Our Taxing Problems

Tim Cook from Apple testified to Congress yesterday. To summarize, Apple moves money around the world to reduce/eliminate taxes as the law proscribes.

Our tax laws make this possible! This is a face palm moment, right?

Before we let Apple off the hook, let’s remember tax policy is greatly influenced by lobbying which is paid for by people/corporations whose ox is about to be gored.

During the last election Mitt Romney said he paid all the tax he owed and not a penny more. Left out was these were tax rules Bain Capital had rallied for.

What I’m getting at is, when someone says they’re just following the law, take that with a grain of salt.

Meanwhile, what’s going on here with Apple has been going on in England with Google.

From BBC.com: Google’s boss has told UK politicians to “sort out” the tax system, after criticisms of the internet search giant by Labour leader Ed Miliband.

Mr Miliband told a meeting of the firm’s staff that he was “disappointed” it had paid just £6m in corporation tax on UK sales worth £3.2bn in 2011.

But executive chairman Eric Schmidt said Google followed “the tax laws of the countries we operate in”.

I’m sure they have, but I close my eyes and see accountants playing Twister on the books!

There was a time when big business and the American dream were closely aligned. We could afford to give corporations a little slack, because in the end we knew they’d employ people and drive prosperity. Those days are over. We shouldn’t favor corporations with gifts for acts they no longer perform.

We can’t afford big corporations being financial takers. We just can’t.

Huffington Post: Citizens for Tax Justice, which advocates steeper corporate taxes, said it surveyed major U.S. companies and found that 26 on average paid no net federal income taxes between 2008 and 2011, among them General Electric and Duke Energy .

“This isn’t fair to the rest of us,” said Bob McIntyre, director of the left-leaning tax research group.

No joke. It isn’t.

This doesn’t just go on with money moving to Ireland or the Cayman Islands. There is a state-to-state competition as well.

Take a look at your phone bill (if AT&T is your home or cell carrier). Look down near the bottom for a copyright notice.

Since 2008 all of the current and past AT&T trademarks and previous regional Bell names are now owned by various Nevada Limited Partnerships based at 645 East Plumb Lane Reno, Nevada. This office location is currently an AT&T main office-formerly occupied by SBC/Nevada Bell.

That means when your Connecticut phone bill comes, a rights fee is paid to AT&T Intellectual Property for displaying logos, etc. That lowers AT&T’s taxes here by shifting the income to Nevada where there’s no corporate income tax! Any time you see an AT&T logo, money is being moved to Nevada.

The problem with fixing the tax code is those who want the code fixed (you and me) will be outspent and outmaneuvered by those who want to avoid paying taxes. I wish I had the solution.

Back in the Eisenhower administration, Charles Wilson was nominated for Secretary of Defense. He had been president of General Motors so there was concern he’d make any decision that affected GM in the company’s favor. He said he would not…

“because for years I thought what was good for our country was good for General Motors, and vice versa”. – Wikipedia

Those days are gone.

10 thoughts on “Our Taxing Problems”

  1. The US has turned into a corporate oligarchy. The stock market has been hijacked from being a mechanism to fund large-scale projects to nothing more than a rigged Vegas gambling machine for the benefit of the wealthy. In the meantime, the vast majority stay divided over issues that mean nothing in the big picture… the perfect distractor to the rise of the oligarchy.

    This is not conspiracy stuff. This is the reality of the control of politics by Big Money. We can’t even have health care …

  2. There is sooo much Goverment waste-Good for Apple! Oh and I have not filed a tax return in 3 years and I don’t give a sh–either!

    1. That’s ok. Just make sure every time you get into your car, you reimburse the actual expense of using the roads, the expense of turning on the water in your house, the expense of sewers, etc.

      Or maybe you’re one of the Eastern Connecticut Crazies(TM) that feels everyone in the state should have wells that can be contaminated and use the government road to service it and everyone should have a septic tank despite the massive waste and the fact that you need to use the government paid road to empty it.

      Ever since I moved to eastern Connnecticut, I have been amazed by the number of ill informed people with wells, while their neighbors are on the town systems, that scream about the government while using every other service as much as possible.

      Is there waste in government? Yes, but you don’t throw the baby out with the bath water. Here is waste… Massive oil subsidies, corporate welfare for Monsanto and their like, and the defense department. Again things all driven by corporations and their their dononations to elections.

  3. This is why we need public funding of elections. Because of the enormous amounts of money pumped into elections by corporations and PACs, politicians are afraid of alienating those deep pocket donors, and will ditch laws that would hurt them (and their own chances at re-election).
    If politicians didn’t need private sector money to run their campaigns they’d be more willing to tighten up tax laws, close loopholes and make corporations pay their fair share.
    But I ain’t holding my breath for any of THAT to happen!

  4. unrelated: Did your phone recover from the “sleep of death”? My sons received an update yesterday at some point that cured his……. Just wondering if this is the real fix or his just was cured unrelated to update?


  5. “There was a time when big business and the American dream were closely aligned. We could afford to give corporations a little slack, because in the end we knew they’d employ people and drive prosperity. Those days are over”

    I’m perplexed as to why you feel those days are over. Have corporations stopped employing people and driving the market?

    In any regard, Apple, Google and AT&T (and Mr. Romney) broke no tax laws. In the case of the mentioned corporations they did exactly what I would expect a corporation to do, which is to be concerned with their shareholder’s bottom line in a completely legal fashion. Frankly, I’m appreciative of that in a company. We could all use accountants like this. Can anyone here honestly say that if their CPA found legal ways to drastically reduce their own taxes they would reject those measures on moral grounds?

    1. Yes, John. Profits are up and yet companies are ditching American employees. Apple used to build computers here. No more. ESPN just laid off a few hundred.

      Here’s what one former employee said, “I was laid off from ESPN today after 9 and a half years. Completely out of the blue, no warning at all. I was told it was 10% across the board, which would be roughly 400. I was told the reason was they needed to make their profit margin and they chose to do that via layoff of staff.” – http://deadspin.com/source-espn-laying-off-hundreds-509043249

      Do you remember when Stanley Works wanted to move their headquarters (mail address only) to Bermuda? Only their US employee stockholders kept them from doing that.

      It’s not that corporations are taking advantage of rules. It’s they’re writing the rules then hiding behind them as if they had nothing to do with it!

      Back to Apple for a sec. They have some subsidiaries which claim to exist in NO COUNTRY! The subsidiaries file no income tax forms.

      We allow corporations to exist and grant them benefits because there was an unspoken pact where their success would be shared. Just as I can’t decide how much tax I pay, they shouldn’t either.

  6. I agree that companies are ditching American workers. When I look closer to understand why, I can see that a prevalent viewpoint pushes the belief that succeeding is somehow bad. If you’re rich, then de facto you must be evil. Perhaps it’s that attitude that’s destroying America’s Horace Greeley ideals. From your answer, do I understand that you would not take your accountant’s advice to lower your taxes drastically, or am I reading that wrong? If so, apologies.

    1. I think you can summarize my position by understanding I could never be Mitt Romney. I could not amass a fortune while those who worked for me lost their jobs. Even corporations must be prevented from using their power for evil purposes.

      It is obvious to all, Apple and other corporations interpretation of our tax laws might follow the letter of the law (might — not necessarily do), but they certainly violate the spirit. I expect no less from Apple than you would from me. You want to be dealt with fairly. What Apple is doing is patently unfair.

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