Rand Paul: Why is Apple being hauled before Congress to explain its perfectly legal tax minimization scheme?
05-22-2013, 03:37 AM
05-22-2013, 03:37 AM
Hey Dartz - here's one that should amuse you. Heh.
The background is straightforward: Congressional investigators discovered that Apple's been using an unusually complex -- but apparently perfectly legal, and decidedly clever -- cluster of international tax shelters to lower its tax burden. For example, they have a holding company incorporated in Ireland that keeps its bank accounts in the U.S.; because Ireland assesses residency based on where the company's assets are while the U.S. assesses residency based on place of incorporation, the holding company effectively exists nowhere for tax purposes. Apple saved $44 billion since 2009 from tricks like this, which, averaged over four years, means the lost tax revenue last year could have paid for a single day of federal spending. But again -- all perfectly legal. Even if you think it shouldn't be, you run into Paul's point in the second clip, namely, why not just have a Senate debate on tax reform rather than try to shame Apple with hearings for doing what literally anyone else in their position would have done (potentially at the risk of being ousted by shareholders if they didn't)?What's especially bizarre about this is Democrats attempting to make an example of a company that's universally respected for its innovation, even among the lowest of low-information voters. If you want to demagogue corporations for lightening their tax load, politics 101 says to find a company that's far removed from the average joe or, at least, whose product reliably produces grumbles about the cost or quality. Defense contractors and oil companies are always easy marks. Instead they chose the one corp above all others whose products nearly everyone likes, and whose late founder has become a symbol for can-do entrepreneurial success -- a point Paul was shrewd in emphasizing today:
![[Image: BMvIFIm.png]](http://i.imgur.com/BMvIFIm.png)
I guess the Dems figured that it'd be better to focus on a household name so that people would pay extra attention to the hearings. I think that's a miscalculation. We'll see.
The fault doesn't lie with Apple and the completely misbegotten sense of patriotism that they are ostensibly supposed to display by pouring as much money as they possibly can into the federal government's coffers; rather, it lies with our wildly burdensome and noncompetitive tax code that gives companies a clear incentive to do otherwise. We are living in an increasingly global economy, and we better man up and deal with it -- and I do not mean by persecuting the individual companies looking to streamline their taxes, because watch them close up shop and move abroad at your own peril.
Ireland is one of the supposed culprits that Apple used to their tax-strategery advantage, and while the country certainly has a heck of a lot of economic and fiscal problems on their hands, there is nothing illicit going on with low rates that make it appealing for multinational companies to do business there. An Irish official today paid the obligatory lip service to the trumped-up need for ‘robust international agreements' to prevent tax-dodging to appease the Euro-bureaucrats, but they are not apologizing for having a tax code that attracts people and companies to their shores -- nor should they. Via the NYT:
But for US Democrats and Europeon socialists (but I repeat myself) there's really only one viable solution - tax Ireland! (I'm kidding, of course. But you never know when reality will overtake parody...)
As for me, if it isn't already obvious - I applaud Apple's ingenuity and Ireland's decision to be competitive. When your choice is paying the Irish 12.5% on offshore earnings vs. the IRS's 35% on same, almost three times as much, this Texan's ready to share a pint and a "top ‘o the mornin' to ye!"
The background is straightforward: Congressional investigators discovered that Apple's been using an unusually complex -- but apparently perfectly legal, and decidedly clever -- cluster of international tax shelters to lower its tax burden. For example, they have a holding company incorporated in Ireland that keeps its bank accounts in the U.S.; because Ireland assesses residency based on where the company's assets are while the U.S. assesses residency based on place of incorporation, the holding company effectively exists nowhere for tax purposes. Apple saved $44 billion since 2009 from tricks like this, which, averaged over four years, means the lost tax revenue last year could have paid for a single day of federal spending. But again -- all perfectly legal. Even if you think it shouldn't be, you run into Paul's point in the second clip, namely, why not just have a Senate debate on tax reform rather than try to shame Apple with hearings for doing what literally anyone else in their position would have done (potentially at the risk of being ousted by shareholders if they didn't)?What's especially bizarre about this is Democrats attempting to make an example of a company that's universally respected for its innovation, even among the lowest of low-information voters. If you want to demagogue corporations for lightening their tax load, politics 101 says to find a company that's far removed from the average joe or, at least, whose product reliably produces grumbles about the cost or quality. Defense contractors and oil companies are always easy marks. Instead they chose the one corp above all others whose products nearly everyone likes, and whose late founder has become a symbol for can-do entrepreneurial success -- a point Paul was shrewd in emphasizing today:
I guess the Dems figured that it'd be better to focus on a household name so that people would pay extra attention to the hearings. I think that's a miscalculation. We'll see.
The fault doesn't lie with Apple and the completely misbegotten sense of patriotism that they are ostensibly supposed to display by pouring as much money as they possibly can into the federal government's coffers; rather, it lies with our wildly burdensome and noncompetitive tax code that gives companies a clear incentive to do otherwise. We are living in an increasingly global economy, and we better man up and deal with it -- and I do not mean by persecuting the individual companies looking to streamline their taxes, because watch them close up shop and move abroad at your own peril.
Ireland is one of the supposed culprits that Apple used to their tax-strategery advantage, and while the country certainly has a heck of a lot of economic and fiscal problems on their hands, there is nothing illicit going on with low rates that make it appealing for multinational companies to do business there. An Irish official today paid the obligatory lip service to the trumped-up need for ‘robust international agreements' to prevent tax-dodging to appease the Euro-bureaucrats, but they are not apologizing for having a tax code that attracts people and companies to their shores -- nor should they. Via the NYT:
Quote:Deputy Prime Minister Eamon Gilmore of Ireland told reporters in Brussels on Tuesday that his government supported efforts to close "loopholes" in corporate taxation, but said these did not stem from Irish taxation policy. ...Of course, august European financiers and political leaders are saying that we all need a "global solution" to prevent multinational companies from exploiting loopholes, blah blah blah -- but they are too often going about this "globalization" thing in precisely the wrong way (more central planning imposed upon an ever-wider swath of people? No. A free and open global economy across all fronts? Yes.). I've got your solution right here, and it's called competition, which works just as well among individuals and private companies as it does countries and currencies. All of this talk about punishing companies that dare to seek legal means to decrease their tax burden and the countries that shelter them is nothing but antithetical to economic growth and a global free market.
Ireland's corporate tax rate is 12.5 percent, less than half the level in many larger European countries. American companies with their European headquarters in Ireland often pay considerably less than this on their European earnings because of accounting techniques that permit them to shift revenue to subsidiaries in offshore tax havens -- as Apple has been accused of doing in a report prepared by Congressional investigators. ...
While Ireland misses out on some tax revenue, analysts say its economy more than makes up for this in other ways, including the tens of thousands of jobs that American technology companies have created there – and the income taxes that well-paid programmers and executives contribute to the Irish treasury. Apple alone employs more than 4,000 workers in Ireland, while Google employs more than 2,500 there. ...
Discrepancies like this have given rise to growing frustration among European policy makers at a time when governments are cutting budgets and struggling to make ends meet.
But for US Democrats and Europeon socialists (but I repeat myself) there's really only one viable solution - tax Ireland! (I'm kidding, of course. But you never know when reality will overtake parody...)
As for me, if it isn't already obvious - I applaud Apple's ingenuity and Ireland's decision to be competitive. When your choice is paying the Irish 12.5% on offshore earnings vs. the IRS's 35% on same, almost three times as much, this Texan's ready to share a pint and a "top ‘o the mornin' to ye!"
