This Just in: Successful Company Chooses to Legally Maximize Profit Rather Than Reward High-Tax Jurisdictions

The New York Times over the weekend had a big blowout story titled "How Apple Sidesteps Billions in Taxes." Since the newspaper-journalism tradition is to lead with your strongest stuff, I'll excerpt the first four paragraphs:

RENO, Nev. — Apple, the world's most profitable technology company, doesn't design iPhones here. It doesn't run AppleCare customer service from this city. And it doesn't manufacture MacBooks or iPads anywhere nearby.

Yet, with a handful of employees in a small office here in Reno, Apple has done something central to its corporate strategy: it has avoided millions of dollars in taxes in California and 20 other states.

Apple's headquarters are in Cupertino, Calif. By putting an office in Reno, just 200 miles away, to collect and invest the company's profits, Apple sidesteps state income taxes on some of those gains.

California's corporate tax rate is 8.84 percent. Nevada's? Zero.

Why, the next thing you know, The Times will be ripping the lid off the fact that many businesses incorporate in Delaware....

Incorporating in Nevada is a time-honored way for heavily taxed Californians to avoid the long arm of Sacramento. I remember hearing earfuls about the process a decade ago at a D.I.Y. convention for indie musicians in Hollywood, but you won't see Silver Lake rocker trash (who, unlike Apple, will never hire an employee in Nevada) on the front page of The New York Times any time soon, on account of not sitting on a $74 billion offshore warchest.

I recommend reading the full article, whether it's because you enjoy tracing the complexities of international softwware tax and trade, or simply because you're a fan of unintentionally hilarious to-be-sure sentences. Such as:

* Almost every major corporation tries to minimize its taxes, of course.

* Apple, of course, is not responsible for the state's financial shortfall, which has numerous causes.

There is some scandalous Apple behavior in the story, although it's barely presented as such. Namely, the company has begged, wheedled, and strongarmed politicians for various tax credits, holidays, and the usual corporate welfare BS. Which is presented not as bad policy (which it is), but rather yet another reason why not volunteering to pay more taxes in California is disloyal and totally unfair to community colleges:

But some in California are unhappy that Apple and other California-based companies have moved financial operations to tax-free states — particularly since lawmakers have offered them tax breaks to keep them in the state.

In 1996, 1999 and 2000, for instance, the California Legislature increased the state’s research and development tax credit, permitting hundreds of companies, including Apple, to avoid billions in state taxes, according to legislative analysts.

Your bonus moment of zen:

And while the company has remade industries, ignited economic growth and delighted customers, it has also devised corporate strategies that take advantage of gaps in the tax code, according to former executives who helped create those strategies.

Will paradoxes never cease!

Here's an idea: Stop giving tax breaks to special pleaders, stop spending money you don't have, use the money saved to drastically simplify the tax code and lower rates, then see where that leaves you. Nah, screw it–let's just blame the world's most successful companies for the country's biggest basketcase of a state:

"When it comes time for all these companies — Google and Apple and Facebook and the rest — to pay their fair share, there's a knee-jerk resistance," [said Brian Murphy, president of nearby De Anza College]. "They're philosophically antitax, and it's decimating the state."

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  • Drake||

    I am stunned! I bet the Times is going to try to tell me that corporations maximize their profits instead of paying unnecessary taxes. Crazy talk.

  • Bardas Phocas||

    "They're philosophically antitax"
    No, it's not a philosophy, more like a couple of dozen links in a human's dna.

  • Hugh Akston||

    So you're saying that politicians and public employees are missing some chromosomes?

  • ||

    No, they don't like paying taxes. They like other people paying taxes.

  • Brandon||

    Wasn't that obvious?

  • ||

    Why, the next thing you know, The Times will be ripping the lid off the fact that many businesses incorporate in Delaware....

    Delaware should change its nickname to "The Credit Card State".

  • Old Mexican||

    But some in California are unhappy that Apple and other California-based companies have moved financial operations to tax-free states[...]


    See me care. See me? See me care. Can you see care? Yes? No? Can you see me now?

    Fuckers. Who cares what "some" Californians think? They can sink in the ocean for all I care. See me care?

  • Enough About Palin||

    When an other says "some people think" they really are saying "I think". Op/ed writers have told me this.

  • Enough About Palin||

    "When an "author" (though "other" works in this case too).

  • ||

    This.

  • ||

    Apple, of course, is not responsible for the state's financial shortfall, which has numerous causes.

    The fact that they even have to say that says quite a bit about both the editors and the readers of the Times.

  • Fist of Etiquette||

    APPLE IS STIFFING THE WORKING CLASS. I call on all of my fellow 99%ers to boycott all Apple products, post-fucking-haste!.

  • ||

    "How dare Apple do something that isn't in tune with my political outlook!"

    These collectivist scum are beyond parody.

  • rts||

    Microsoft does it too, the horrors.

    This story made the 'rounds on my lefty friends Facebook last week, and nearly all "posted from iPhone".

  • John Thacker||

    The only thing that I think is worth pointing out about this is that lefty bugaboos like ExxonMobil and WalMart and insurance companies (except for the ones that are primarily finance companies) all pay relatively high corporate income taxes (especially ExxonMobil.)

    The corporations that are more Democratic Party-friendly seem to be ones that tend to pay lower taxes. One could speculate on that.

  • DJF||

    The same applies to Democratic politicians, they seem to be the ones who are caught most of the time fudging on their taxes.

  • Enough About Palin||

    Walmart paid 24% last year to the Feds in taxes. That doesn't include state and local taxes, FICA, etc.

  • Enough About Palin||

    That useless cunt. Mika, on Morning Joe this am was railing at Apple telling them to "Pay their fair share." What a useless, idiot cunt.

  • DJF||

    So says the New York Times Corporation which used its political connections to take property via eminent domain so that they could build a brand new office building.

  • Bardas Phocas||

    Stephen King cannot decide what to do with his filthy money.
    Needs government to help him.
    http://www.thedailybeast.com/a.....me_oneline

  • Brandon||

    Jesus Christ, ad hominems, non sequiturs, question begging, is Stephen King Tony?

  • radar||

    Oh, Matt, I knew I could forgive your hipster glasses and Angels fanship - you've used a line from Drain You in a hover caption!! Well played, sir, well played indeed!

    Don't worry, California - keep fucking with Apple and perhaps they'll do you the favor of relocating entirely, jobs and all, to Nevada. Then you won't have to worry about them!

  • ||

    That's my favorite Nirvana song of all time. He used lines from it in two captions, actually. And a Beck lyric. And here I thought he was just a fan of the Beatles and the Rolling Stones.

  • radar||

    Mine too. The live version from their MTV Live and Loud special in 1993 was pretty goddamned awesome.

    Loser's got some nostalgia value, but it kind of sucks that a lot of people only remember Beck for that one throwaway song. There are much better songs on Mellow Gold by itself - Beercan, Nitemare Hippie Girl, Fuckin' With My Head

  • NeonCat||

    Weirdly enough Loser is playing on my radio right this instant.

  • ||

    Aw yeah, Mountain Dew Rock. And of course he put out tons of brilliant work after that album.

  • Old Mexican||

    When it comes time for all these companies - Google and Apple and Facebook and the rest - to pay their fair share, there's a knee-jerk resistance, [said Brian Murphy, president of nearby De Anza College]. They're philosophically antitax, and it's decimating the state.[!!!!]


    They don't want to be robbed, the bastards!

  • ||

    I hate to have to point this out to my intellectual betters at the New York Times, but taking advantage of every deduction and loophole in the tax structure is not in the least bit "unfair." Apple is playing by the same rules as everyone else.

  • Enjoy Every Sandwich||

    This. I would like for them to explain to me how Apple doing this is "unfair" but Warren Buffett doing this isn't.

  • VG Zaytsev||

    Not only that, but also...

    Those tax loopholes and deductions were enacted by our democratically elected representatives and therefor are exactly the behavior that our society collectively desires.

    Companies that refuse to use those loopholes and deductions are undermining the democratically enacted policies of our republic.

  • Old Mexican||

    Yet, with a handful of employees in a small office here in Reno, Apple has done something central to its corporate strategy: it has avoided millions of dollars in taxes in California and 20 other states.


    God forbid avoiding paying more than one should on taxes happened to be the central corporate strategy of any other American company.

    Going back to this:
    "They're philosophically antitax, and it's decimating [sic] the state."

    As if Apple et al were robbing the state of its lifeforce a la Mathilda May. The level of hyperbole makes me think the guy is deranged.

  • rts||

    But remember, because we're anti-tax, we're the children in this debate.

  • John C. Randolph||

    I'll define it. Everyone's "fair share" of taxation is zero. Anything more than that is theft.

    -jcr

  • Jerryskids||

    central to its corporate strategy: it has avoided millions of dollars in taxes

    Earning money is the central strategy of any corporation, keeping that money is secondary. The fact that it takes so much work to keep the money should be an indictment of corporate taxation.

    Apple makes and sells stuff, that is its' central strategy, it is what it is good at. Apple's central strategy is not to develop and exploit tax loopholes, it is not what Apple is (comparatively) good at.

    Suppose we let Apple do what it is good at, allow it to utilize all its' resources to perform its' central strategy of making and selling stuff? Does anyone doubt that if there were no corporate taxes that Apple would be more efficient and more profitable by getting rid of all that deadweight of accountants and lawyers and lobbyists who now do nothing but try to avoid paying taxes? How much better off would we all be if corporations were more efficient?

    But that is not the NYTimes central strategy here. They admit that Apple has created jobs, ignited growth, provided benefits, done far more to make more people better off than a hundred NYTimes - but screw those bastards for trying to keep their own money. Better to have no Apple than to have a rich Apple.

  • Jerryskids||

    And here I am listening to those same assholes talk about Mitt Romney not paying his "fair share". The guy paid well over $3 million in taxes last year after donating nearly $3 million to charity - but it's not fair because he made $22 million.

    Would we be better off with a million Mitt Romneys or no Mitt Romneys? I don't think there is a single person who doesn't know the obvious answer to that question - the problem is that half the people pick the wrong answer.

  • The Craig||

    Maybe the problem is Nevada. Why won't they take their fair share?!

  • R||

    Because they know that the lack of income tax is the only way they have to attract business to the state?

  • The Craig||

    Trying to be sarcastic, I guess I failed

  • np||

    Here's an idea: Stop giving tax breaks to special pleaders, stop spending money you don't have, use the money saved to drastically simplify the tax code and lower rates, then see where that leaves you. Nah, screw it, let's just blame the world's most successful companies for the country's biggest basketcase of a state:

    That reminded me of the NPR interview with Ron Paul where he was asked about the unfairness of how capital gains was taxed lower at 15% (the rich aren't paying their fair share!). His was response was obviously, why not try to lower everyone's to that rate instead of raising them?

  • np||

  • Enjoy Every Sandwich||

    Is there a journalist in this country who can ask the simple question "what exactly constitutes a 'fair share'?" If the Left is going to make the term "fair share" a basis for public policy, should we not have a concrete definition of the term?

  • ||

    You know, that's a thought. Since the left is going to take this "fair share" meme and run with it despite not bothering to define it, what say we define it for them?

  • LarryA||

    [If the Left is going to make the term "fair share" a basis for public policy, should we not have a concrete definition of the term?]

    You haven't been listening. "fair share" = "net profit."

  • John Thacker||

    At least part of "fair share" is "whatever the oil companies are paying, it's not enough."

    I don't think that they want to define "fair share," because they always want to raise it on the industries that they don't like.

  • Brandybuck||

    Wait... Matt went to De Anza? No wonder he's not allowed to wear The Jacket!

  • Weygand||

    He did? I knew there was a reason he always comes off as principled.

    /Go Dons!

  • John C. Randolph||

    Even if Apple was burning their cash in a bonfire, that's still better than using it to hire goons to molest old ladies.

    -jcr

  • Weygand||

    So the problem I have with the rationing poster is that the pushy bitch interrupts the butcher when he is still helping the first customer and tries to get the butcher to give her first customer's food. Where is the outrage about that????

  • Mr. FIFY||

    That's how things were in the 1940s... propaganda posters espousing collectivist nonsense, while at the same time fighting the Nazis.

    Dig the irony.

  • niobiumstudio||

    Many businesses incorporate in Delaware? I didn't know it was just "many" I thought ALL businesses incorporate in Delaware or at least have a Delaware corporation...for tax purposes...

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