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The Milton Measure

Spoiled Apple: Corporation Pays Reduced Tax

by Hari Patel on Friday, June 7th, 2013

Last week, an investigative committee in the United States Congress found that Apple Inc. had used tax avoidance schemes to get around paying billions of dollars to the government. While the company did not technically break any laws, it employed schemes that resembled some of Mitt Romney’s tricks to avoid paying his “fair share” throughout his career. As the investigation of Apple came to light, members of Congress, particularly Senators Carl Levin of Michigan and John McCain of Arizona, were outraged over this iconic company’s “cheating the nation” out of tax revenue.

However, Apple CEO Tim Cook testified before the Senate’s permanent subcommittee on investigations and staunchly defended the company’s tax policy. He declared that the company pays non-U.S. tax rates only on profits it made outside the United States, that Apple pays every single dollar of the taxes it owes, and that Apple does not rely on tax “gimmicks” or on shifting intellectual property overseas. In his much quoted testimony, he said, “We not only comply with the laws, but we comply with the spirit of the laws.” Free-market supporting senators, such as Rand Paul, advocated for Cook, and some even attempted to defend Cook for the company’s attempts to save money and increase its budget.

The case of Apple’s totally legal tax avoidance methodology does not point to any wrongdoing on the part of the company’s employees. As a company in the free market, Apple logically pays the least amount of taxes it can to maximize its profits and increase funding for product development and advertising. However, the existence of these wrongful “loopholes” suggests Congress’ systemic failure to develop proper tax legislations rather than any failure on Apple’s part.

Rand Paul correctly suggests that Apple did not act maliciously. In the intensely competitive tech markets of today, a company the size of Apple cannot afford to waste any money on paying avoidable taxes. By definition, a publically-owned company in the free market like Apple has an obligation to minimize costs and maximize revenue in order to produce the highest possible profit. If senators are suggesting that companies should not take advantage of loopholes that they wrote into the books, they clearly lack an understanding of America’s free market system.

Further, senators should not call CEOs before Congress who have done nothing to break the law. The legislature creates the law, and if lawmakers believe that tax laws are not working, they hold the responsibility to craft legislation that can improve the effectiveness of our tax laws. Obviously, the Senate has proven to be incompetent at tackling tax reform and, instead of making meaningful progress, has chosen to whine about how corporations are taking advantage of the current system. If senators think that attacking companies’ legal practices will solve the nation’s tax problems, they need to take a long, hard look in the mirror.

Another important point to examine is Apple’s positive influence on society in the United States. Apple is a source of national pride and is one of the world’s most respected companies. If the United States government does not want to have the company here, then it should feel free to create conditions such that it will leave. However, a company with a proven track record of integrity, respect, and American ingenuity should be given the respect it has earned. If senators want businesses that operate within the United States to pay more tax, they need to change the tax laws themselves.

If this nation continues to have a Congress at conflict with a functioning corporate America, a Congress so incompetent that it does not know it needs to solve its own problems, our national economic strength will be imperiled.

Short URL: http://miltonmeasure.org/?p=4949

Posted by Hari Patel on Jun 7 2013. Filed under More Opinion, Opinion, Recent Opinion. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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