Tuesday, May 21, 2013

Tim Cook Testifies: Apple Games the System, Or How The Rich Stay Rich

Let's talk about taxes.
No, not those taxes, not the taxes the Tea Party doesn't want to pay because it is an educational institution which spends only 49% of its time on politics.

Not the exemption to taxes.

Let's talk about the taxes Apple, Inc. did not pay.  
Apple did not pay taxes to either Ireland or the United States for its Irish subsidiary, a shell company it set up to evade taxes.  

Here's how the game is played: Ireland taxes corporations only if the the corporation is managed and controlled in Ireland. The USA taxes corporations based on where the company is incorporated.  So Apple incorporates (a subsidiary)  in Ireland (not taxed by the US) and controls that subsidiary by having board meetings in California (not taxed by Ireland) and thus avoids being taxed on earnings of billions (millions in taxes) in either country.

Oh, and it gets better: Apple sells it's subsidiary company in Ireland some products, like iTunes or whatever, and the Irish Apple sells that stuff abroad, so there is no profit in the USA to tax. Apple files to pay taxes in neither country. Apple is laundering money, legally. If a drug lord sends money abroad to a bank to spend it through that bank, that is a high crime. If Apple does it, it is a brilliant business strategy.

You've got a phantom company paying nobody taxes.

Now, it gets way better: Tim Cook, the CEO of Apple, goes before a Senate committee and holds up a scolding finger and proclaims Apple has paid every dollar it was legally required to pay (which is to say, none) and that it also complied with not just the letter of the law but with the spirit of the law.

Mad Dog particularly liked that spirit of the law bit. He is still trying to figure out what exactly that spirit is. The spirit of not paying taxes? The spirit of gratitude to the country that provided you with skilled, educated employees, infrastructure and sustenance? Mad Dog likes that spirit thing.

And, oh, yes, Apple informed the Senators you don't want to tax Apple anyway, because if Apple gets to keep all the money it makes, it will make better decisions about what to do with that money than the government ever could. 

To which, Rand Paul swoons. 

You got to give Cook credit. The man has chutzpah. He tells the United States Senate Apple is not above the law, but outside it, and having managed to evade the law, he makes a virtue of that tax evasion.  You wouldn't want that money anyway. You wouldn't really know what to do with it. You want us to keep the money and spend it on things which we know are good to spend money on. 
 And Rand Paul says, "Amen."

Is this an amazing country?  Or what? 

Here's what Mad Dog wishes the chairman of the Senate committee, Mr. Levin, had said:  "Mr. Cook, thank you for your comments today.  I understand you feel very virtuous. I, on the other hand, think you belong in jail.  I will go back to my office now and I will consult with my staff to see if we can think of a way to tax Apple in the future in a way to recoup some of the millions of dollars you have evaded paying.  Until now, you have slipped through one loop hole or another, but we ought to be able to construct a net with mesh fine enough to catch even as slippery a worm as you."


  1. You may be a little off here Dog. Apple actually paid more in tax than any other US company. The argument is that they should pay even more. However, Congress writes the tax code and if they create loop holes it is on them. No one is required (or probably should) pay more than they are required to pay in tax. Congress needs to write better tax legislation. Apple apparently complied with all applicable tax laws which is why Mr. Cook could say what he did. I, for one, am tired of this political grandstanding by our elected representatives. Good for Cook and Apple!

  2. Anon,

    He's not exactly Warren Buffet, though is he? He does not say, "You know something is wrong when I am asked to pay less income tax than my secretary." He gets all sanctimonious and says, well we play the game by the rules. If he had stopped there, fine. But he then gets into the "spirit of the law" talk. For that he cannot be forgiven.

    Mad Dog

  3. Well, admittedly, Buffet should be running the country - seems honest, straight forward, ethical and moral. Of course, he would never agree to do it, which tells you something about the state of our politics. There should be more like him in decision making positions but, sadly, there are not. It is one of the potential weaknesses of a democracy.