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Apple’s Tax Avoidance Scheme

by BINOY KAMPMARK

It’s been gaining traction in broad circles, but Charles Duhigg’s work on Apple and the iEconomy in the New York Times is alarming in its revelations, though few can claim to be too surprised by them.  The world’s most profitable company is also a global expert in tax avoidance. Some call it minimisation, others good old theft which by any name would still be theft.

The payment of taxes is not a pleasant task. Often, there is a feeling of managed theft being committed, a violation of pocket exercised by anonymous agents.  The individuals who collect tax are less popular than pox doctors or manic, jaw drilling dentists.  But the payment of tax, if we are to take the view put forth by Oliver Wendell Holmes, Jr., is the sacrifice one pays for a civilised society, a necessary tariff that prevents us turning into savages.

The antithesis of such a society is the corporate jungle world that Apple inhabits.  There, in true Hobbesian fashion, Apple rules with a degree of impunity, avoiding filling treasuries, both in the US and elsewhere, and forging a global network of suppliers it refuses to disclose.  The response by Apple is to blame the insatiable consumer.  In the words of an unnamed Apple executive, ‘You can either manufacture in comfortable, worker-friendly factories, or you can reinvent the product each year, and make it better and faster and cheaper, which requires factories that seem harsh by American standards’ (NYT, Jan 26).

The last thing on the mind of Apple officials is forking out for a tax bill and replenishing the milk of human kindness with community projects.  Particularly devastating on this score are the tax receipts from corporations at the state level.  As a joint report between the Institute on Taxation and Economic Policy and Citizens for Tax Justice notes, state corporate taxes as a share of Gross State product have halved over the last 25 years to 0.28 percent of GSP.

The report titled Corporate Tax Dodging In the Fifty States, 2008-2010, makes rather glum reading.  In 2009, 32 companies paid no state income tax. Between 2009 and 2010, 265 companies on the Fortune 500 corporations list paid state income taxes equal to a paltry 3 percent of their US profits. The authors summarise the implications of their study – ‘the trickle down impact of federal corporate tax cuts, ill-advised tax “incentives” intentionally enacted by state lawmakers, and unintended tax shelters created by companies armed with creative accounting staffs’.

Apple’s own behaviour is hardly surprising, given the assortment of tics and allergies America’s politicians simulate when confronted by the issue of taxation.  Talk about tax – that is, attempts to increase receipts – is less popular than a discourse on garbage collection.  Last year, South Carolina Nikki Haley suggested that the state’s corporate income tax would be gradually repealed.  Florida and Arizona have voiced similar suggestions.  The erosive nexus between state income tax and federal taxes is there for all to see. The tax collector has been run out of town.

The tax platform Apple endorses simply receives a shrug from political advisors and members of Congress. So Apple showed the business acumen to move operations to Nevada.  Or Ireland.  The beast of competition must thrive – that before anything else.  Advantages to opponents must be avoided – corporate America is a vicious, uncongenial place.  Indeed, the underlying conservative approach to Apple is that tax avoidance is a patriotic duty, exercised in order to conserve profits that can, in turn, push prices down and stimulate employment.  This is ideology as fantasy, not so much voodoo as mind altering.

Such attitudes suggests less the triumph of competition than the spirit of anti-competition.  Christopher Newfield, writing for Huffington Post (Apr 30), suggests that Apple, by virtue of its stance on taxation, is inherently disposed to anti-innovation, profiting by a tax system it helped build and undermining the distribution of resources to parts of the ‘iEconomy’. That is a true recipe for the de-civilising of society.

Binoy Kampmark was a Commonwealth Scholar at Selwyn College, Cambridge.  He lectures at RMIT University, Melbourne.  Email: bkampmark@gmail.com


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Binoy Kampmark was a Commonwealth Scholar at Selwyn College, Cambridge. He lectures at RMIT University, Melbourne. Email: bkampmark@gmail.com

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