Ben Franklin famously said that there are only two certainties in life: death and taxes. Over 200 years later, it’s still impossible to cheat death, but not taxes. The New York Times recently published an expose on how Apple and other tech companies use perfectly legal loopholes to finagle their way out of paying state and federal taxes. Apple uses subsidiaries in states (Nevada) and countries (Luxembourg) with more favorable tax rates in order to hang on to as much cash as possible.
Apple isn’t the first American company to be accused of cheating on its taxes, but that doesn’t explain why. Apple wants to maximize profits like any other company, but it also has a reputation for good citizenship. Doesn’t being a good citizen include paying taxes?
In a statement, Apple noted that it gives a significant portion of its untaxed profits to charitable organizations. “We have contributed to many charitable causes but have never sought recognition for doing so,” the company said, “Our focus has been on doing the right thing, not on getting credit for it.” Over the past two years, Apple has donated $50 million to Stanford University, another $50 million to an African aid organization, and started a matching donation program for employees.
If Apple is willing to give freely to charity, why does it squirm at the thought of paying taxes, which fund the same good works. Taxes take away from a company’s profits, but so do donations. At least taxes pay for the infrastructure required to keep a company in business and, you know, keep it in compliance with the law.
Some people believe that, by headquartering itself in California, Apple has “done enough.” The company does not need to pay more taxes, because paying some is better than paying none. If we were still talking about charity, that would make sense; you can’t force an organization to donate a certain amount of money to African aid.
However, taxes are a legal, not a moral, issue. For both individuals and companies, being in the United States means paying taxes. The amount is determined by a duly-elected representative government. Apple needs to pay its fair share, because otherwise everyone else will have to pay more than their fair share. Paying the correct amount of taxes is not optional, at least not for most people.
Companies may hate to part with cash, but taxes benefit them in other ways. The government programs funded by taxes make our society work. How can we help people in Africa if we can’t even maintain streets in Worcester, Massachusetts?
It’s a point that often goes unnoticed in our modern society of corporate worship. Yes, Apple gives us amazing technology that makes our lives easier. It also creates jobs and pays some taxes. Still, Apple needs the United States as much as the U.S. needs Apple. Steve Jobs gave his customers personal computers, and his customers made him rich. He took advantage of America’s entrepreneurial spirit, and rich economy, to found a company. Would things have worked out as well if Jobs was born in Russia?
I’m a huge fan of Apple products (this piece was written on an Apple computer), and I’d like to think that there is more than sheer greed behind the company’s actions. Apple said it just wants to do the right thing, regardless of public recognition. Not dodging taxes is definitely the right thing to do. If Apple continues to scrimp, it may getting some unwelcome publicity, and not the kind that includes awards and pats on the back.