversary of the 2008 crash, ProPublica’s Jesse Eisinger reminds us that no top bankers were ever “held accountable for the biggest financial crisis since the Great Depression.… No one. No top officer from any major bank went to prison.” ~[Past failures to punish white-collar crime helped produce Trump]It’s no accident that we have the sense of white-collar criminals acting with impunity; they face very little oversight, and not by accident:Resources have been stripped from white-collar enforcement. The FBI shifted agents to work on international terror in the wake of 9/11. White-collar cases made up about one-tenth of the Justice Department’s cases in recent years, compared with one-fifth in the early 1990s. The IRS’ criminal enforcement capabilities have been decimated by years of budget cuts and attrition. The Federal Election Commission is a toothless organization that is widely flouted. ~[Why Manafort and Cohen Thought They’d Get Away With It — ProPublica]…meanwhile, the regulators that are on the beat have very strong incentive to make nice with the institutions they regulate; there exists a revolving-door arrangement between them and regulatory agencies that ensures regulators use the kid-gloves when doing their work:The guilty plea of Michael Cohen was announced with great fanfare by Robert Khuzami, the current deputy US attorney for the United States Attorney’s Office for the Southern District of New York. He proclaimedthat Cohen’s conviction “serves as a reminder that we are a nation of laws, with one set of rules that applies equally to everyone.”If Khuzami’s name rings a bell for some, it is because he was once the general counsel for the Americas for Deutsche Bank from 2004 to 2009, and then went to the SEC as head of enforcement. In the latter position, Khuzami’s intense conflicts of interest from his previous role at DB guaranteed there would be no serious investigation of collateralized debt obligation (CDO) abuses.Indeed, his career exemplifies the revolving-door culture that has characterized the DC-Wall Street nexus, which makes one prone to regulatory capture, and correspondingly lax when it comes to prosecuting the very rule of law that Khuzami himself trumpeted in the wake of the Cohen convictions. ~[Past failures to punish white-collar crime helped produce Trump]In effect, this means that the cops on the beat are not only in league with the institutions they purport to regulate, they are often alumni of these same organizations, who in effect decline to make white-collar crime more consequential than any other kind of business expense.If you look at the last 7 consecutive Secretaries of the Treasury, they are all alums of a single financial institution. If you look at the financial industry in its gestalt, it is so deeply entwined in American politics and its regulation that this observation rings eerily true:Now, this is not a problem to be pinned on providing value in exchange for profit, and it is not even a problem specific to capitalism. It is in the broadest sense a market failure, a moral failure, and a political problem- one that creates conditions we have every incentive to correct.The question asks when and why “providing exchange in value for profit” became unethical, but this language is pretty clearly a deflection, a way to present our options as ‘keep what we’ve got, or risk throwing the baby out with the bathwater’.We’re not really seriously considering doing away with capitalism, it’s the corruption and white collar crime we want to be rid of.Footnotes[1] Why have no CEOs been punished for the financial crisis?[2] How Wall Street’s Bankers Stayed Out of Jail[3] Terms of Service Violation

As the question notes, California has strict requirements for an individual to be considered an intern, thus not subject to minimum wage requirements (i.e., the individual need not be paid).The sole workaround of which I am aware (and it is not much of a workaround), is that laws pertaining to interns do not apply to those who volunteer services for public service, religious or humanitarian purposes. (See discussion at Unpaid Interns: What You Need to Know.)I suspect that your startup is a private-sector for-profit business, thus anyone who does not satisfy the state's internship requirements must be paid at least minimum wage.

To start, for the sake of accuracy, let’s make some clarifications.Amazon recorded a provision for income taxes in 2018 of $1.2 billion. Of this amount, $436 million was provisioned for U.S. Federal Taxes, $327 million for U.S. State Taxes and $434 million for International Taxes.Out of the U.S. Federal Tax amount, $565 million was deferred and negative $129 million (i.e. “less than zero”) was provisioned for current-year obligations:Source: Amazon 10-K (2018) (Note 9, p. 62)In accounting-speak, “provision” is a fancy way of saying “estimate”. For example, in 2018, the tax provision includes a “one-time provisional tax benefit of the U.S. Tax Act recognized in 2017”. The Tax Cuts and Jobs Act of 2017[1] reduced the corporate tax rate from 35% to 21%, and this shows up as a benefit for profit-generating corporations like Amazon. Translation: what happened here is that the previously estimated figure was re-estimated based on recent changes in tax laws.Actual taxes paid are another matter, although it just so happens that for 2018 they were pretty much the same (also $1.2 billion). Normally, these numbers are different. Amazon’s 10-K does not provide a breakdown of this amount between U.S. Federal, U.S. State and International.With this out of the way, let’s look at how Amazon managed to reduce its current-year U.S. Federal taxable income to the point where it could record a negative provision in 2018. Our tax code is complicated, and this means there are a lot of tricks that you can do to legally reduce taxes or push them out as far into the future as possible.Aggressive re-investment. Amazon plays in a number of sectors that (i) feature significant long-term growth opportunities and (ii) require significant capital or technology investment to capture. Historically, the company has re-invested nearly all of its growth back into the business, including the creation of entirely new market segments from scratch — e.g. how it parlayed internal technology services into a third-party business (Amazon Web Services) that is now the largest contributor to consolidated group operating profit. Heavy re-investment, whether through capital assets (more on this below) or hiring of high-salaried technology workers, will serve to reduce taxable income.It took a long time before Amazon started generating GAAP[2] profits. Even after it started generating GAAP profits, the company still had to burn through all of the tax losses accumulated in the earlier, ramp-up years. It wasn’t until 2009 that Amazon’s retained earnings account on the balance sheet turned positive. And it has only been the last couple years where the company has really started to see its profits increase to substantial levels relative to its market cap.On top of this, remember that U.S. companies keep two sets of books, one for GAAP accounting and the other for taxes. This is perfectly legal, as the rules for tax treatment are often very different than GAAP treatment. This means that even as its accumulated GAAP earnings finally caught up in 2009, accumulated losses for tax purposes would take much longer to burn up.One of the key GAAP vs. tax accounting differences that Amazon takes advantage of is accelerated depreciation.Accelerated depreciation. Amazon is a capital-intensive business that requires significant capital to grow, both for its core e-commerce operation (logistics and fulfillment) as well as its technology services (Amazon Web Services). For e-commerce, it invests in warehouses and the equipment and machinery within the warehouses. For cloud/technology services, it invests in servers, networking equipment and some capitalized software development to expand capacity to meet both internal needs and that of third-party customers.These investments are typically made via something called a “capital lease”. Capital leases allow companies to finance the purchase of long-lived assets, but for tax purposes treat them like normal capital assets. As a capital asset, the company can take a depreciation charge for tax accounting purposes. Companies typically try to “accelerate” as much of the depreciation as possible, which has the net effect reducing current-year taxable income by pushing profits farther out into the future.This accelerated depreciation shows up in something called “deferred taxes”. When a company pushes taxable income into the future, this shows up as a future liability on the balance sheet through the deferred tax liability account. To the extent tax laws stay the same, at some point the company will need to pay those taxes. Of course, most companies, Amazon included, try their best to push the actual bill as far out into the future as possible.Other cool tricks. Interestingly, the largest adjustment to Amazon’s 2018 income tax provision was an adjustment made for stock-based compensation.Stock-based compensation arises when companies like Amazon issue stock options to employees. When equity is awarded to employees, a complicated calculation is performed — typically by the HR department — to calculate the value of the equity, using models with fancy-sounding names (e.g. the “Black-Scholes”[3] formula).However, in the time from when the equity award was issued to when it was exercised, the share price invariably changes. In the case of Amazon, the direction has historically been upwards, often at a very steep slope!When this happens, tax accounting rules[4] allow the company to calculate how much higher the realized equity award was compared to the original estimate. The difference between these two numbers gives rise to something called “excess tax benefits from stock-based compensation” and has the effective of lowering current-year income tax provisions.This is one reason why companies love to issue options!Profit-shifting. Another common practice is maximizing the allocation profits to overseas entities in jurisdictions where tax rates are lower. The most profitable segment within Amazon is its cloud/technology services division, and a not-insignificant proportion of these revenues are generated overseas. As I discuss here[5], because of the intangible nature of technology and software services, it is quite easy to structure things so that a big chunk of these profits are recognized offshore to lower the overall tax bill.In my view, Amazon is actually not as aggressive compared to some other technology companies at shifting profits overseas. A big part of this is, as described earlier, Amazon does not generate significant profits to begin with (again, relative to its market cap). The other reason is that a significant amount of its profit is actually generated onshore vs. offshore. For example, its International operations are barely profitable (as you can see in the first table above).However, as the company’s profits start to significantly ramp up, expect more of an effort to use international tax havens like Ireland and the British Virgin Islands to minimize its overall tax bill.As it states in its 10-K (p. 63) , “we intend to invest substantially all of our foreign subsidiary earnings, as well as our capital in our foreign subsidiaries, indefinitely outside of the U.S. in those jurisdictions in which we would incur significant, additional costs upon repatriation of such amounts.”I just want to add that even though Amazon’s corporate tax bill is relatively low (or even non-existent) at the federal level, the company is still responsible for generating significant tax revenue when you analyze things holistically. Amazon pays tens of billions of dollars in wage and compensation income to its employees, the majority of whom are based in the United States. A significant portion of the wages will fill government coffers in the form of federal and state-level income taxes.Its spending (on capital leases and other non-compensation related expenses) also indirectly generates taxable income for other companies in its eco-system.Finally, unlike many other multinational corporations, Amazon is actually heavily investing back into the United States, both in terms of hiring workers and investing in next-generation warehouse and datacenter operations.Footnotes[1] https://www.govinfo.gov/content/pkg/PLAW-115publ97/html/PLAW-115publ97.htm[2] Generally Accepted Accounting Principles (United States) - Wikipedia[3] Black Scholes Model[4] Proposed ASU—Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting[5] Glenn Luk's answer to Where does the money I pay for an iPhone go?