What’s that? Political commentator Ben Shapiro tweeted about Apple? Delightful:
Like cheap Apple products? Like that Apple has approximately 600,000 Americans working for it in some capacity? Then STOP BOTHERING THEM.
I wonder if, in his world, there are circumstances under which it’s permissible to criticize a private company that employs hundreds of thousands of Americans in the manufacture of reasonably priced electronics. (I would hesitate to call them “cheap,” but perhaps that’s the Winnipegger in me talking. We get mad over five-cent grocery bags.) In this case, it is on the disingenuous side to blame Apple for using accounting methods that they’re legally free to use. It hurts, but it’s not aggravated assault. Here’s what Apple did, according to a Senate investigation:
- They arranged a sweetheart deal with Ireland, whose corporate tax rate is generally 12 percent, that allows them to pay below 2 percent on paper, and as little as 0.06 percent in reality.
- They created shell companies around the world that sold products and intellectual property to one another at a “substantial” markup. (The U.S. was not a base for one of these shell companies, as Apple went out of its way to note.)
- They took advantage of a U.S. tax loophole that effectively allows them to decide which subsidiary gets taxed.
This is rightfully called “creative accounting.” Remember when Apple’s creativity was concentrated in its product development? Now we know where that went, along with the taxable income.
I’m sorry, what? Sen. Rand Paul (R-KY) has a solution to all this? Let’s hear it:
A couple years, we did repatriation of foreign capital. If we want the capital to come home, don’t double tax it. We tax it 35 percent. Let’s tax it at 5 percent.
Fair enough, if the end game is simply to bring the profits back to the U.S. Just don’t make the mistake of assuming this will automatically lead to job creation, as many defenders of across-the-board tax cuts have an unfortunate tendency to do. If anything, according to the nonpartisan Congressional Research Service (CRS), the benefits to Americans would only be seen by the few who hold company stock. I suppose you could argue that the real amount of revenue from dividend taxes could go up, if the dividends are larger, but that’s assuming the people who hold them can’t navigate loopholes as well as Apple does.
Closing loopholes is the most sensible thing Congress can do about this kind of tax avoidance (not evasion). It’s not completely nonsensical to lower corporate tax rates, either. Let’s just be honest about what good that would do. And let’s not cross the line into essentially applauding Apple, or any other company, for tax avoidance. There are less suspect ways to maximize profits.