Apple Tax

What is it with those on the left and tax avoidance? Arranging your affairs so that you pay as little tax as possible is a normal business practice, as long as it is legal. In New Zealand we have recently had plenty of people moaning about the use of trust structures and offshore accounts, as if these things are somehow immoral.

The MacDoctor will tell you what is really immoral – politicians who spend our tax dollars without reference to the fact that it takes us a great deal of effort and hard work to earn it.

This is not a New Zealand phenomenon. A new liberal advocacy group is accusing Apple of being a tax “cheat” because they are spearheading an initiative to lobby for a flat 5% tax rate on repatriated earnings. The group, US Uncut, say that Apple and similar large corporations don’t pay their “fair share” of taxes – by which I suppose they mean the full tax rate.

““Our rallying cry is, ‘we all pay our taxes, and why don’t they?’” said Ryan Clayton, a co-founder of US Uncut. “At the same time as we’re firing firefighters, teachers and cops, it’s just really irresponsible for them to not be paying their fair share of the public burden.”

“In its fiscal year 2010, ending in September, Apple reported income of $18.5 billion and paid $2.7 billion in income taxes, or about 15 percent.”

What complete tosh. No-one is firing firefighters, teachers and cops because companies are not paying their share of tax. Cuts are being made to public services because the US government (federal and state) spends far too much money on welfare, health plans and, in the federal’s case – war. Cuts are being made because the US is in a deep recession brought on mostly by hare-brained statism ideas such as extending mortgages to people who could no more afford them than fly to the moon. It is little to do with companies legally avoiding tax – they have been doing this for a hundred years or more. The US government has bankrupted itself through poor management, not evil corporates.

Besides, Apple is not asking for more tax loopholes or even lower taxes per se. Apple is simply suggesting that companies would be more likely to repatriate their earnings to the US if the US did not charge them an exorbitant sum for the privilege. Bear in mind that, for the most part, Apple has already paid taxes overseas, often at a lower rate than the US. They have no pressing reason to give a third of their profits to Uncle Sam. So the net result of the current US tax policy is that this money stays overseas, to the detriment of the US economy.

What groups like US Uncut do not seem to get is that the government is currently receiving no tax dollars at all from these billions of dollars (perhaps as much as a trillion dollars) of overseas earnings. If they accept Apple’s suggestion, they could be earning an extra $50 billion and boosting the US economy by a trillion dollars – money that will find its way into new jobs and businesses that will easily generate the “lost” taxes (that the US is not getting anyway).

But this was never about cuts in fire fighters, teachers and cops, was it? It was always about the blinkered ideology of the left that sees all corporate activity as evil and wishes to tear it down.

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