Posts Tagged taxes

Apple’s taxes: What is the right thing to do?

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.


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Why SOPA Will Fail

According to Noam Chomsky, Richard Nixon only made one major mistake. In a 1976 dialogue with Mitsou Ronat, Chomsky analyzed Watergate in the context of other American political upheavals, and concluded that it had nothing to do with democracy. “Nixon was condemned,” Chomsky said “not because he employed reprehensible methods in his political struggles, but because he made a mistake in the choice of adversaries against whom he turned these methods. He attacked people with power.”

The idea that, even in America, the powerful are only held accountable when they attack others with power is pretty cynical, but it seems to be playing out in the debate over SOPA and PIPA.

This debate is pretty unusual, because it is a battle of corporate interests as much as it is one of politics. On the pro-SOPA side are media and entertainment concerns like the Motion Picture Association of America and News Corp., who believe this legislation is needed to protect their intellectual property.

Fighting against SOPA are Internet companies like Google and Facebook, whose sites would be responsible for policing content under SOPA, or risk being shut down. This time, the suits are waving the free speech flag.

That is why SOPA will not become law. The Internet companies have as many resources (possibly more) than their opponents; the sponsors of SOPA severely underestimated them. Last week’s protests show how powerful Google and company really are.

Although both bills had bipartisan support, the backlash was equally bipartisan. Conservatives and liberals alike called SOPA a threat to free speech. President Obama said he would veto SOPA, while conservatives blamed him for it.

When was the last time such a mass demonstration of political will occurred? It’s not like Americans haven’t had big issues to support or challenge in recent years: last fall, during the peak of the Occupy Wall Street protests, the majority of people in a Time poll said they wanted tax increases for the wealthy, but how many of them wrote to their Congressman?

The United States seems to be mired with problems, but no one seems to be doing anything about them. Neither Congress or the American people can muster enough effort to solve problems like joblessness and tax reform, yet the reaction to SOPA was quick and decisive.

Would it have been as quick and decisive without Google directing people to contact their Congressman? SOPA threatens the rights of both corporations and people; luckily for people, the corporations are on their side this time.

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