Others, notably Senator Carl Levin, chairman of the Permanent Subcommittee on Investigations, seem to feel that Apple should be paying more taxes in U.S. jurisdictions.
In hearings held by Levin’s committee yesterday, CEO Tim Cook pointed out that Apple pays more taxes than anybody, I mean, any company; oh, wait, companies are people, too. And Senator John McCain pointed out, just as correctly, that Apple also avoids more taxes than anybody, taking into consideration its revenue and actual taxes paid.
And if Apple takes advantage of a double Irish with a Dutch sandwich or some similar arrangement, well, it could explain its actions in the same words that George Mallory used to describe his reason for attempting to climb Mt. Everest: “Because it’s there.”
It’s legal. So, why not do it?
Certainly the shareholders (when they’re not being consumers of public services) would agree. Cook argued for a friendlier tax regime and said he’d repatriate his profits if the tax rate on foreign earnings were a “single-digit number,” instead of 35%, and suggested, rather boldly in my view, that a tax rate on U.S. domestic earnings would be easier to bear if it were in the “mid 20s.”
It should be noted here that, just as in the case of labor issues at Foxconn and other Chinese contract manufacturers, in the matter of taxes Apple is far from alone in its practices. A half dozen tech companies that engage in similar behavior easily come to mind:
Apple was picked out in both cases because, given its size as the largest tech company by revenue, it is the greatest “offender.” But what Apple is doing is no different, in spirit, than the actions of any other outfit — just in magnitude. And so it is singled out for special treatment.
But here’s the thing: our government needs money to run its operations. The recent sequester has taken a bite out of vital services across the board.
Here’s a tiny example from my own experience of how Apple’s (and others’) behavior shifts tax burden from the rich to the non-rich:
Last night I received a call from the Appalachian Mountain Club (AMC), which is raising money out of season because it can’t pay for the traditional complement of (very modestly compensated) staff that keep the trails in many New England forests clear. The club had been receiving some federal money, but that flow was cut off by the sequester. So, essentially, I was being asked to fill in for what Apple won’t do.
How good could this activity be for the social fabric?
Let me make a suggestion. Apple could repatriate this year, say, $2 billion of its $100 billion in overseas retained earnings and pay $700 million in tax on it. The firm would get $1.3 billion in after-tax money, which could be used for investment or dividend payout, and the government would get some much-needed tax receipts to run for the benefit of everyone. And most of Apple's overseas powder would still be dry.
I’m just a small fry myself, but my accountant joked with me a couple of years ago, after I’d paid hefty tax bill, “They should name an aircraft carrier after you.” He’s pretty libertarian-conservative and thinks I should work harder to avoid taxes.
But I like having money free and clear, with no restrictions on usage, and that sort of money is after tax money. I don’t like twisting into unnatural contortions just to avoid taxes. And I think our government should be financed. By people who make a lot of money. Like Apple.
Twitter: RogerKay
