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Backlighting 05-25-2013 12:37 PM

In Praise of Apple's Low Taxes
 
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.

chscag 05-25-2013 03:11 PM

Then why doesn't Apple move lock, stock, and barrel out of California which is one the worst places in the US for high taxes, public waste, and deficit?

Quote:

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.
Let's not get carried away. Apple is no different than any other large corporation in the business of making money. And... politicians are what they are, politicians. :P

louishen 05-25-2013 03:19 PM

Lets all move to countries with the lowest tax rates (% of GDP)

United Arab Emirates
Kuwait
Equatorial Guinea
Oman
Qatar
Libya
Chad
Bahrain
Burma
Saudi Arabia
Angola
Congo, Republic of
Iran
Nigeria
Sudan
Afghanistan
Yemen
Algeria
Central African Republic
Cambodia
Guinea
Bangladesh
Haiti

Oh hang on. lets not

Guess I'll have to continue paying taxes to enjoy political freedom, rule of law and a working infrastructure

Backlighting 05-25-2013 03:19 PM

Quote:

Originally Posted by chscag (Post 1517205)
Then why doesn't Apple move lock, stock, and barrel out of California which is one the worst places in the US for high taxes, public waste, and deficit?
Let's not get carried away. Apple is no different than any other large corporation in the business of making money. And... politicians are what they are, politicians. :P

Not that easy to just move a company as large as Apple. Who knows, perhaps they will.

Slydude 05-25-2013 04:57 PM

Quote:

Originally Posted by louishen (Post 1517207)

Guess I'll have to continue paying taxes to enjoy political freedom, rule of law and a working infrastructure

For me the problem is not in paying of taxes as much as the double standard associated with their collection and what they are collected on. Did the same people who complained about Apple complain as publicly about Microsoft, G.E. et al. who have used similar practices?

vansmith 05-25-2013 05:08 PM

I'll bite.


Quote:

Originally Posted by Backlighting (Post 1517189)
But in fact it's the politicians who deserve condemnation, not Apple.

Because Apple moved/kept massive amounts of money overseas with the explicit purposes of protecting it from taxation? Yeah, they did make use of loopholes. There's a reason they kept the money in Ireland specifically (source). Given that, of all the people, the politicians are to blame?

Quote:

Originally Posted by Backlighting (Post 1517189)
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.

Doesn't negate the fact that Apple did what it did. Did they break the law? No but that doesn't negate the fact that they're playing the system which is questionable and potentially reprehensible. Remember, you can separate moral judgment from legal ramifications.

Quote:

Originally Posted by Backlighting (Post 1517189)
Second, anyone with a proper sense of self-worth seeks to pay no more taxes than they legally owe.

That's quite the broad and sweeping statement that unnecessarily ties perceptions of self-worth to financial solvency and unreasonably fervent protection of one's assets.

Quote:

Originally Posted by Backlighting (Post 1517189)
If that’s “tax avoidance,” everyone does it and should do it.

Attempting to play the system and robbing the government of money benefits no one. A "let's keep our money from the government" was and continues to be devastating to a system that depends on taxation to fund public projects. Might people in certain places be taxed too much? Probably but that's besides the point. This garrison mentality when it comes to financial assets is nothing short of destructive.

Quote:

Originally Posted by Backlighting (Post 1517189)
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.

That's fallacious logic at its finest. Apple has total control over its pricing structure and as-is, has one of the highest profit margins in the industry. Apple could easily take a hit to their profit margin, still invest heavily in R & D and design excellent products. This whole notion of "higher taxes means higher prices" is a joke. If that were the case, Americans would pay more for Apple products that Canadians since the U.S. has a higher corporate tax rate but that isn't the case (source). A more stark example would be Australia - a country whose corporate tax rate is 9% lower than the U.S. and a country that pays considerably higher prices for most electronics.

Quote:

Originally Posted by Backlighting (Post 1517189)
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.

This whole problem with loopholes has to do with the Irish tax code, not the American. There's nothing wrong with companies holding assets overseas. Any attempt to do otherwise would seem to contradict the principles of the free market.

Quote:

Originally Posted by Backlighting (Post 1517189)
Conclusion: Apple was not trying to screw anyone, just trying to use every legal means to keep from being looted.

Looted? You might want to look up what that word means.

Quote:

Originally Posted by Backlighting (Post 1517189)
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.

Protection of the citizens is by no means free. Regardless, if that's the only purpose of government, I suppose it should stop building roads, building schools, funding scientific research, etc. since none of that has to do with protecting the individual.

Quote:

Originally Posted by Backlighting (Post 1517189)
Most government activities nowadays are by no rational standard authorized by the Constitution.

That's not how a constitution works. Constitutions are designed specifically (in part) to outline what level of government does what (if the U.S. constitution is like any other which I presume it is).

Quote:

Originally Posted by Backlighting (Post 1517189)
So let’s praise Apple both for being one of the world’s most productive companies and for keeping its tax bill low.

Regardless of whether or not this is problematic, I find it hard to believe that Apple deserves praise for this. Even if they did nothing wrong (which they probably didn't), why should I or any other non-investor praise Apple for protecting its assets?

Quote:

Originally Posted by Backlighting (Post 1517189)
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.

Again, you really seem to be leaning heavily on this rather sensational notion that taxation is an all or nothing game, that it's either severely crippling to the point of being authoritarian in nature or, without taxes, we'll all live free and the banalities of life (roads, schools, etc.) will somehow magically take care of themselves.

RavingMac 05-25-2013 05:32 PM

I won't get into the tax avoidance and Apple issue, but will weigh in with my 2 cents worth.

My opinion is that Apple should pay zero taxes, nothing, nada, not a dime. The same thing goes for every other corporation.

Why?
Because every penny that passes through the corporation is already taxed multiple times, sales tax on materials, products and services, income taxes on salaries, capital gains on investments. Give it a rest!

I am not anti-tax by any means, but corporate taxes make zero sense to me (and, no, I don't own, operate, or work for a corporation).

iggibar 05-25-2013 07:19 PM

Apple did nothing illegal. They are the ones on the hot seat because everyone knows them. Blame a company for following your own tax laws?? Okay, then why is their list so short of companies who have done the exact same thing, or even worse? Where's G.E.? I bet GE has much more lobbyists...that's why.

Simply put, the current tax codes are in place for educated people and companies to use them for their benefit. If these people don't like it, get rid of our current tax codes. There's nothing complicated AT ALL about it! The only thing that complicates things are the stupid lobbyists who pay $$$$$ to get their way.

harryb2448 05-25-2013 07:32 PM

Isn't that so typical of a politician for complaining about any companies following the rules legislators make?

Here in Australia Federal Election due 14 September. Opposition Treasurer has already been observed on TV saying 'It is not Australian citizens fault they are not paying sufficient taxes'. In other words brace yourselves if we get in!

chscag 05-25-2013 08:19 PM

Quote:

Opposition Treasurer has already been observed on TV saying 'It is not Australian citizens fault they are not paying sufficient taxes'. In other words brace yourselves if we get in!
A very wise Ross Perot once said (when he was running for president) "Giving the government more money in taxes is like giving a drug addict more drugs"! :P

harryb2448 05-25-2013 08:35 PM

True Charlie true!

XJ-linux 05-25-2013 08:54 PM

I have no problem with Apple following the law and paying only it's legal due in taxes. My only complaint is that I don't have the leverage to have a similar arsenal of exemptions, "loopholes" and "gimmics" in my existence as a non-corporate entity. Fair is fair...

I'm a business called "Paying Dave's Family's Way Though Life and Supporting in Part Those Who Pay Little or Nothing Into the Common Good for Whatever Reasons". I'd be happy if I could do some of the stuff any company can do to defer payments, depreciate assets and write off interest/value/etc on my car, home, computer, phone, cell phone, work clothes, yard service, trash pickup, guns, appliances, phone service, internet, blah, blah, blah... I use it all (at least in part) for the business of keeping keeping Me, Inc. running, ready, available, able and qualified to work. I bet I could make every year look like a financial loss on paper if I could use corporate accounting to account of everything it takes to keep the lights on around here. Fair is fair...

If Citizens United lets companies have some broad rights as "people" so to speak, then people should be able to have some of the broad rights as "companies" as well. Maybe enjoy some of those corporate benefits they lobbied for so hard can trickle down to me? It would certainly be nice to enjoy the benefits of citizenship when needed, while enjoying a certain amount of legal distance of responsibility when needed.

No problem with Apple of GE following the law. But, all citizens (corporate or private) should all get the same, or nothing when it comes to legal guarantees, protections or restrictions by a government.

XJ-linux 05-25-2013 08:57 PM

Quote:

Originally Posted by chscag (Post 1517242)
A very wise Ross Perot once said (when he was running for president) "Giving the government more money in taxes is like giving a drug addict more drugs"! :P

Ross warned us about NAFTA as well, and yet both R & D alike seem to just love tossing jobs and money out of the country. Go figure. I miss United We Stand America. You can blame Clinton winning partly on me.

toMACsh 05-26-2013 09:12 AM

Quote:

Originally Posted by louishen (Post 1517207)
Lets all move to countries with the lowest tax rates (% of GDP)

...

Oh hang on. lets not

Guess I'll have to continue paying taxes to enjoy political freedom, rule of law and a working infrastructure

Well, around here, with an alarming percentage of bridges for vehicles rated as structurally deficient, that infrastructure is crumbling. Three bridges that I cross on the way to work are currently being replaced. I found them on the "worst" list for our state yesterday. I never knew, and how many others am I crossing that could fail?

But, yeah, on the tax thing, if governments need more revenue, change the tax laws and deal with the consequences.

osxx 05-26-2013 10:23 AM

Quote:

Originally Posted by chscag (Post 1517242)
A very wise Ross Perot once said (when he was running for president) "Giving the government more money in taxes is like giving a drug addict more drugs"! :P

Best statement yet.


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