Don’t tax Apple, tax its shareholders

“Apple Inc. Chief Executive Officer Tim Cook appeared before the Senate Permanent Subcommittee on Investigations this week to defend his company’s tax record,” Josh Barro reports for Bloomberg News. “The media has focused on how much of Apple’s income is earned by subsidiaries that do not claim tax residence anywhere and therefore do not pay tax. That’s a problem — but not the big problem.”

“The big problem is that the process of determining the taxable U.S. income of a multinational corporation is necessarily complicated and arbitrary,” Barro reports. “Companies, including Apple, will exploit that arbitrariness to reduce their tax bills, and while we can diminish their flexibility to do so at the margins, we’ll never fix the problem entirely.”

Barro reports, “Instead, we should sharply reduce the corporate tax and replace it with higher taxes that are more progressive and easier to collect: taxes on shareholders in corporations.”

Read more in the full article here.

33 Comments

  1. Liberals that site the Eisenhower era of high taxes should realize that we had no competition then because Europe was devastated. Hardly the same world today. States lose businesses due to high taxes and so does the Fed government. Governments mst be competitive or lose companies. They are owned by shareholders, not countries and should go for the best deal offered even if that means moving operations. It’s their job to do what’s best for the shareholders.

    1. Shareholders have citizenship somewhere. If a retirement trust fund is investing in a corporation that is hurting American workers by moving jobs away from America, that’s pretty dumb, long term. When they invest in Wal-Mart, that’s pretty dumb. When Sam Walton was alive, he insisted that Wal-Mart sell goods made by American workers. He got it, but he’s gone. The current crop of corporatists that head Wal-Mart only get their bonuses. But no retirement fund can justify supporting such an operation by owning their stock.

      1. The thing that is ‘pretty dumb’ is that you are completely discounting the lower cost that are at the Walmart stores and the millions of people in America that helps.
        American workers are pricing themselves out of a job. They just want the best for themselves, but are out of work because they don’t compete with their competition. So, jobs and product production go overseas. When a worker makes more than he is worth to the market, the market will go elsewhere.

        1. Your assumption is that the American worker must compete with the Pakistani worker in a crumbling building. I would say the American worker needs to be a lot smarter in their spending decisions. Have three well made shirts from an American factory instead of 10 from China. It has to stop somewhere. And Wal-Mart will adapt. Notice how they started offering the option of unadulterated meats when people started buying elsewhere once they understood that 20% of the cheap Wal-Mart meat was salted water (aka “flavor enhancers”).

          A national economy is a closed system. The guy that makes the shirts buys from the guys that make the cars and build the houses. It falls apart when extra-national elements are introduced and money is siphoned out of the system. Then the nation becomes unsustainable because it can’t afford to defend itself. Right now the US is on the back side of that curve, riding on our past strength. Unfortunately we are starting to impoverish ourselves with defense spending that is not supported by the rest of our economic activity.

          So where do we go from here? Do we become a weak bit player on the world stage, an integral player in the world structure that benefits the few at the expense of the many or do we regain the wisdom to stand on our own two feet as a nation and rebuilt ourselves from the bottom up?

          1. I would characterize your second paragraph not as being true because of a closed national system but rather as a level playing field for both producers and consumers who produce what the first producers consume. The distinction is important, I think, because even today we don’t really have that in the US revenue code. We might have it if we truly enacted a flat tax with no investment credits, subsidies, etc. We could have it internationally if everyone around the world could agree on what’s best for everyone. Not holding my breath on any of that though.

            The US, through it’s revenue code, seeks to coerce people and companies into doing things the current administration believes to be beneficial. Whether that be “first-time home buyer” mortgage rate reductions or tax credits for installing solar panels on a school roof, such measures distort the level playing field to the same effect as import duties on foreign goods on your “extra-national” field.

            ***

            I really didn’t follow your leap where you were discussing closed economic systems and jumped to defense spending and being a weak nation.

    2. What does that have to do with the individual tax rate which is the one most referenced from the Eisenhower era? And as far as the corporate rate we have one of the highest nominal rates but one of the lowest effective rates. For large cap corps anyway.

  2. taxes are already collected on capital gains and dividend income . these incomes have nothing to do with the company and production and profit of devices. to demonize shareholders as parasitic neredowells is as sinister and ludicrous as “Illegal aliens,entitlements death taxes,and private prisons,swiftboats “. as long as the politics of demonization and spin keep putting people in office we will suffer and have to defend ourselves against the inmates that have taken over the asylum. if corporations are people when it comes to campaign contributions then there people when it comes to jail time for tax evasion. we really need to elect people who know that laws and government are our only protection against the forces of unbridled mercantilism.
    please google trust busters and read some history .
    we can’t even walk erect and breathe air with out being forced into paying private companies for insurance that contributes nothing to health care and everything to lining pockets. we can no longer be victims of this type of thinking

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