Michigan Senator Carl Levin is making the news in his outrage about Apple’s exploiting the tax code to reduce its income tax liability:
Mr. Levin is outraged that Apple subsidiaries in Ireland pay little or no corporate income tax on profits generated from Apple’s international sales. Ireland has a laudably low corporate tax rate of 12.5% to attract jobs and capital, but it turns out that for certain corporations controlled by entities outside Ireland, the deal gets better.
The Apple units are based in Ireland, so U.S. law does not consider them to be U.S. corporations subject to U.S. corporate tax. But since they are managed and controlled by Apple in the U.S., Irish law doesn’t consider them Irish companies and thus they are also not subject to the 12.5% Irish corporate tax. This isn’t alchemy; it’s accountancy.
Carl Levin has been a U. S. Senator since 1979. That means that he held office when most of the laws governing income taxes, individual or corporate, were enacted into law. What was he, an innocent bystander? The problem is, of course, that Apple has strong incentives to do what they can within the law to reduce its tax burden and Apple’s accountants and tax lawyers are smarter than Sen. Levin. Or Sen. Levin, all of his colleagues, and their staffs put together. That will always be the case.
There’s plenty of room for outrage. The WSJ is outraged over the high corporate income tax that incentivizes companies to implement such tax avoidance schemes.
Have you noticed how many of the stories of the day ultimately revolve around the corporate income tax? The IRS singling out conservative and libertarian organizations for scrutiny, Citizens United v. Federal Election Commission, stories about lobbying. They all come down to the corporate income tax.
They all come down to the corporate income tax.
Wow, what a weird coincidence.
/ sarcasm
The best part is that companies like Google and Apple are campaigning hard for immigration reform, particularly on the H1-B stuff, because they need to be able to import cheaper programmers to keep labor costs down so that they can keep profits high so that they can continue to pay expensive attorneys and lobbyists to avoid paying taxes – and of course keep driving their stock prices higher. And of course, they will all support Democratic pols who will attempt to raise taxes to even higher levels so that smaller competitors (who can’t afford the legions of tax attorneys and whatnot) will have an even higher set of hurdles to get over to challenge these companies.
@Dave Schuler
… since 1979 …
The modern political era begins 6 – 8 years ago. Anything before that is ancient history, and it is all the same. In 1979, he might have had dinner with ex-President George Washington or Plato.
You may have Alzheimer’s. One sign of memory impairment is the ability to clearly remember the past.
As Janis Joplin noted: “It’s all the same fucking day, man.”
Flat tax. That is all.
1) The lower rates didn’t seem to help Ireland that much.
2) I have always said a primary reason for abolishing the corporate income tax is because of all of the corruption surrounding it.
Steve