Politics & Policy

The Big Apple Circus

Apple pays all the taxes it owes, and Congress pretends it’s a crime.

In our age of sclerotic growth and sprawling, dysfunctional government, Apple, Inc., represents an astonishing success story.

Since its nadir in 1997, the company has increased in value by 6,413 percent. Today Apple, which is estimated to have created around 600,000 jobs, is worth more than the entire American aircraft-carrier fleet. They’re good for the government, too: “To our knowledge Apple is the largest corporate taxpayer in America,” CEO Tim Cook noted yesterday morning. “We paid $6 billion in cash to the U.S. Treasury [in 2012] — that’s $16 million each day. And we expect to pay even more this year.”

Clearly, this is a company that deserves a show trial in Congress.

#ad#Apple’s alleged crime? Obeying the law. The venue? The rather terrifying-sounding Senate Permanent Subcommittee on Investigations. And the investigation du jour? Why a private company is not volunteering more taxes than the law requires.

Yes, you read that right. The world’s greatest deliberative body is asking a for-profit company why it isn’t volunteering to pay taxes that it doesn’t owe. You might have imagined that tax collectors targeting innocent parties would make for poor optics right now. But you’d imagine wrong.

“Apple is exploiting an absurdity,” Michigan’s Democratic senator Carl Levin spluttered professorially at the start of the Senate’s probe yesterday — an absurdity “that is right at the epitome of creative tax gimmickry.” He quickly made sure to note that he wasn’t being personal. “Apple’s a great company. But no company should be able to determine how much it’s going to pay in taxes . . . by using gimmicks!”

Along with “loophole,” “gimmick” is the voracious Left’s newest way of describing “compliance with our rules.” Since 2009, the company’s annual reports show, Apple has paid a tax rate of around 2 percent on the $74 billion it has earned in overseas income. Which is precisely what it owed. American law holds that companies incorporated overseas, as Apple is in Ireland, aren’t required to pay U.S. taxes; Irish law holds that, as Apple is controlled in the U.S., it should be taxed there. Senator Levin can fulminate all he wants, but Apple is “determining how much it’s going to pay in taxes” by following the rules of the two countries in which it operates. That’s how it works, Carl.

After explaining how much he, too, liked Apple, John McCain joined Levin in objecting to their obedience. “For years,” McCain griped, “Apple has opted to forego fully contributing to the U.S. Treasury and to American society by shifting profits and circumventing U.S. taxes.” A reminder to the maverick: You are discussing taxes. One cannot “opt” out of taxes. If Apple has done something wrong, then prosecute them. If not, stay quiet. When you imply that a beloved company isn’t fully “contributing to American society” if it declines to hand over some of its hard-earned cash to the federal treasury, you sound like a fool.

“Apple pays all its required taxes, both in this country and abroad,” the firm observed bluntly in a written statement. Indeed so, and, both legally and morally, that is all that is required of it. My colleague Kevin Williamson is bang on: Avoiding taxes is not just legal, but it is a patriotic and virtuous act. At today’s spending rates, the federal government blows through Apple’s $16 million per diem contribution by 12:03 a.m. For avoiding destructive corporate taxation as much as is legally possible, Tim Cook and his team are to be admired.

Quite why Apple was singled out is unclear. In fact, quite why anybody was called in is unclear. If Congress wishes to change America’s tax code, removing the “absurdities” and “gimmicks” of which Senator Levin so disparagingly spoke, it can do so on its own time. Are we to expect it to become customary for the victims of convoluted legislation to account for their submission? When debating the Volstead Act, did Congress wheel in the patrons of America’s saloons and request sniffily of them an explanation as to why they were drinking beer?

Apple is a publicly traded company whose finances are available to anyone who cares to take a look. Why single it out?

“If anyone should be on trial here, it should be Congress . . . for creating a bizarre and byzantine tax code,” said Rand Paul, objecting to the spectacle. “If you want to assign blame, this committee needs to look in the mirror and see who created that mess.” Tim Cook agreed: “The tax code has not kept up with the digital age.”

The digital age? It’s barely escaped parachute pants and shoulder pads.

— Charles C. W. Cooke is a staff writer at National Review.

Most Popular

Liberalism as Faith

The British philosopher John Gray is not someone to shy away from ‘difficult’ topics. If you are looking for a provocative long read this weekend, his new article in the Times Literary Supplement ought to be a contender. I didn’t agree with all of it (for example, I would argue that the supposedly ... Read More
Culture

Our Cultural Crisis: A Kirkian Response

Editors’ note: The following article is adapted from a speech the author delivered at the Heritage Foundation on March 14, 2018. Few would dispute that we are in the middle of a grave cultural crisis. A despairing conservative critic wrote: “We are on the road to cultural disaster.” He placed the ... Read More
Politics & Policy

An Enduring Error

Editor’s Note: The following piece originally appeared in City Journal. It is reprinted here with permission. Fifty-one years ago, in July 1967, in response to an explosion of rioting in poor black urban neighborhoods around the United States, President Lyndon B. Johnson created the National Advisory ... Read More
Culture

The Mournful, Magnificent Sally Mann

‘Does the earth remember?" The infinitely gifted photographer Sally Mann asks this question in the catalogue of her great retrospective at the National Gallery in Washington. On view there is her series of Civil War battlefield landscapes, among the most ravishing works of art from the early 2000s. Once sites ... Read More
Economy & Business

How the Constitution Limits State Taxes

Must a company have a physical presence in a state for that state to require it to collect taxes? The Supreme Court is considering that question, which has grown more important as online sales have taken off. The Competitive Enterprise Institute has submitted an excellent brief arguing that the answer is yes, at ... Read More