This week it was the turn of Apple’s Chief Executive Tim Cook to sit
in the Congressional hot seat. With lights blazing and cameras rolling, a
bipartisan lineup of Senators grilled him about the relatively small
amount of tax the company pays on its substantial corporate profits.
According to a New York Times account
of the hearing, Republican John McCain characterized Apple “as among
America’s largest tax avoiders.” Democrat Carl Levin complained about
the use of “ghost companies” to hide profits overseas.
Cook replied that Apple pays “all the taxes we owe — every single
dollar.” He could have added that as Chief Executive, it is his
fiduciary duty to look after the interest of his shareholders. He could
go to jail if he passed up entirely legal methods of protecting their
profits from the IRS. So don’t beat up on Apple. The flaw is in the law.
What exactly are the flaws in the corporate tax law?
The first is that the “corporate tax” is not really a tax on
corporations. Yes, corporations can “pay” taxes in the sense that the
check that goes to the IRS is printed with the corporate logo, but they
can’t bear the economic burden of taxes, because they are not people.
The entire burden of the tax ultimately falls on the corporation’s
stakeholders—its shareholders, executives, workers, customers, suppliers
and others. >>>Read more
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