Archive for tax fairness

Tax “Avoidance” by Apple Computers and President Obama

Posted in Economics, Fairness, Government, In the News, Philosophy, Politics, Taxes with tags , , , , , , , on April 30, 2012 by Xajow

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.

“We don’t run bake sales” Addendum

Posted in Economics, Fairness, Morality, Philosophy, Taxes with tags , , , , , , on April 19, 2012 by Xajow

Shikha Dalmia of the Reason Foundation made a excellent point:

If Buffett has trouble putting his money where his mouth is, he’s not alone. Obama’s tax returns (released last week) show that he paid a 20 percent effective tax rate on his $790,000 income — slightly lower than his secretary’s and a whole four points lower than the average rate for people in his income category. He could have easily avoided this by filing his tax returns the way he advocates millionaires do — by forgoing all deductions. But he didn’t. Not only did he claim a $47,564 mortgage deduction on his $1.6 million home in Chicago, he also claimed tax breaks on the $172,130 — about 22 percent of his gross adjusted income — he gave to charity.

This would be perfectly legitimate for someone who didn’t believe that the government is the best vehicle for doing good. But the president does. He has repeatedly said that the Buffett Rule is not about raising revenues to pay down the country’s massive deficits and debt.

After all, 250 years of Buffett revenues wouldn’t so much as pay for last year’s deficit.

Rather, Obama insists that the rule is about “fairness,” ensuring that the rich pay at least the same tax rate as middle-income people. But if that’s the case, why didn’t he hand Uncle Sam the donations he gave to charity or at least not take deductions for them?

The rest of the op-ed can be found at The Daily.

“We don’t run bake sales”

Posted in Economics, Fairness, Government, Morality, Politics, Taxes with tags , , , , , , on April 19, 2012 by Xajow

Back on Sunday (April 15, 2012), David Axelrod, the chief Obama presidential campaign strategist, was asked if the President would voluntarily give money to the U.S. Treasury in light of the fact that the President’s secretary paid a higher percentage tax rate than the President did. Let’s go the transcript.

WALLACE: It turns out that [President Obama] paid a tax rate of 20.5 percent, which is a lot less than the 30 percent he talks about and yes, it is lower than what his secretary pays.

AXELROD: It is.

WALLACE: And the president has — if I may, David, the question I have for you is: if the president feels so strongly about tax fairness, is he going to he contribute money to the Treasury and they have a special department just for this, to help with the deficit?

AXELROD: Listen, Chris, first of all, the reason that his tax rate was so low was in part because 22 percent of his income was donated to charity, mostly to these Fisher Houses around veteran hospitals. So —

WALLACE: Mitt Romney contributes a lot to charity as well. It’s not the issue.

AXELROD: That’s right. Not quite yes. But there’s no proportionality there. 

But here is the larger issue: the president’s proposal would have him pay a higher rate of taxes in the future. Governor Romney’s proposal would make him pay a lower rate in the future. So, that’s fundamentally different.

We are arguing for a system that is fair. He’s arguing for a system that would exacerbate the great gaps that we have in our system today.

WALLACE: I take it that he’s not going to contribute money to the Treasury to help with the deficit.

AXELROD: Listen, well, that’s not the way we operate our tax system, OK? We don’t run bake sales. It’s not about volunteerism. We all kick in according to the system. And the system allows that — look, the fact that Mitt Romney pays 14 percent on $20 million income is not the issue. The issue is that the system permits it and he would perpetuate that and he would enhance it.

Got that? The President is not going to voluntarily donate money to the Treasury because that just is not the way things are done. Wow. What a pathetic excuse. Maybe, just maybe, the President of the United States of America could show some leadership and donate some money? Why is that so crazy? But no, that just is not the way we do things around here, young man.

This is just one more piece of evidence that Obama and his team believe they are better than everyone else. They are guilty of hubris. Not crazy cool hubris like the Rat Pack, uncool tyrannical hubris that believes they deserve to tell you how to run your life. “It’s not about volunteerism.” It should not be a choice, the man is saying, but it should be a coerced action. This is why I do not believe these people give a flying leap about fairness. They want control, not fairness.