Tax “Avoidance” by Apple Computers and President Obama

A few days ago, The New York Times ran a lengthy article about, according to the headline, “How Apple Sidesteps Billions in Taxes”. There is some predictable whining in there about how Apple Computer is avoiding paying taxes. Where was the whining about President Obama avoiding paying taxes?

Although the Times article itself is interesting, there are some spots of sad cluelessness in it. For example:

A mile and a half from Apple’s Cupertino headquarters is De Anza College, a community college that Steve Wozniak, one of Apple’s founders, attended from 1969 to 1974. Because of California’s state budget crisis, De Anza has cut more than a thousand courses and 8 percent of its faculty since 2008.

Now, De Anza faces a budget gap so large that it is confronting a “death spiral,” the school’s president, Brian Murphy, wrote to the faculty in January. Apple, of course, is not responsible for the state’s financial shortfall, which has numerous causes. But the company’s tax policies are seen by officials like Mr. Murphy as symptomatic of why the crisis exists.

“I just don’t understand it,” he said in an interview. “I’ll bet every person at Apple has a connection to De Anza. Their kids swim in our pool. Their cousins take classes here. They drive past it every day, for Pete’s sake.

“But then they do everything they can to pay as few taxes as possible.”

Yeah. Of course Apple tries to pay as few taxes as possible. Anybody with a modicum of income and sense does. (And, oddly but not surprisingly, that includes President Obama.) The California budget crisis has pretty much nothing to do with what Apple pays in taxes and everything to do with massive California government spending. But once again we see this odd attitude that if people and/or businesses cared about their city/state/country, they would pay more taxes. The question I want answered, and which the article does not address, is: does De Anza College president Brian Murphy claim deductions on his personal income taxes? In other words, does he do everything he can to pay as few taxes as possible? If so, he is a hypocrite to then complain about Apple.

Some days back, President Barack Obama’s tax records were released, and apparently he paid about 20.5% of his income in taxes, which was, we were assured, slightly higher than the rate paid by his secretary. Somehow this proves we need to raise taxes on the wealthy. I suggest that this proves first that the taxes the secretary pays is probably too high, and second that Obama is choosing to claim deductions on his taxes. The reason his tax rate was so low, we were told, is because he donated lots of money to charity. But those deductions are voluntary. No one forced him to claim those deductions on his tax return. So if, as we were told, Obama believes he should pay more in taxes, then why did he not do so? Even if he had someone else prepare his tax return, he could very easily tell that person to claim no deductions. Apparently he did not do this.

So what about Obama contributing money to the U.S. Treasury? As I pointed out the other day, President Obama is not going to do that because, according to David Axelrod anyway, that is not the way things are done. Yet Obama says the wealthy, including himself, ought to pay more taxes to the government. Why they must be forced to do so rather than choosing voluntarily to do so, no one has yet explained.

Back to the Times article and Mr. Murphy’s whining:

“When it comes time for all these companies — Google and Apple and Facebook and the rest — to pay their fair share, there’s a knee-jerk resistance,” Mr. Murphy said. “They’re philosophically antitax, and it’s decimating the state.”

Again we come to the “fair share” argument. Fair is entirely subjective. Apple does actually pay billions in taxes and contributes millions of dollars to various organizations and charities. Were I a betting man, I would bet Google and Facebook and Intel and Cisco do the same. The idea that somehow the financial crisis is all their fault because they’re just not paying enough in taxes is silly. That is sort of like a person who makes a $50,000 per year salary spending $70,000 and then blaming his massive debt on his employer for not paying him more.

In any case, again and again and again I have to come back to the idea that if you want government have more of your money, then you should give the government more of your money. Take responsibility for yourself. If Obama and Warren Buffet want the government to have more of their money, why are they not writing checks to the U.S. Treasury? I’m not sure what Buffet’s problem is, but I can guess at Obama’s motivation. He is, after all, a politician.

In Obama’s case, the obvious answer is that what he wants is for government to have more control. He probably also wants to be able to claim he cares about middle-class voters by sticking to the wealthy. He does seem to like his class warfare rhetoric. But mostly, in my opinion, he believes the government needs more control. His intentions may well be entirely good. But good intentions are not enough. Good intentions do not mitigate bad and unintended consequences. The problem, in general terms, is that Obama and people like him believe the solution to everything is more government control. And all the evidence that more government control does not help in the long run (and often not in the short run either) is simply ignored.

If you think this is somehow not about controlling other people, then I will point again to Obama not choosing to take zero deductions on his taxes and his choosing not to give more money to the U.S. Treasury. If he genuinely believed the government needed to have more of his money, he would have given it to the government. People act on what they believe. When they say one thing and do another, they indicate a lack of belief in what they say. There is a word for this. I’ll give you a hint. It starts with an h and ends with ypocrisy.

2 Responses to “Tax “Avoidance” by Apple Computers and President Obama”

  1. You make a good point here. Nobody wants to pay taxes, especially when it heads into a bottomless pit of public debt. It is a sign of intelliegence (Apple has that) to find the ways to avoid tax legally.

    It is not the problem of Apple that they pay low tax, it is the politicians for allowing the system to be be so complicated.

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