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Robert Reich Appears Not To Understand Apple Or Corporate Taxes

This article is more than 7 years old.

The latest little policy eructation from Robert Reich - policy idea or suggestion would be much too grand descriptions - is that companies like Apple should be banned from being American companies. This is because, according to Reich, they don't pay enough in taxes and so we should thus bundle them out of the legal protections of our society. This does have one particular problem, which is that Apple appears to the the country's largest single taxpayer. Quite why we'd want to outlaw it so that it pays nothing is unknown.

However, the real problem revolves around the word that Reich uses, "fair." For we've really only got one definition of what is the fair amount of tax that anyone or thing should pay is - that amount that Congress has determined they will pay. "Fair" is not a synonym for "more than they do" nor is it one for "however much Professor Reich believes they should pay today." If we're going to take this democracy thing at all seriously then tax rates are as they are because we have all collectively voted for them to be as they are. We might have done it through our representatives and all that but that does have to be the basis of the system of law.

And thus there's a problem to Reich's suggestion:

Apple is only the latest big global American corporation to use foreign tax shelters to avoiding paying its fair share of U.S. taxes. It’s just another form of corporate desertion.

Corporations are deserting America by hiding their profits abroad or even shifting their corporate headquarters to another nation because they want lower taxes abroad. And some politicians say the only way to stop these desertions is to reduce corporate tax rates in the United States so they won’t leave.

Wrong. If we start trying to match lower corporate tax rates around the world, there’s no end to it.

Instead, the President should use his executive power to end the financial incentives that encourage this type of corporate desertion. President Obama has already begun, but there is much left that could be done.

In addition, corporation that desert America by sheltering a large portion of their profits abroad or moving their headquarters to another country should no longer be entitled to the advantages of being American.

It's a mindbogglingly silly idea.

It's worth noting that the recent EU case about Apple reduces the amount of tax that Apple will ultimately pay in the US. Because Apple hasn't avoided paying its share of US taxes. It has delayed having to pay them, no more. And the US taxes that Apple will pay at some indeterminate date in the future will be paid at the US rate minus any foreign taxes which have already been paid. So, the EU insisting that more must be taxed in Ireland simply reduces the amount that Apple will pay, in the end, in the US.

But there's that larger problem we've got there over that word "fair." In this context the only possibly meaning of fair is "what the law says must be paid". And Apple does that - there's quite literally no one out there claiming that Apple is breaking American tax law in anything that it is doing. Thus the amount Apple is paying Uncle Sam, given that it's the same amount that Uncle Sam asks for and is legally allowed to ask for, that sum must also be the fair sum.

Quite simply because "fair" does not mean "whatever Robert Reich thinks would be a nice number."