Apple Inc. is under attack by politicians for “avoiding” paying $44 billion in American corporate taxes.
Sen. Carl Levin (D-Mich) complained about tax “gimmicks” and Apple’s “unfair behavior,” saying “loopholes in our tax laws and regulations allow many companies … to shift enormous amounts of income from this country to other countries.” Making the whining bipartisan, Sen. John McCain (R-Ariz) complained that Apple “is one of the largest corporate tax avoiders.”
But in fact it's the politicians who deserve condemnation, not Apple.
First, as Apple CEO Tim Cook pointed out in Congressional testimony, his company paid all the corporate taxes it legally owed—estimated to be around $6 billion. It broke no law.
Second, anyone with a proper sense of self-worth seeks to pay no more taxes than they legally owe. If that’s “tax avoidance,” everyone does it and should do it. What kind idiot would Cook be if he said to his shareholders “Gee guys, let’s fork over tens of billions more to the feds above and beyond what we’re required to do”?
Third, if Apple had shoveled more of its cash into the federal government’s insatiable maw, this would have meant some combination of higher prices for Apple consumers, less Apple investment in developing cool new products, lower prices for Apple stock (check your portfolio!), and less profits for the individuals who earned it. Note: none of those “earning it” are members of Congress.
Fourth, the huge, arcane, incomprehensible tax code is a political document. Every deduction is there because Congress put it into law, whether it’s for oil companies purchasing drilling equipment or Green consumers purchasing Chevy Volts. Yes, it’s a mess. But…
Fifth, the reason the tax code is a mess is that political power is the coin of the realm. Few companies can stay “above politics” and survive. They always must watch for competitors who try to use the tax code or regulations to screw them. So every interest group—every business—tries to influence Congress to get benefits or at least protections worked into the law—and the politicians oblige. The result is a tangled, corrupt, crony-capitalist mess.
Conclusion: Apple was not trying to screw anyone, just trying to use every legal means to keep from being looted.
Neither Apple nor any enterprise or individual needs to justify why they should keep their own money. The government must justify why it should take it away since the only legitimate purpose of government is to protect our lives, liberty and—yes!—property. Most government activities nowadays are by no rational standard authorized by the Constitution. Most tax money is spent by political elites who arrogantly presume to run our lives.
So let’s praise Apple both for being one of the world’s most productive companies and for keeping its tax bill low. And let’s condemn politicians who try to cripple the productive while demanding that the productive turn over more of the fruits of their productive efforts to politicians to be wasted.
Hudgins is director of advocacy and a senior scholar at The Atlas Society.
For further information:
*Video: “ The IRS Scandal and Tea Party Protests. ” May 23, 2013.
*Video: “I RS Denied Non-profit Status To Free State Project. ” May 20, 2013.
*Edward Hudgins, “ The IRS and the Cult of Arbitrary Power. " May 14, 2013.
*Aaron Day, “ Voting With Your Wallet Against the IRS. ” May 14, 2013.
*Edward Hudgins, “ Steve Jobs vs. the Anti-Capitalists. ” October 5, 2011.