Why Elected Thieves and Redistributionist Special Interests Hate Apple

Wednesday, February 17, 2016
Posted in category Tax Tyranny

Apple has been coming under fire in the media, again, for its cash-rich financial position. A couple of months ago, CEO Tim Cook was on 60 Minutes deflecting criticism concerning the company’s reputation as a “tax avoider.” Apple has been accused of engaging in a “sophisticated scheme to pay little or no taxes” by engaging in offshore profit shifting.

Of course, the usual culprit here is government and its tyrannical tax policy. In short, Apple’s corporate structure allows it to keep its after-tax profits from overseas sales in a holding company. By keeping the cash overseas, Apple defers the enormous tax rates the company would be subject to were it to repatriate those profits. Apple is using legal loopholes to avoid being robbed of its profits by political theives here in the US.

The left-wing Citizens for Tax Justice has long accused Apple of manipulating cost-sharing agreements and “being aggressive” with transfer pricing rules in order to avoid “paying its fair share.” In point of fact, CTI is essentially a socialist 501(c)(4) organization that works to influence US tax/financial policy and has an IRS tax exemption that flies under the radar as a public interest organization. This tax-exempt organization also blames large, profitable companies with offshore havens for world income inequality.

In reality, Apple uses cost-sharing agreements legally, and the company also uses loopholes in the transfer pricing rules to minimize the amount of cash that the US government can steal from its coffers to redistribute according to political fiat. As a CPA, it is well-recognized in my field that transfer pricing is so complex that it takes large staffs at companies to navigate these tax rules, let alone play the rules aggressively, as Apple does. Transfer pricing is a specialty that takes up enormous resources for international companies. PricewaterhouseCoopers distributes a 294-page document that is just a guide to navigating transfer pricing in various countries.

Rand Paul has fought this battle against the massively complex tax code and he accused Congress of bullying one of America’s most innovative success stories. As is well known, the US has the highest corporate tax rate of all industrialized nations in the world.

The famously libertarian-Paul told lawmakers that Apple’s relatively small tax bill is effectively Congress’ fault, arguing that any successful executives would do what they could to bring their company’s tax rate as far down as possible while still complying with the law. As Paul noted, Apple’s alleged tax practices aren’t illegal, but creative accounting employed by profitable corporations like Apple to avoid paying taxes has stoked the ire of lawmakers and activists.

“What we really need to do is just apologize to Apple, compliment them for the job creation they’re doing,” Paul said.

On 60 Minutes, CEO Tim Cook stated it perfectly when he said, “This is a tax code that was made for the industrial age, not the digital age.” That reminds me of how the government still builds 1980s-style roads in 2015 to accommodate future traffic for 2017 and beyond.

So the antiquated, totalitarian, redistributionist tax code of the United States of America has influenced how American corporations manage their day-to-day business, and Apple has allowed its cash to stay overseas while it borrows money to pay for its stock buybacks, debt repayments, and dividends. And everyone is up in arms and calling out Apple as the Great Offender. Apple is doing absolutely nothing illegal or unethical, but social justice warrior redistributionists everywhere are alluding to Apple executives as being evil, unethical, and immoral for refusing to be a victim of US criminal tax policy.

Since taxes are a gun-to-head proposition, being called out as a “tax avoider” is the same as being called a “crime avoider.” Sticks and stones.

 

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