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The Apple tax Apple laws Apple are Apple the Apple problem

Sorry for the bizarre headline, but I wanted to make sure I got the proper clickbait, er, SEO, er clickwhoring, er, credit for the following insightful observation. Which is this:

The author, one Lisa Sanders, states that she’s now boycotting Apple due to their tax avoidance strategy:

Apple, it’s over. I’m breaking up with you. Because of your tax-ducking ways, I won’t buy another phone or computer or tablet or even song from you.

I hope Lisa is just as willing to give up products from Microsoft—I guess she’s going to Linux?—which sheltered over $60 billion dollars in 2012, more than Apple’s $54 billion that year. And she better not buy that Linux box from Dell, which sheltered $16 billion in 2012. And she better not use MySQL on that machine, because Oracle sheltered $21 billion. Also, no Western Digital hard drives ($5 billion). Oh, and those shoes? Better lose the Nikes, as they sheltered $6 billion. Credit cards? Citigroup ($36 billion), Bank of America ($19 billion), and JPMorgan Chase ($22 billion) are out; I guess Lisa is going cash-only.

All of the above data was found within 30 seconds of starting to search the web; the source for the numbers is Which Fortune 500 Companies Are Sheltering Income in Overseas Tax Havens? by the Citizens for Tax Justice.

Yes, Apple shelters taxes. Yes, it’s very good at it. Yes, it sucks that they aren’t paying their fair share. But the reality is that nobody in the Fortune 500 is paying their fair share. Why? Because they owe it to their shareholders not to do so. Lisa almost got that with her mention of Rand Paul:

At last year’s Senate hearings, Sen. Rand Paul of Kentucky said that it would be malpractice for Apple to pay a penny more than the minimum its accountants say it owes.

That’s exactly it, but not just for Apple, but for any publicly-held company. Just when I’m thinking she’s going to get it, she…goes 100% the wrong direction:

Perhaps Paul feels that the company’s fiduciary obligation outweighs its obligation to help support the nation that made and continues to make its profitable activity possible.

That’s how he feels because he’s correct: The company’s fiduciary obligation comes first, at least when compared to “voluntarily paying more tax than required.” Companies like Apple already benefit the country to a tremendous degree. How? By employing people and paying them good wages. Those wages are taxed. The things people buy with those wages are taxed. Add up all those impacts, and Apple (and the others) are definitely helping the economy.

Any public Fortune 500 company is tasked with returning maximum value to its shareholders; that’s why the list of abusers is so long and deep. Any company not taking advantage of legal tax reduction strategies isn’t maximizing wealth for shareholders.

The problem isn’t the companies, it’s the tax law.

If we want to fix the problem, we need to fix the law that’s allowing the behaviors. Period. Boycotting Apple because they’re very good at taking advantage of legal loopholes isn’t going to make them pay more in taxes. Change the law, though, and Apple (and everyone else) will do so, because none of these companies are willing to break the law to lower their tax bills.

19 Comments

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  1. “Companies like Apple already benefit the country to a tremendous degree. How? By employing people and paying them good wages.”

    You must have missed the Steve-o organized and led illegal conspiracy to dramatically hold down the wages of employees at Apple and other big tech companies.

    You ought to read the papers.

  2. I do read the papers … and yes, I read that article … but that doesn’t change the fact that all of those companies do pay good wages to their employees. Yes, it’s a slimy stupid thing to do, and all companies involved deserve to be punished. But during my years at Apple, and since in talking to people in the Valley, have I ever heard anyone complain that they’re underpaid. And keep in mind not all of Apple’s employees are high-profile Silicon Valley talent, which is what the anti-poaching agreements covered.

    -rob.

  3. Thank you for a great rebuttal of that article by the dufus-goofus, putz, Lisa Sanders. She didn’t even allow comments on her slander and demonization of Apple. Nasty, nasty, nasty, etc., woman!

  4. “Yes, it’s a slimy stupid thing to do”

    Slimy, yes. But stupid? Isn’t it just in keeping with the company’s sole mission of returning maximum value to its shareholders?

    Rand Paul certainly believes that any agreements between free market actors are proper. Apple’s massive screwing of their tax-paying employees in order to benefit its shareholders after their tax-avoidance should be exemplary in your eyes.

    “But during my years at Apple, and since in talking to people in the Valley, have I ever heard anyone complain that they’re underpaid.”

    Of course, the bulk of Apple’s US employees work at the company stores. And they never complain that they are underpaid, or lack benefits.

    Rand would approve. More money to capital, less money to labor and government. Everyone wins, except for the everyone part.

  5. If an agreement is against the law, then all involved should be penalized. Taking what Rand Paul said about one thing (which is legal) and applying it to another (which is not) is a completely baseless way to build your argument.

    And regardless of that, how -I- personally feel about the issue is irrelevant to what he may have said. His quote relative to taxes and shareholder value, though, is spot on: if the law allows it, then it’s in their shareholders’ best interests to minimize the tax bill. If shareholders don’t like that strategy, they shouldn’t buy the stock. But they will like it, because it maximizes returns.

    Hence, the only way to solve the problem is to fix the tax law.

    Those retail employees, by the way, aren’t subject to the purported anti-poaching agreement. Many leave and go elsewhere, many don’t. But the bigger question of employee compensation—not just at Apple but everywhere—isn’t relevant to the issue of what companies do and don’t do to legally minimize their tax bills.

    -rob.

  6. “If an agreement is against the law, then all involved should be penalized.”

    Sure. Of course, in the question of the anti-poaching predatory behavior, the question is whether or not the penalty will be worse for the shareholders than the predatory behavior was in the first place. If not, then it’s win, win!

    “But during my years at Apple, and since in talking to people in the Valley, have I ever heard anyone complain that they’re underpaid.”

    Of course, if wages were held down across the board in a predatory and secretive manner, there’d be reason for anyone to think they were underpaid. The higher bidders had formed a cartel to not be higher bidders, and everyone lived in ignorance happily ever after. Except for the shareholders, who were in a different boat.

    “Those retail employees, by the way, aren’t subject to the purported anti-poaching agreement.”

    Agreed! They just get underpaid, and suffer from (perfectly legal) anti-union efforts, and thus end up needing government assistance to live. It’s win, win!

    “(Rand Paul’s) quote relative to taxes and shareholder value, though, is spot on: if the law allows it, then it’s in their shareholders’ best interests to minimize the tax bill.”

    Damn straight! If Apple is able to stretch the boundaries of tax evasion beyond what other corporations have done, and thus benefit their shareholders, it’s win, win! Especially given that they don’t think they are practically vulnerable to legal prosecution from their shady practices.

    Same as when Mitt Romney’s PE firm would buy marginally profitable firms, loot the pension fund, declare bankruptcy leaving the workers holding the bag, and cash out. Rand would agree with you that it’s win, win!

    And none of these things should matter to consumers! If it’s legal, or if it’s not legal and it can’t be practically prosecuted, or if it’s not legal and prosecution is less bad than the crime, none of this should matter to consumers! All that consumers should care about is that shareholders are maximizing their profits. Rand, you, and I are in perfect agreement.

  7. I have no idea how any of this is relevant to my article, especially because I probably agree with you more than you may think.

    I think Apple underpays its taxes, and goes out of their way to do so. But I think that’s true of nearly all Fortune 500s. I also think retail employees are underpaid and overworked—but again, not just Apple, that’s across-the-board retail. Companies set the rules and pay, and employees either have to accept those conditions, find new work, or try to organize into a union to protect their rights. So I agree things can really suck for employees when it comes to companies in general.

    But none of that is relevant to this article. All I was addressing was the click-bait idiocy of boycotting Apple for their practices. If one feels as strongly as Ms. Sanders seems to feel about companies skirting their tax obligations, then there’s no way that she should be boycotting just Apple. Thousands of other companies do the exact same thing, so unless you’re willing to take a stand against all of them, you’re just showboating.

    -rob.

  8. Thanks for your great rebuttal. I think many forget that Apple was the LARGEST corporate tax payer to the US Treasury!

  9. “I have no idea how any of this is relevant to my article, especially because I probably agree with you more than you may think.”

    Well, you seem to think consumers shouldn’t worry their pretty little heads about how Apple treats anyone but its shareholders, so I’m not sure how much we do agree, if I’m reading you in English.

    “But none of that is relevant to this article. All I was addressing was the click-bait idiocy of boycotting Apple for their practices. If one feels as strongly as Ms. Sanders seems to feel about companies skirting their tax obligations, then there’s no way that she should be boycotting just Apple. Thousands of other companies do the exact same thing, so unless you’re willing to take a stand against all of them, you’re just showboating.”

    This seems to posit that Apple hasn’t been an especially bad corporate citizen over the past 5 to 8 years or so. There, you and I part company. I think their book-cartel was pretty damn bad. I think their hiring cartel is far beyond the pale of civilized behavior. And I think their ‘best of breed’ tax evasion among tech companies is far beyond the pale of civilized behavior.

    What’s relevant to your article is that all that seems to matter to you is that Apple is doing right by its shareholders after the net cost through Apple Legal, and that consumers have no right to take issue with Apple’s corporate citizenship beyond that. I have no idea how much you agree with Rand, but Rand sure agrees with you.

    (Though I’m sure Rand is smart enough to phrase in some more felicitous manner than the “dufus-goofus, putz … nasty, nasty, etc., woman!” of your supporting commenter.)

  10. About all I said of my feelings on Apple are “Yes, it sucks that they aren’t paying their fair share.” That’s it. The article isn’t about whether what Apple does is good or bad. It’s about someone taking what Apple does, and using it for click-whoring when there are numerous other examples of equally abhorrent behavior.

    So how do you know how I feel about Apple as a corporation, beyond my being upset that they (and many other Fortune 500s) do their best to minimize their tax bill? My feelings aren’t relevant to the article, which is why they’re not there.

    What is relevant is one author singling out a company for the purposes of garnering clicks. Nobody would have read her article if she’d chosen Microsoft or Oracle or Citibank for the hundreds of billions they’ve hidden. But Apple? Sure, that’s a great one to get eyeballs. That’s the stupid that needs to stop.

    -rob.

  11. “The article isn’t about whether what Apple does is good or bad. It’s about someone taking what Apple does, and using it for click-whoring”

    Ah. Moving from ‘click-bait’ to ‘click-whoring’. That “nasty, nasty, etc., woman!”

    But your slurs aside, the Guardian article was precisely about whether or not “whether what Apple does is good or bad”, and how consumers might want to react to that.

    “My feelings aren’t relevant to the article, which is why they’re not there.”

    But, again, your feelings in the article are that Apple’s role is to maximize profits to its shareholders, full-stop. That consumers should ignore any collateral damage from this role. And that the click-whoring woman is the “stupid that needs to stop.” Personally, I’d say something else is what needs to stop.

    1. “Ah. Moving from ‘click-bait’ to ‘click-whoring’. That “nasty, nasty, etc., woman!””

      I never said anything about her gender, and I didn’t move to those words, I used them in the original article, right there in line one. I use the phrase on any article, by any gender of writer, that seems to exist only to garner clicks through sensationalism.

      “But, again, your feelings in the article are that Apple’s role is to maximize profits to its shareholders, full-stop.”

      No, my -statement- was that Apple (and other public companies) have a fiduciary responsibility to maximize shareholder value. I didn’t say how I felt about it at all, because, again, my feelings are irrelevant to the subject matter.

      Ms. Sanders could have written a great article about Evil Apple, based on all the points you’ve brought up. If she would’ve done so, and based her boycott on all of those points, I wouldn’t have written this at all—there’s plenty of material there for someone to justify a boycott.

      But she didn’t do that. She just wrote that it was their tax-evasion practices that drove her over the edge. But that makes no logical sense, given the thousands of other companies that do the same thing. Where’s the hate and boycott for Microsoft, who has probably hidden more cumulative tax money than Apple, given how many years they were bigger and more profitable? Why not outrage at the billions that our own banks—our BANKS—have hidden from the IRS?

      My overriding point remains: If you want the companies’ behavior to change, change the law. (OK, sure, a consumer upswelling may work, if you can get tens of millions of folks to boycott Apple and Microsoft and Oracle and all the rest. But that’s what it’ll take, because if you succeed with just Apple, then whomever takes their place on the list will be doing the same things Apple did.)I

      -rob.

  12. “No, my -statement- was that Apple (and other public companies) have a fiduciary responsibility to maximize shareholder value.”

    The management of public companies have an absolutely tremendous amount of leeway on how they conduct their affairs. Tax evasion is not mandatory. Neither is ringleading hiring cartels mandatory.

    For that matter, sending Apple representatives out to rob random citizens at gunpoint is not mandatory, though that could certainly help maximize shareholder value.

    “My overriding point remains: If you want the companies’ behavior to change, change the law.”

    Of course, if the tax law were to change, it’d likely change to the benefit of Apple’s shareholders, not to the benefit of the populace.

    Your overriding point really does seem to be that consumers shouldn’t concern themselves with public-facing companies’ psychopathic behavior when they make their purchasing decisions, and that any attempt by the press to bring a public-facing company’s psychopathic behavior to an audience that may or may not purchase their products is “whoring”.

    Publicity can actually change the behavior of public-facing companies, y’know. (See how the General Mills brouhaha has played out over the 48 hours.)

    I’d say Apple management is whoring for its shareholders. I’d say you are whoring for Apple. And I’d say Lisa Sanders and the Guardian are getting important facts out to the public. But Rand Paul wouldn’t approve of such appeals to consumers, and you obviously don’t approve either.

  13. So, the class-action lawyers settled the Apple-ringled, knowingly illegal anti-poaching case for pennies on the dollar despite having a winning case because the class-action lawyers didn’t think they had the resources to endlessly combat the tech companies’ armada of lawyers.

    If a psychopathic company like Apple can profit by knowingly breaking the law and getting caught, why bother changing the law? How would that help?

    Who is better at performing their fiduciary obligation to maximize profit in defiance of the law: Apple or the Mafia?

    1. You may not think so, but there’s a big diff between a handful of CEOs sitting around at Starbucks and deciding to screw employees, and a company taking an “ignore the law” approach to taxation.

      To do one, you need the handful of CEOs and some hiring managers. To do the other, you have to convince a number of people who will never work again if caught (CPAs, and including many who don’t work for your company) to look the other way—you can’t cheat on taxes with just a small club in a public company.

      I am not excusing the behavior of any of the companies involved in the hiring agreement, but it’s a really big step from there to blatantly ignore federal tax laws.

      -rob.

  14. “To do one, you need the handful of CEOs and some hiring managers. To do the other, you have to convince a number of people who will never work again if caught (CPAs, and including many who don’t work for your company) to look the other way—you can’t cheat on taxes with just a small club in a public company.”

    A psychopathic company like Apple can certainly cheat on its taxes by evading them in such a manner that, while may be de jure illegal, isn’t de facto illegal, given that they won’t be punished.

    And, of course, there is no difference between that and a psychopathic company like Apple ringleading a scheme to cheat labor in such a manner that, while may be de jure illegal, isn’t de facto illegal, given that they won’t be punished.

    To a normal person, I’d say, “the stupid needs to stop”, but I think we all get at this point that, like Apple management, you’re just a profoundly immoral person.

    Since you are so happy whoring for mafia-run capital, I’ll note for you that Adam Smith wrote a couple of quite worthwhile books on the market railing against folks like you and Apple management. Were you a less immoral person, you might even want to read them, instead of the Ayn Rand you seem so fond of. But given their content, those Adam Smith books don’t have much appeal for the profoundly immoral, were they actually to read them, rather than just relying on the CATO bullet-points. So you’re better off just sticking with the Ayn Rand.

    (I especially love you having the CEO’s meeting at Starbucks (!) to plan their illegal anti-labor schemes, and you having Apple Legal outsourcing its illegal tax evasion to out-of-company CPA’s. You do love them fairy tales, don’t you? But the fact that organized crime pays isn’t a fairy tale, so that one isn’t a fave of yours…)

  15. I give. You win. I’m a liberal loser who loves Apple and believes they walk on water and can do no wrong.

    -rob.

  16. “I give. You win. I’m a liberal loser”

    No, Rob, you’re a libertarian winner!

    But let’s agree to both go after the real killers: that “whoring”, “stupid” woman, Lisa Sanders, who dares to point out Apple’s psychopathic behavior.

    So, what’s next for you? Pointing out the fiduciary duty of the officials of the Confederate States of America who merely wanted to protect the property rights of their subjects?

  17. “The problem isn’t the companies, it’s the tax law.”

    Or maybe the problem really is Apple breaking the tax law. As noted above, they have a well-documented and repeated pattern of intentionally breaking the law.

    Apple will be accused of prospering from illegal tax deals with the Irish government for more than two decades when Brussels this week unveils details of a probe that could leave the iPhone maker with a record fine of as much as several billions of euros.

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