Corporate Tax Double-Talk
In my last post I noted that there was a need for individuals to think about the question How Much Is Enough. The point of the post was that devoid of any desire or need for legislation, individuals should think, both for their own benefit and for the general social welfare, about how much wealth they really need to accumulate and how they will go about doing so.
Today I want to speak briefly about policy, particularly as it relates to the tax code and the interplay of corporations in that paradigm.
The other day, May 21, Apple CEO Tim Cook went before a Congressional committee to testify. It wasn't part of any high-level investigation or anything of the sort, but they wanted to know how it was Apple over the past few years avoided paying taxes on a very large sum of money, somewhere in the neighborhood of $44 billion.
For days leading up to this testimony the media seemed almost fearful that Apple would get raked over the coals with accusations of being railroaded and forced into this testimony. That they would get unfairly treated for common business practices. Before the questioning even began, Senator Rand Paul chastised the committee for even asking Apple to testify, and demanded that the committee apologize to Apple and the American people for inconveniencing the company.
As an American I can tell you that I need no apology for the committee for that. What I would like is an apology for wasting our time and money by calling him up there to Washington and treating him like some kind of king on a hill rather than asking, and I should say demanding answers, to pertinent questions.
Instead they asked his advice on how to make things easier for his company. Questions that should have been about why a company that at one period last year was the richest company on the planet and has massive cash reserves they've stated an uncertainty what to do with, would go through the rigor of developing off-shore accounts and subsidiaries to minimize their tax burden, were instead questions about how to further lower tax burdens on these companies. We were "treated" to continued corporate drum-beating for the "simplification" of the tax code so that by some mathematical jujitsu we could slash rates while eliminating loopholes and somehow that would equate to these companies paying more equitable tax receipts.
There are two things to remember. First, the reason the tax code is the way it is.
Poor people do not lobby. Poor people cannot lobby. Poor people are too busy trying to survive to be able to lobby. So exemptions, rates, set in the tax code are not set by poor people. Conversely, rich people do lobby, and rich companies lobby a lot. Lobbying is not bad. It is a function of the political system that in its ideal form allows all peoples to put ideas forward to their government. One of the things corporation lobby to do is create better circumstances for their companies. What that usually means is getting the government to spend more money on projects that benefit that company's industry (think military industrial complex, or what used to be a big boon; construction). The other is tax exemptions - the infamous tax loopholes.
This is the biggest problem for me. Many of the companies today that you will see giving interviews on television, or hear on talk radio, or read op-eds from, will tell you how much they hate the tax code, how it's too complicated, how it saps investment and innovation. The problem is that the complexity of the tax-code mainly derives from the loopholes these very businesses and industries lobbied to get in the first place. It is like a child pestering you to get them a toy and then complaining the toy is no fun, except these are supposed to be the best and brightest in the world - though that might explain why they can dupe so many with their hypocrisy.
The second issue has to do with choice. Many of these companies feel proud to walk out and say they are speaking for the good of the country, explaining how they're willing to pay more in taxes if the code is simplified the way they suggest. But here is the crux of that issue; they could easily pay more now if they so wanted. They don't have to hide all of their money off-shore. And even if you are to buy the argument that they would be paying too much if they just brought all the money back, they control how much money they funnel to these subsidiaries and off-shore accounts. Therefore, any company that says it can pay more and is willing to pay more, can easily do so if that was their real desire. But they don't. They don't because they don't want to, and they are counting on the fact that the system they've gone to such lengths to complicate will be too complex for it to be unraveled. And even should it be unraveled, they have played their hand such that they will have tax-rates so low that any simplification of the tax code according to their prescription would have them paying less in taxes, not more.
Make no mistake, Apple and many of the other companies whose CEOs have been asked, not forced, to testify before Congress have done amazing things. They got to where they are in part because they have put forth the effort, the time, and the resources, to making and selling great products enjoyed by many. But we don't need members of Congress grandstanding or singing praises on their behalves - these companies spend plenty enough on ads and commercials for themselves. If you're going to ask them to Capitol Hill to testify on an issue, do more than make lengthy adverts for them. Ask pertinent questions, get real answers, challenge them on the facts, and stop listening to them talk out of both sides of their mouths.
Today I want to speak briefly about policy, particularly as it relates to the tax code and the interplay of corporations in that paradigm.
The other day, May 21, Apple CEO Tim Cook went before a Congressional committee to testify. It wasn't part of any high-level investigation or anything of the sort, but they wanted to know how it was Apple over the past few years avoided paying taxes on a very large sum of money, somewhere in the neighborhood of $44 billion.
For days leading up to this testimony the media seemed almost fearful that Apple would get raked over the coals with accusations of being railroaded and forced into this testimony. That they would get unfairly treated for common business practices. Before the questioning even began, Senator Rand Paul chastised the committee for even asking Apple to testify, and demanded that the committee apologize to Apple and the American people for inconveniencing the company.
As an American I can tell you that I need no apology for the committee for that. What I would like is an apology for wasting our time and money by calling him up there to Washington and treating him like some kind of king on a hill rather than asking, and I should say demanding answers, to pertinent questions.
Instead they asked his advice on how to make things easier for his company. Questions that should have been about why a company that at one period last year was the richest company on the planet and has massive cash reserves they've stated an uncertainty what to do with, would go through the rigor of developing off-shore accounts and subsidiaries to minimize their tax burden, were instead questions about how to further lower tax burdens on these companies. We were "treated" to continued corporate drum-beating for the "simplification" of the tax code so that by some mathematical jujitsu we could slash rates while eliminating loopholes and somehow that would equate to these companies paying more equitable tax receipts.
There are two things to remember. First, the reason the tax code is the way it is.
Poor people do not lobby. Poor people cannot lobby. Poor people are too busy trying to survive to be able to lobby. So exemptions, rates, set in the tax code are not set by poor people. Conversely, rich people do lobby, and rich companies lobby a lot. Lobbying is not bad. It is a function of the political system that in its ideal form allows all peoples to put ideas forward to their government. One of the things corporation lobby to do is create better circumstances for their companies. What that usually means is getting the government to spend more money on projects that benefit that company's industry (think military industrial complex, or what used to be a big boon; construction). The other is tax exemptions - the infamous tax loopholes.
This is the biggest problem for me. Many of the companies today that you will see giving interviews on television, or hear on talk radio, or read op-eds from, will tell you how much they hate the tax code, how it's too complicated, how it saps investment and innovation. The problem is that the complexity of the tax-code mainly derives from the loopholes these very businesses and industries lobbied to get in the first place. It is like a child pestering you to get them a toy and then complaining the toy is no fun, except these are supposed to be the best and brightest in the world - though that might explain why they can dupe so many with their hypocrisy.
The second issue has to do with choice. Many of these companies feel proud to walk out and say they are speaking for the good of the country, explaining how they're willing to pay more in taxes if the code is simplified the way they suggest. But here is the crux of that issue; they could easily pay more now if they so wanted. They don't have to hide all of their money off-shore. And even if you are to buy the argument that they would be paying too much if they just brought all the money back, they control how much money they funnel to these subsidiaries and off-shore accounts. Therefore, any company that says it can pay more and is willing to pay more, can easily do so if that was their real desire. But they don't. They don't because they don't want to, and they are counting on the fact that the system they've gone to such lengths to complicate will be too complex for it to be unraveled. And even should it be unraveled, they have played their hand such that they will have tax-rates so low that any simplification of the tax code according to their prescription would have them paying less in taxes, not more.
Make no mistake, Apple and many of the other companies whose CEOs have been asked, not forced, to testify before Congress have done amazing things. They got to where they are in part because they have put forth the effort, the time, and the resources, to making and selling great products enjoyed by many. But we don't need members of Congress grandstanding or singing praises on their behalves - these companies spend plenty enough on ads and commercials for themselves. If you're going to ask them to Capitol Hill to testify on an issue, do more than make lengthy adverts for them. Ask pertinent questions, get real answers, challenge them on the facts, and stop listening to them talk out of both sides of their mouths.
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