As we divvied up yesterday's newspaper, Steve handed me the front section with a cover story about Apple's evasion of US taxes using a complicated, legal, money laundering scheme through Ireland, the Netherlands, and the Caribbean.
Steve thought that it was weird that we are getting stories critiquing Apple's tax and labor practices only now, after the death of Steve Jobs. Did Jobs have connections that suppressed the stories? I mocked him for looking for an international conspiracy. No, he said, the Steve Job's cult of personality repressed the story. I said that Apple's shady tax schemes is such a juicy topic that it is in the interest of every reporter to dig this up, regardless of the Jobs personality. These exposés are a huge career coup.
Maybe there is something to Steve's theory though. This weekend's White House Correspondent's Dinner was a delightful ménage a trois between government, journalism, and George Clooney. Even the bloggers who were supposed to act as a check on these guys are now in on the action. Bloggers got invites and a shoutout by the president.
Apt. 11d 
“Tax evasion” is a crime. “Tax avoidance” is what Apple was doing, if it was legal.
http://en.wikipedia.org/wiki/Tax_avoidance
I loved this quote that Ann Althouse highlighted:
“In one of his last public appearances before his death, Steven P. Jobs, Apple’s chief executive, addressed Cupertino’s City Council last June, seeking approval to build a new headquarters.
“Most of the Council was effusive in its praise of the proposal. But one councilwoman, Kris Wang, had questions.
“How will residents benefit? she asked. Perhaps Apple could provide free wireless Internet to Cupertino, she suggested, something Google had done in neighboring Mountain View.
““See, I’m a simpleton; I’ve always had this view that we pay taxes, and the city should do those things,” Mr. Jobs replied, according to a video of the meeting. “That’s why we pay taxes. Now, if we can get out of paying taxes, I’ll be glad to put up Wi-Fi.”
“He suggested that, if the City Council were unhappy, perhaps Apple could move. The company is Cupertino’s largest taxpayer, with more than $8 million in property taxes assessed by local officials last year.
“Ms. Wang dropped her suggestion.”
It would have been entertaining to see Steve Jobs debate Elizabeth Warren.
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The problem I have (tea partier manque that I am) is that big companies like Apple tend to have it both ways. Sometimes they exploit generally available loopholes, as seems to be the case with the Ireland/Netherlands scheme. When that happens, they say, “We’re just following the law as it is written. One law for everyone.” When the law as written doesn’t suit them, they lobby successfully for special tax breaks, threatening the government with loss of jobs if they don’t get the requested break.
There is a good recent example in Illinois. The legislature substantially raised taxes on middle-income taxpayers, rather than do something like cut government pension spending. I know Megan McArdle cheered, and I’ll bet Laura did too. Every small business owner has to pay those taxes. Then the state turns around and gives the Mercantile Exchange a special tax break to make up for it, lest they leave the state.
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See, I’m a simpleton; I’ve always had this view that we pay taxes, and the city should do those things,”
I don’t know about California, but around here few of the larger employers pay local property taxes. They’re either non-profit or they came with an abatement or an explicit subsidy.
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“The legislature substantially raised taxes on middle-income taxpayers, rather than do something like cut government pension spending. ”
Or tax the 1%. Or stop giving the 1% tax breaks.
I think we’re getting to the core of the problem here, which is that big business has way too much influence over government, not that government is inherently bad. I forget–what was your opinion on Citizens United? And campaign finance reform?
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See, I’m a simpleton; I’ve always had this view that we pay taxes, and the city should do those things,”
Steve Jobs — unfrozen caveman entrepreneur.
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Ragtime FTW.
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Too many initials. It’s just me still.
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“I think we’re getting to the core of the problem here, which is that big business has way too much influence over government, not that government is inherently bad.”
If the government is so predictably eager to serve as a handmaiden of evil big business, maybe it’s not so sweet and innocent? It’s like if a kid runs around with a bad crowd and gets into trouble–at some point, parents have to ask themselves, is it just bad peers, or maybe my kid has issues of his own?
(Also, bear in mind that Kelo was brought to you by the liberal and liberalish justices–Stevens, Kennedy, Souter, Ginsburg, Breyer.)
“I forget–what was your opinion on Citizens United?”
Do we get to pull the plug on the NYT’s 1st Amendment rights? Don’t tease me if you don’t mean it. They’re a corporation, too.
“And campaign finance reform?”
I don’t know about you, but I haven’t noticed corporations being less politically important after McCain-Feingold. As P.J. O’Rourke said, if buying and selling is going to be legislated, the first thing to be bought and sold will be legislators.
My personal take on all of this is that the smaller and less powerful government is, the cleaner and more transparent it’s possible to keep it. The bigger and more powerful it is, the harder it is to keep track of what all the wheels and gears are doing.
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Just to put some context around the Apple story and Ireland’s glorious 12% corporate income tax rate, the US currently sports probably the highest corporate tax rate in the world. The US staves off disaster in this area (barely) by exempting US company profits that stay overseas from US taxation. The recent Obama proposal to significantly lower US corporate income tax rates (to the 25-27% range – of course, differentiated by industry, like all good technocratic proposals) while taxing this overseas income is close to what we should expect to happen. There’s been bipartisan agreement on this general approach for a few years now and I would expect a reform similar to the administration’s proposal to pass in the next 1-2 years.
And not a moment too soon because the US is being hamstrung by an awful corporate income tax system. What’s happening is awful. I give Obama credit for proposing the change.
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“…differentiated by industry, like all good technocratic proposals…”
Yet more of this godawful favoritism. Now every burger joint is going to claim it’s a manufacturer and every cell phone booth at the mall is going to be a high tech business. What would be so wrong with just charging the same corporate tax rate for everybody? (Oh, yeah, I know–no favors to sell to the highest bidder.)
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