Thursday, January 25, 2018
Los Angeles Times: Apple's Bogus Claim That the Tax Cut Is Making It Spend More in the U.S. Is Just a PR Sop to Trump, by Michael Hiltzik:
To hear the White House tell it, Apple's big announcement last week that it would increase jobs and make billions in new investments in the United States is proof positive that the big tax cut President Trump signed in December is working. ... If anything, Apple's announcement proves just the opposite. It underscores Apple's success at having gamed the U.S. tax system for more than a decade before finally browbeating Republicans in Congress to do its bidding. The announcement bristles with exaggerations and misrepresentations about what the company really is promising. It glosses over the fact that the billions in overseas earnings it's "bringing home" as a result of the tax legislation were pretty much here all the time. ...
"Effectively, they've repatriated $97 billion," notes tax expert Edward Kleinbard of USC, perhaps the nation's foremost expert in the "stateless income" held overseas by U.S. corporations. (He estimates the sum at about $3 trillion, of which about $1.2 trillion is in cash and the rest in real investment such as in bricks and mortar.) The tax legislation subjects that income to U.S. tax, though at a rate of only 15.5% on the cash and about 8% for the real investment, compared with the overall top corporate rate of 21% — that's what's really meant by "bringing it home."
Apple wants to be congratulated for having to make a payment of $38 billion in this repatriation tax, which it says is probably "the largest of its kind ever made." Kleinbard says the company shouldn't win plaudits for this payment. "Apple is paying a record tax because for the last two decades, it has been the world champion at global tax avoidance. They've accumulated vast earnings outside the United States and paid tax essentially nowhere on that income to speak of."
The size of the levy demonstrates that the earnings have not been taxed by foreign countries, or Apple would be able to credit its foreign taxes against the U.S. levy. "The $38 billion is not a sign of corporate virtue," Kleinbard says, "but its having been the world's biggest tax scofflaw." ...
Then there's the $2,500 bonus Apple says it's granting its employees, which parallels $1,000 bonuses announced by other companies, typically with references to their lower taxes. ... "The idea that the tax bill is doing anything right now with respect to workers' pay is inconceivable," says economist Justin Wolfers of the University of Michigan. "At any given point in time there are literally thousands of corporations that give their workers bonuses. They do it because labor market conditions change, because they're good people, because they're forced to because of union contracts. It's clear that the new corporate playbook is to never do that without tipping your hat to the White House."