Paying taxes isn’t fun. For the average American, it often requires special software or an accountant to find all the obscure deductions and exemptions. Unfortunately for Apple, they got in trouble for doing essentially the same thing. They chose to wisely look at the law and arrange their money in such a way that legally lowered their tax burden.
Imagine being prosecuted for claiming your family members or spouse as tax dependants. This is essentially what happened to Tim Cook, CEO of Apple. Senator Carl Levin (D-Mich.), Chair of the Investigations Subcommittee, apparently feels that Apple has acted unfairly. By establishing their distributer’s headquarters in Ireland and other European countries, Apple was able to save $74B over a 4 year period.
In the US, unlike any other country in the world, companies have to pay taxes on all international operations, not just domestic operations. Pair this with the outrageous and unprecedented confiscatory corporate tax rate of 35%, and one can easily understand how American businesses are disadvantaged around the world. Apple, in strategizing to reduce its tax burden, is trying to maintain competitiveness in the face of anti-competitive tax policy.
Any accusation by Senator Levin that Apple is not “paying their fair share” is absurd. Who’s exactly to say what constitutes a “fair share?” Last year alone, Apple paid $6B in corporate taxes to the US government; it was the 3rd largest tax payer last year. And as Senator Rand Paul (R-Kent.) noted, “Apple has done more to enrich people’s lives than government will ever do,” with its many beloved and useful tech products.
If the tax code was simplified across the board, the tax burden for citizens and businesses would be greatly reduced. It would be easier for all Americans to navigate the paperwork so they would only pay as much tax as they are legally obligated, and nothing more. With a simpler tax code, individuals, and small businesses would be able to access the same tax savings as Apple.
The US should lower the corporate tax rate to a more reasonable level and eliminate the unprecedented tax on international business operations. When companies can use their money to maximize profit, instead of handing it over to the wasteful government, shareholder value is maximized and the economy prospers.