There is a broader question of how the US should structure corporate taxes, but demonizing individual corporations for how they follow the crazy rules is a silly thing. Perhaps useful to further the conversation, but not really a reflection on ethics.
I personally prefer more systems-centric journalism myself, which focuses on how economics/law/etc. interacts rather than tracing some particular person/company/story, but it rarely appears outside of specialist journals. Even in the Valley, journalists trace how the startup/technology ecosystem works by weaving tales of specific founders and startups that they hope illustrate broader principles, instead of describing those broader principles directly.
If you really look around you'll quickly learned that everything is taxed. Everything. Politicians have gotten very good at finding all sorts of areas where they can insert a probe and extract "blood". From gasoline to telephones, communications, dogs, cars, food, air travel, tobacco, etc. Here's one attempt at a list: http://theeconomiccollapseblog.com/archives/taxed-enough-alr...
Here in California it is not uncommon to hear of more hair-brained schemes to levy taxes on more things. A little-bit here and a little-bit there and politicians have collect billions to keep their gravy train going.
Regardless of whether we are talking about personal or corporate taxes, or taxes in general, it is important to always keep in mind what the "mission statement" might be for taxes. Lately the lines on this have blurred.
In general terms taxes should be used to run the government, military and reasonable social services (the last one being debatable).
Lately, at least in California and other similarly-afflicted states, a huge percentage of taxes are being dedicated to supporting a ridiculous pension infrastructure and a bloated government and public employee sector. Tax increases are being proposed with the sole purpose of finding funding for union pensions. We, then, exist to ensure that the union "class" gets to live happily every-after with their wonderful lifetime pensions and healthcare. This is beyond wrong. This is criminal.
I don't have a problem with the idea of questioning if large companies are paying what they are legally supposed to. At the same time, the system should also demand that government be responsible and not exist to create and maintain their own ecosystem through the abuse of taxation. Name one government entity that, over the last few years, has put forth cuts and savings measures on par with families and businesses across this nation. Exactly.
Watch closely what is happening with the post office. Here's a clear case of a government entity that should start to see massive cuts and reorganization. What do you want to bet that we carry these people on our taxes for the rest of our lives? So, rather than being able to devote our money to the furthering of our own kids and culture we are obligated, through taxation, to support useless hordes of government employees. This isn't going to end well.
http://en.wikipedia.org/wiki/2008%E2%80%9311_California_budg...
The Cali budget crisis was caused by a decrease in revenue. Let me repeat that. Decrease.
Similarly, federal spending on domestic discretionary (what you're complaining about) has been flat or almost-flat for a decade, while spending on defense/security has been skyrocketing.
Lastly, if you want to reduce government spending on employee benefits, the first, second and third things you should think about are healthcare reform, not pensions. Healthcare costs are and have been inflating a lot faster than any other cost-of-living cost. Compound 15% over 10 years and see where that gets you.
Medicare is the big problem. And the problem is costs. The government's on the hook for the old, the poor, and the too sick to get insurance, and like I said, insurance and provider costs have been increasing by 15% a year or so. We need a better system of healthcare regardless of how the accounting is done.
America has at least $100 trillion in entitlement liabilities that can never be paid for under any circumstances. Which is why the Fed has begun to monetize as much of it away as they can without sparking massive inflation.
That supposed point or two of adjustment is a purely fraudulent number from make-believe-land. SS is already bleeding out right now, prior to full scale boomer retirement. All of their accounting lies are premised on the Federal Reserve destroying your standard of living for the next 50 years to pay for the massive red ink that boomers are going to generate in SS.
Medicare is the big problem. And the problem is costs.
Agreed. More specifically, the problem is aging. We should do something about that.
Google 2.4% Rate Shows How $60 Billion Lost to Tax Loopholes
Google Inc. cut its taxes by $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda.
http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-sho...
You'll see that many of the top paid state employees are doctors, or policemen/firefighters who get paid a ton of overtime.
But you'll also notice things like the director of IT for Alameda County was paid 430,312 with a 266,760 base salary. Where as the direct of IT for San Mateo country had a base salary of 175,775 and had pay around to 330K. Which is probably market for someone like that in the Bay area, but sure seems a lot for a government position.
I think it is reasonable that if salaries go up in a good year, that salaries should go down in a bad year. I'd be interested in seeing the change in government employee pay over time relative to tax revenue.
And I'm sure there are plenty of idiots who got entrenched and earn more than they're worth, but that's the same in any large bureaucratic org, public or private.
http://www.americanprogressaction.org/issues/2011/03/state_b...
The cited Wikipedia article says that, but it also says:
"Another source has been the continuous growth in salaries and benefits of state employees during economic boom times, some of which were lobbied by trade unions."
Note also that the decrease in revenue was due to falling incomes as a result of the recession, not falling rates. Spending was on an unsustainable path based on assuming that boom times would last forever.
On one side, you have a private sector that is dramatically widening the income gap thanks to globalization processes and technological advances that lower expenses, increase productivity and maximize revenue. On the other, you have a public sector that basically cannot compete for talent unless they try to align to private-sector pay levels, because in a post-Soviet "capitalism-uber-alles" world, public office does not grant much social status in itself. It's a vicious circle: the more we disparage civil servants, the less people are attracted to those jobs, the more you have to pay for lower-quality applicants. The same goes for cutting entitlements, by the way.
If you can't make public office appealing in itself, you have to pay civil servants in line with any other similar job, or suffer from corruption and "revolving door" effects with a private sector they're supposed to effectively rein in.
This applies even to the most high-profile positions (presidents, senators etc). Remuneration levels for US presidents or British Prime Ministers, for example, are so ridiculously low in real terms, that the office is basically seen by most career politicians as an introduction to the moneyed "conference-speech" circuit, or as a past-time for millionaires. It also makes them ripe for corruption: when somebody earning £ 150k per year has to deal with multi-billionaires, it's easy to predict how it will end.
Government cannot and should not exist in isolation of reality. In this case, a reduction in tax revenue was a result of a reality that caused catastrophic damage to the lives of millions of Americans and destroyed businesses far and wide. Not so if you were in government. In that case you got to live inside this protected environment at the expense of all of those who were suffering on the outside. Notice how the article you point to chronicles all of the efforts to raise tax revenue in a variety of creative ways.
What is conspicuous due to its absence are the cuts. No talk about cuts. Nobody in government ever gets fired or laid-off. Why?
If I have a business and times are tough I cut my spending. I might move t cut marketing. Maybe even move my operation to a cheaper location. Downsize my building. Find ways to become more efficient. And, yes, eventually, if there are not other options and sales are down, I have to lay off employees.
At the personal level, if a member of the family looses her job or is hit with a reduction in income you take the same kinds of steps to achieve fiscal balance: No more Starbucks; Cheaper (or no) satellite TV plan; No more dining out; Rent movies instead of going to the theater; more camping, less hotel vacations; etc.
This isn't an academic exercise for me. I've lived this. I've had to live through economic difficulties and have had to make the tough choice to let valuable people go in order to ensure the survival of my businesses. I've had to make serious personal adjustments in order to adapt to new economic conditions. You do what you have to do and come out the other end stronger and, what's more important, alive to continue moving forward.
There's nothing I detest more than the fact that we have allowed government to exist in nearly absolute isolation of our realities. They are supposed to work for us. The reality is that we work for them. That is fundamentally wrong.
The talk in Sacramento (and D.C.) should never be about raising revenue but rather about optimizing the available revenue and giving us the most for our money. And, yes, this should also mean adapting to economic conditions; adjusting workforce size accordingly; becoming more efficient; not entering into criminal contracts with unions; not spending more than is available --ever-- and, in general, living by the same rules everyone else has to live by.
The California problem isn't a reduction in revenue. It is the combination of that along with the inflexibility of government rules, services and systems to adapt. There's more than one variable in this equation, it can't always be "revenue, revenue, revenue".
Oh, please. Public-sector employees make on average less than their private-sector counterparts, even taking into account fairly-negotiated benefits.
It boggles the mind how you can be such a misanthrope as to believe that teachers' healthcare coverage is a scourge on our society and "criminal". What's criminal is that the richest country on earth cannot educate its children or provide for the health of its citizenry.
Our college students now carry one trillion in debt, more than all credit card debt in America. That debt went to pay for university facilities and extraordinary teacher benefits and salaries. Meanwhile 50% of graduating students can't find a job.
There's only one place for the blame to go, unless you intend to blame the students. The teachers and their unions have been given resources that other first world nations would kill to have.
But even unfunded, the USPS must operate under a strict legal framework requiring them to keep offices open and uphold a large pension program. Imagine needing to go before congress anytime you want to adapt your business.
Why is the transfer of wealth from densely populated areas to rural ones considered good? Should we let the real costs shine through so people can make the best economic decisions?
At the end of the day, we've got bills to pay, and any deviation from "everyone pays a fair share" should have the burden of proving it's worth it.
That means they gave that money to someone else, and perhaps they are hiring, or perhaps they in turn invested it again.
"The cash probably goes somewhere" isn't that convincing. I'm not saying that companies should hire with extra cash if they don't need the employees. That would be a bad business decision. I'm just saying that "cash sitting on the sidelines = probably employment somewhere" isn't a great justification for them paying less taxes than I do. I work too, you know.
Correct, but you should also consider that creating a company creating jobs also adds another tax payer to the economy.
> should have the burden of proving it's worth it.
That is actually the whole point. The impact of consumption (purchasing power) will over time (if increasing) make it reasonable for companies who experiences these demands, to hire more employees to follow. How does that deviate from the idea of lowering tax so that the companies have incentives to create these jobs in the first place? Imagine the tax is twice as high (which, in most countries, is equal to the max taxation of indivduals). If that increase causes the company to only hire one (or none) employees, how would that be benificial? The new jobs would provide more tax revenue to the government, keeping in mind there's still the tax which the company pays, and the two tax filings by the job holders.
But to your point, let's say both coorporations and individuals pay the low income tax. I'll try to say this the least synical way I can: there is a trade off between working and leisure. People (in general) would work less, which is not desirable if you're trying to maximize tax revenue.
Overall, what I'm trying to convey is that consumption and company tax rates are combined means to a goal - tax revenue.
What I question in your post is how stimulated demand creates more jobs if there's a shortage of employees due to people not needing to work as much.
So how are they not paying their "fair share"? Perhaps you should define what you mean by "fair share".
As far as what they consume, they're based in the US, with the best technical workforce in the world. Everything about Apple is an only-in-America story. Turning around and saying "Oh, all we consume is some police protection" is pretty dishonest in view of that. Like they'd be fine if you transported the campus to Sierra Leone and hired good security? The only other countries developed enough to have conceivably yielded an Apple all levy higher taxes than us (VAT vs corporate income notwithstanding), and a higher regulatory burden. "Fair share" isn't so much to ask for, when you look at the competition in terms of countries.
Note that the people who own Apple generally do pay a similar percentage - some of it in the form of corporate income, some of it as cap gains.
As far as what they consume, they're based in the US, with the best technical workforce in the world.
I'd bet good money that Apple's workforce is received a disproportionate amount of education outside the US. For example, the US government didn't educate Jonathan Ive. Besides which, the workforce was already charged for that and Apple is paying a wage premium to compensate for it.
Since you seem to believe Apple consumes more than just police protection, please be specific about what you think they consume. Which of the major services do you believe enabled Apple to be an "only-in-America" story? Was it redistribution from the young to the old, or was it the war on Iraqis?
On your side of the argument, if you say "Hey, Apple doesn't really gain anything from the wars we're fighting or the expanded security state", I'd agree and include myself in there as well. Others might disagree. But we're all in it together on the costs for that stuff, that's what being part of the same country means.
That is so ridiculous. Maybe you need to take a deeper look at a Mac and see where much of that innovation comes from.
If you design in California, produce in China and sell in Europe, you shouldn't be allowed to shelter your profits in Caribbean tax havens instead of giving back to the societies that made you successful in the first place. We need better treaties among countries to adequately tax large capital movements across the world.
Note how the Chinese try to sidestep the problem by heavily restricting capital flow in exit. This has never been a viable policy for capital-rich countries with saturated markets, of course; but as we've been seeing since 2008, US and EU markets are not as capital-rich as we thought, after all. This doesn't mean that we should blindly follow Chinese policies, of course, but maybe a degree of restriction should be introduced.
Small companies, and individuals without clever accountants, miss out on those benefits.
Since companies benefit from the advantages of the nation state in which they're based (rule of law, policing (often protecting their products) roads, etc etc) they should make an effort to pay reasonable taxes.
All citizens, all parties, play under the same set of rules.
If you start playing favorites with the poor or some depressed economic sector, it simply opens the door for everybody else to play the game and game the system.
Coupled with the "closing loopholes" dog-whistle--to reasonable people who have not ceded their thinking to Ayn Rand, this should not be in the same statement as anything related to "lower taxes"--and I have a great deal of trouble finding a good-faith reason to think better of you than "disingenuous."