In Praise of Apple's Low Taxes

[Doubletap]

By Edward Hudgins

May 24, 2013 -- Apple Inc. is under attack by politicians for “avoiding” paying $44 billion in American corporate taxes.

Sen. Carl Levin (D-Mich) complained about tax “gimmicks” and Apple’s “unfair behavior,” saying “loopholes in our tax laws and regulations allow many companies … to shift enormous amounts of income from this country to other countries.” Making the whining bipartisan, Sen. John McCain (R-Ariz) complained that Apple “is one of the largest corporate tax avoiders.”

But in fact it's the politicians who deserve condemnation, not Apple.

First, as Apple CEO Tim Cook pointed out in Congressional testimony, his company paid all the corporate taxes it legally owed—estimated to be around $6 billion. It broke no law.

Second, anyone with a proper sense of self-worth seeks to pay no more taxes than they legally owe. If that’s “tax avoidance,” everyone does it and should do it. What kind idiot would Cook be if he said to his shareholders “Gee guys, let’s fork over tens of billions more to the feds above and beyond what we’re required to do”?

Third, if Apple had shoveled more of its cash into the federal government’s insatiable maw, this would have meant some combination of higher prices for Apple consumers, less Apple investment in developing cool new products, lower prices for Apple stock (check your portfolio!), and less profits for the individuals who earned it. Note: none of those “earning it” are members of Congress.

Fourth, the huge, arcane, incomprehensible tax code is a political document. Every deduction is there because Congress put it into law, whether it’s for oil companies purchasing drilling equipment or Green consumers purchasing Chevy Volts. Yes, it’s a mess. But…

Fifth, the reason the tax code is a mess is that political power is the coin of the realm. Few companies can stay “above politics” and survive. They always must watch for competitors who try to use the tax code or regulations to screw them. So every interest group—every business—tries to influence Congress to get benefits or at least protections worked into the law—and the politicians oblige. The result is a tangled, corrupt, crony-capitalist mess.

Conclusion: Apple was not trying to screw anyone, just trying to use every legal means to keep from being looted.

Neither Apple nor any enterprise or individual needs to justify why they should keep their own money. The government must justify why it should take it away since the only legitimate purpose of government is to protect our lives, liberty and—yes!—property. Most government activities nowadays are by no rational standard authorized by the Constitution. Most tax money is spent by political elites who arrogantly presume to run our lives.

So let’s praise Apple both for being one of the world’s most productive companies and for keeping its tax bill low. And let’s condemn politicians who try to cripple the productive while demanding that the productive turn over more of the fruits of their productive efforts to politicians to be wasted.

 

[Lakhota]

I have nothing but disdain for Apple's tax evasion.

 

[tooAlive]

I have nothing but disdain for Apple's tax evasion.

Right? Who in their right mind would use our own tax laws to legally keep more of the money they've earned?

How much extra money do you send to the IRS every year, Lakhota?

 

[AmazonTania]

I have nothing but disdain for Apple's tax evasion.

Do you have an accountant? If so, why?

 

[boedicca]

I have nothing but disdain for Apple's tax evasion.

It's not tax evasion to file tax returns that are perfectly legal.

 

[Politico]

I have nothing but disdain for Apple's tax evasion.

It's not tax evasion to file tax returns that are perfectly legal.

He's just jealous. Ignore him.

 

[Darkwind]

By Edward Hudgins

May 24, 2013 -- Apple Inc. is under attack by politicians for “avoiding” paying $44 billion in American corporate taxes.

Sen. Carl Levin (D-Mich) complained about tax “gimmicks” and Apple’s “unfair behavior,” saying “loopholes in our tax laws and regulations allow many companies … to shift enormous amounts of income from this country to other countries.” Making the whining bipartisan, Sen. John McCain (R-Ariz) complained that Apple “is one of the largest corporate tax avoiders.”

But in fact it's the politicians who deserve condemnation, not Apple.

First, as Apple CEO Tim Cook pointed out in Congressional testimony, his company paid all the corporate taxes it legally owed—estimated to be around $6 billion. It broke no law.

Second, anyone with a proper sense of self-worth seeks to pay no more taxes than they legally owe. If that’s “tax avoidance,” everyone does it and should do it. What kind idiot would Cook be if he said to his shareholders “Gee guys, let’s fork over tens of billions more to the feds above and beyond what we’re required to do”?

Third, if Apple had shoveled more of its cash into the federal government’s insatiable maw, this would have meant some combination of higher prices for Apple consumers, less Apple investment in developing cool new products, lower prices for Apple stock (check your portfolio!), and less profits for the individuals who earned it. Note: none of those “earning it” are members of Congress.

Fourth, the huge, arcane, incomprehensible tax code is a political document. Every deduction is there because Congress put it into law, whether it’s for oil companies purchasing drilling equipment or Green consumers purchasing Chevy Volts. Yes, it’s a mess. But…

Fifth, the reason the tax code is a mess is that political power is the coin of the realm. Few companies can stay “above politics” and survive. They always must watch for competitors who try to use the tax code or regulations to screw them. So every interest group—every business—tries to influence Congress to get benefits or at least protections worked into the law—and the politicians oblige. The result is a tangled, corrupt, crony-capitalist mess.

Conclusion: Apple was not trying to screw anyone, just trying to use every legal means to keep from being looted.

Neither Apple nor any enterprise or individual needs to justify why they should keep their own money. The government must justify why it should take it away since the only legitimate purpose of government is to protect our lives, liberty and—yes!—property. Most government activities nowadays are by no rational standard authorized by the Constitution. Most tax money is spent by political elites who arrogantly presume to run our lives.

So let’s praise Apple both for being one of the world’s most productive companies and for keeping its tax bill low. And let’s condemn politicians who try to cripple the productive while demanding that the productive turn over more of the fruits of their productive efforts to politicians to be wasted.

Does everyone understand and see how the narrative is written?

Apple did not 'AVOID' anything. They were never obligated to pay an additional 44 billion dollars in taxes. They have broken no law.

 

[FA_Q2]

I have nothing but disdain for Apple's tax evasion.

I despise the asinine tax laws that this nation creates while you despise people who follow the law. Can you not see how asinine you are being (never mind LK, we know you can’t)

Even worse, that tax law exists exactly because of people like you advocate for government payoffs and handouts to those ‘less fortunate’ or that are doing the ‘right’ kind of business. You can’t have green energy kickbacks and then be upset at Apple for not putting themselves out of business by not taking advantage of a broken tax system.

 

[georgephillip]

Bill Black has spent decades studying white collar crime:

"William Kurt Black (born September 6, 1951) is an American lawyer, academic, author, and a former bank regulator.[1] Black's expertise is in white-collar crime, public finance, regulation, and other topics in law and economics. He developed the concept of 'control fraud', in which a business or national executive uses the entity he or she controls as a "weapon" to commit fraud."

He's makes the case in this recent interview that Apple and its Irish shell are felony violations of US tax laws:

"JAY: Go back to the Apple case. How do they get the money into their U.S. bank accounts and then don't have to pay tax on it? And how do they call it--claim that it's in Ireland if it's sitting here?
BLACK: Okay. So here the series of things. First, Ireland deliberately became a tax haven as a strategy about 20-plus years ago when it reduced its corporate tax rate to half the regular corporate tax rate in Europe. So that's the beginning of the story. And a lot of U.S. corporations in particular go to Ireland.

"Now, the second part of the story is a key scam which is not being treated as unlawful, even though it should be treated as unlawful and people should be punished for felonies for doing it. And this goes by the arcane name of transfer pricing. And what transfer pricing means is I jiggle the accounting to make it appear that the vast bulk of the
earnings occurred in the nation with the lowest tax rate, which of course is back to Ireland.

"Now, this is easier in the context of high-tech companies, because the earnings, of course, you know, not that much of the cost is attributable to the glass and the electronics; it's mostly the marketing and the technology, the intellectual property. And so you assign virtually all the profits to the intellectual property component.

"JAY: And then you assign the rights to the intellectual property to your shell in Ireland.
BLACK: That's correct. You create a shell, except that the shell isn't really in Ireland, necessarily. It's of course actually run out of the United States. But to the Irish, they're told that that is a U.S. entity, and the Irish corporate tax is not assessed on earnings of U.S. entities that are not located in Ireland."

 

[Dugdale_Jukes]

I have nothing but disdain for Apple's tax evasion.

Do you have an accountant? If so, why?

Because corporations working through lobbyists have bought enough federal influence to make American tax codes byzantine labyrinths filled with gordian knots. In a decent country no law would be too complex for the average citizen to understand, and all law would be across the board rather than targeted to specific sectors or constituents through opaque legal veils.

The amount of money decent people spend on cultural parasites in finance and law is as much of a crime against the citizens of the United States as the sale of influence to lobbyists.

As many have observed, the real crime in America today is what is legal.


The law is the law. If Apple has done nothing illegal, there it is. All honest people can agree not all laws are good laws.

 

[ScienceRocks]

If we raise the taxes on apple then they will move over sea's.

 

[editec]

But in fact it's the politicians who deserve condemnation, not Apple.

Absolutely spot on correct.

 

[Sallow]

But in fact it's the politicians who deserve condemnation, not Apple.

Absolutely spot on correct.

No it's not.

Apple didn't take it upon itself to act in an ethical manner in relation to tax law.

Quite the opposite. It used it's success to help cobble a system that keeps them from paying their fair share.

 

[Sallow]

By Edward Hudgins

May 24, 2013 -- Apple Inc. is under attack by politicians for “avoiding” paying $44 billion in American corporate taxes.

Sen. Carl Levin (D-Mich) complained about tax “gimmicks” and Apple’s “unfair behavior,” saying “loopholes in our tax laws and regulations allow many companies … to shift enormous amounts of income from this country to other countries.” Making the whining bipartisan, Sen. John McCain (R-Ariz) complained that Apple “is one of the largest corporate tax avoiders.”

But in fact it's the politicians who deserve condemnation, not Apple.

First, as Apple CEO Tim Cook pointed out in Congressional testimony, his company paid all the corporate taxes it legally owed—estimated to be around $6 billion. It broke no law.

Second, anyone with a proper sense of self-worth seeks to pay no more taxes than they legally owe. If that’s “tax avoidance,” everyone does it and should do it. What kind idiot would Cook be if he said to his shareholders “Gee guys, let’s fork over tens of billions more to the feds above and beyond what we’re required to do”?

Third, if Apple had shoveled more of its cash into the federal government’s insatiable maw, this would have meant some combination of higher prices for Apple consumers, less Apple investment in developing cool new products, lower prices for Apple stock (check your portfolio!), and less profits for the individuals who earned it. Note: none of those “earning it” are members of Congress.

Fourth, the huge, arcane, incomprehensible tax code is a political document. Every deduction is there because Congress put it into law, whether it’s for oil companies purchasing drilling equipment or Green consumers purchasing Chevy Volts. Yes, it’s a mess. But…

Fifth, the reason the tax code is a mess is that political power is the coin of the realm. Few companies can stay “above politics” and survive. They always must watch for competitors who try to use the tax code or regulations to screw them. So every interest group—every business—tries to influence Congress to get benefits or at least protections worked into the law—and the politicians oblige. The result is a tangled, corrupt, crony-capitalist mess.

Conclusion: Apple was not trying to screw anyone, just trying to use every legal means to keep from being looted.

Neither Apple nor any enterprise or individual needs to justify why they should keep their own money. The government must justify why it should take it away since the only legitimate purpose of government is to protect our lives, liberty and—yes!—property. Most government activities nowadays are by no rational standard authorized by the Constitution. Most tax money is spent by political elites who arrogantly presume to run our lives.

So let’s praise Apple both for being one of the world’s most productive companies and for keeping its tax bill low. And let’s condemn politicians who try to cripple the productive while demanding that the productive turn over more of the fruits of their productive efforts to politicians to be wasted.

Does everyone understand and see how the narrative is written?

Apple did not 'AVOID' anything. They were never obligated to pay an additional 44 billion dollars in taxes. They have broken no law.

Does everyone understand that if that's indeed the case, it's a huge problem?

 

[ScienceRocks]

Apple has the choice to go to China or somewhere else. This is the way it is.

 

[Sallow]

Apple has the choice to go to China or somewhere else. This is the way it is.

Yup.

And that tax law makes it profitable.

That's a problem.

 

[zeke]

Hey you corporation lovers. IF Apple gave their lobbyists enough money to influence Congress to the point where, instead of Apple paying taxes to the US Treasury, the US Treasury had to pay Apple 5 billion dollars, would that be a good thing and OK with you all?

I mean, Apple could go to China. Wait a minute, Apple is IN China. Wouldn't it be great to have millions and millions to spend on lobbyists to make things happen just for YOU? Like Apple and other major corporation do?

BTW don't buy Apples' product if you don't like Apple. Only apples I own are on the kitchen counter.

 

[georgephillip]

After criticizing the US Senate for daring an assault on Apple, the WSJ tells us we must look forward to reducing the US corporate tax rate to zero.

"And then--this is in the same two sentences. And then the Treasury, it says, of the United States could sit back and get wealthy on all the additional revenues it would get with a zero tax rate."

Apple Achieves Holy Grail of Tax Avoidance

 

[boedicca]

Bill Black has spent decades studying white collar crime:

"William Kurt Black (born September 6, 1951) is an American lawyer, academic, author, and a former bank regulator.[1] Black's expertise is in white-collar crime, public finance, regulation, and other topics in law and economics. He developed the concept of 'control fraud', in which a business or national executive uses the entity he or she controls as a "weapon" to commit fraud."

He's makes the case in this recent interview that Apple and its Irish shell are felony violations of US tax laws:

"JAY: Go back to the Apple case. How do they get the money into their U.S. bank accounts and then don't have to pay tax on it? And how do they call it--claim that it's in Ireland if it's sitting here?
BLACK: Okay. So here the series of things. First, Ireland deliberately became a tax haven as a strategy about 20-plus years ago when it reduced its corporate tax rate to half the regular corporate tax rate in Europe. So that's the beginning of the story. And a lot of U.S. corporations in particular go to Ireland.

"Now, the second part of the story is a key scam which is not being treated as unlawful, even though it should be treated as unlawful and people should be punished for felonies for doing it. And this goes by the arcane name of transfer pricing. And what transfer pricing means is I jiggle the accounting to make it appear that the vast bulk of the
earnings occurred in the nation with the lowest tax rate, which of course is back to Ireland.

"Now, this is easier in the context of high-tech companies, because the earnings, of course, you know, not that much of the cost is attributable to the glass and the electronics; it's mostly the marketing and the technology, the intellectual property. And so you assign virtually all the profits to the intellectual property component.

"JAY: And then you assign the rights to the intellectual property to your shell in Ireland.
BLACK: That's correct. You create a shell, except that the shell isn't really in Ireland, necessarily. It's of course actually run out of the United States. But to the Irish, they're told that that is a U.S. entity, and the Irish corporate tax is not assessed on earnings of U.S. entities that are not located in Ireland."

This is hysterical nonsense and completely ignores that each country in which a company does business has an army of tax collectors to get as much as they can.

Tax treaties exist between countries in order to deal with the double taxation issue. (The lunacy in the U.S. right now is insisting on double taxation - taxing income earned in other tax jurisdictions). Transfer pricing is done for an operation to take on its share of the company's cost structure. If development is done in the U.S. for a product that is sold around the world, the international sales pay a royalty (transfer price) for their share of that expense base.

There are also variants for the nature of the business entity (marketing or liaison office, which are generally handled on a cost plus basis up to full subsidiaries, which recognize revenue and pay royalties or full transfer pricing).

Countries, such as Ireland, use low tax rates to encourage business to locate there. Quelle surprise! We see Texas, Utah and other low tax states doing the very same thing in the U.S. today. Is it TAX AVOIDANCE for Google to have an office in Texas instead of locating employees in CA?

You Total Economic Illiterates With Severe Cognitive Dissonance persist in the idea that taxes don't affect behavior. Yet you favor taxes on cigarettes to discourage smoking and high gas taxes to discourage gas guzzlers. Well, what do you think high taxes on business are supposed to accomplish?

 

[FA_Q2]

Hey you corporation lovers. IF Apple gave their lobbyists enough money to influence Congress to the point where, instead of Apple paying taxes to the US Treasury, the US Treasury had to pay Apple 5 billion dollars, would that be a good thing and OK with you all?

I mean, Apple could go to China. Wait a minute, Apple is IN China. Wouldn't it be great to have millions and millions to spend on lobbyists to make things happen just for YOU? Like Apple and other major corporation do?

BTW don't buy Apples' product if you don't like Apple. Only apples I own are on the kitchen counter.

It seems to be okay with you.

I, and many that you incorrectly label in your statement, advocate for completely ridding ourselves of tax loopholes and creating a flat tax system. Those on the left on the other hand want this tax code to persist. Granted, many claim that they want big oil and farms to lose subsidies and tax favors but as soon as the light turns on their own pet project, oh no. Green energy NEEDS that payoff. Wind MUST have a subsidy. We NEED to keep those tax rebates for cars, new windows, shiny new water heaters etc. etc.

One tax favor leaves the doors open for others. If you don’t want this travesty from happening you need to get the government out of business. Set a tax rate and then collect it to fund the government, NOT to push a bullshit political agenda.