What Apple Should have Said to Congress [Reader Post]



Baby Bob and his efforts to keep us on our toes have once again knocked me a bit behind the news cycle, but this story was too good to let slip by the wayside. On May 21st Apple CEO Tim Cook was hauled before Congress because various politicians felt that Apple had not paid its “fair share” of campaign contributions to them via lobbying PAC’s tax dollars, and I thought he handled himself pretty well. He pointed out that:

  • The $6 billion that Apple paid in taxes in 2012 is more than any other US corporation
  • The company has been directly/indirectly responsible for the creation of over 600,000 jobs
  • Apple complies with the letter and spirit of the laws and has paid every dollar that it legally owed

I thought that Cook was too kind in the dog and pony show. Although it probably would have launched investigations from every conceivable agency into Apple and him personally, here is the speech that he probably would have enjoyed delivering a lot more:

“Thank you for calling me here today. Actually, I don’t mean that. In fact, what am I doing here? My company has broken no laws, and in fact has gone to great lengths to ensure full compliance with the tax laws. Shouldn’t you be dragging up here actual tax cheats, such as say Charlie Rangel or Timothy Geithner? Never mind, it’s not like they hold any significant positions in dealing with the government’s finances, as that would kill any credibility of this panel. Your issue with my company is that the fact that paying every penny we owe the US Treasury is not enough and that you want more. How much more? You have your eyes on the $100 million that we’re banking in various institutions outside of the United Sates. So how much of it do you feel you’re entitled to – $10 million? Half? How about the entire $100 million? Given how you manage taxpayer dollars, at the rate of adding one trillion dollars of debt per year you’ll burn through our money in less than three months. What then? Now you’ve robbed us of our capital that we use to plan, invest, and for research and development and you continue to engage in what Ben Stein referred to as “fiscal grandchild abuse” with your miserable return on investment for the taxpayer dollars.

Speaking of rate of return, we have an obligation to our shareholders, you know those people who chose to invest in Apple to own a share of our company and share in our success, and even though we’ve hit a few bumps in the road lately, if you invested in Apple stock ten, twenty, or thirty years ago and held it you should be quite happy. We have an obligation to our shareholders to give them the largest return possible that will not hurt the company and within the law, and I’d like to say we’ve done a pretty good job of it. If you’ve gone to the trouble I hope that you have long ago liquidated any Apple stock and removed any funds that invested in us for your own portfolios, lest you all look like hypocrites for questioning our business practices when you yourselves are part owners.

Of course, we could follow the example of long time rival Microsoft. From its inception in the 1980’s though the late 1990’s the folks in Redmond offered good steady growth, and produced some healthy returns for their investors. Then in the late 90’s they peaked, and have never been quite the same since. Granted, there were some external factors, such as the dot-bomb bubble burst and the ill-conceived Time Warner merger. But there was another large factor in play as well. Up until the late 1990’s Microsoft had mostly stayed out of politics and just focused on its product and bringing it to market. In fact, they did it so well that they became too successful and profitable and caught the attention of regulatory overlords and became the subjects of antitrust legislation. Messr. Gates learned his lesson and it’s PAC increased its spending from about $16,000 in 1995 to roughly $1.6 million in 2000. Now instead of focusing on its product and bringing it to market Microsoft also had to waste resources keeping various politicians happy, and their share price has remained relatively flat ever since.

While we’re picking on Microsoft, is it your goal to turn Apple into the next Microsoft? MS spent the 90-‘s innovating and delivering products that made such great improvements in productivity that they dominated their markets. Granted, one could argue that their products ripped off competitors, such as Word and Excel to Word Perfect and Lotus 1-2-3, and of course there was Windows to *cough * Macintosh. But one can not argue that they were better at developing and marketing these innovations than their competitors. Then when resources had to be diverted to being “responsible corporate citizens” what has MS given us since? Zune? Vista? How many of you and your staffers are using Windows 8 tablets instead of iPads? You’ve already helped to contribute to the decay of one great American company; do you really want to do the same to another?

So let’s say you’re happy with how we’re spending our capital but you still want more. Maybe we can impose a 20% tax on all iPhones, Macs, and iPads? Maybe then we could also soak all app users with a $1 tax on every app downloaded. Maybe make the app fees and annual renewal cost? Of course, that would hurt our sales, and spur underground app development, not to mention what a boon it would be to our competitors. Of course, I have every confidence you would find ways to immunize yourselves from such taxes, or simply find a way to hand the bill to tax payers, so please forget I said that.

I’m also still not completely sure why I’m standing here today, since my company has broken no laws. Tax avoidance is completely legal, if it offends you so greatly perhaps you should be hauling up here other “tax cheats” like Secretary of State Kerry or Senator Warren for their own tax avoidance. Personally, I don’t begrudge them their efforts to keep their own money, but the difference between Apple and them is that we don’t self righteously bray that other people need to stop avoiding taxes while doing the same thing ourselves. That and unlike them or any of you, Apple actually contributes something useful to society, not to mention how our company and the use of its products actually creates jobs.

In conclusion, I’ve had enough of this extortion effort – I’m going back to my company where I have to work to pay the salaries of you tax fattened hyenas. I’d call this effort no better than extortion, but that would be an insult to organized crime. At least when the mob shakes you down they’re up front about it and how much they expect out of you. For that matter, I hear that the IRS is having a few problems of its own these days with some questionable practices. Maybe you should clean up your own house first before you rush to judgement on anyone else. Or if you don’t like how we work within the tax code maybe you should sit down and look at simplifying it. Maybe even consider something crazy like a Neutral Tax.

Please don’t bother us again with this garbage.”

Unfortunately, reality tells quite another story. Afterward as a means of bowing down and paying tribute, Apple hired disgraced former EPA head Lisa Jackson as Apple’s “top environmental officer”. Twitchy captured some of the best analysis across Twitter on the subject, and out of them all I’d say that @iowahawkblog summed it up with the two best takes:

“If Apple has honest accountants, they’ll list Lisa Jackson’s salary under “extortion payments.”

“1. Apple CEO get browbeaten by congress for not paying enough taxes. 2. Apple CEO hires DC sleazebag for 7-figure job. The system worked.”

And that, friends and neighbors, is a perfect example of why we remain stuck in the worst “recovery” ever. To repeat that favorite cliche from Conservatives, “They told me if I voted for Romney we’d get an unholy marriage between big business and corrupt government; and they were right!”

Cross posted from Brother Bob’s Blog

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Apple needs to atone.

@This one:
You forgot your sarcasm tag.
I’ll fix it for you:

Apple needs to atone. /off

LOL, good one BrotherBob. I could say something like, suspicious minds think alike, but then that would be self-serving.

I commented on “Apple Succumbs to Political Pressure” before I read your post Brother Bob, and I have to say I could not agree with you more! With Congress at such a low level of respect from America these days because of their miserable performance, I think it wise to attack THEM. Here is my comment from the other article:

Foolishness on the part of Cook and Apple. NEVER should have hired Jackson, and more companies ought to not just explain why they were breaking no laws when hauled in front of the Congress, but they ought to be a bit outraged and parallel their corporate situation with Americans in general. Start talking about the jobs you created IN SPITE OF GOVERNMENT POLICIES. Everyone in American needs to start taking a bit more of an offensive in dealing with a government who treats us all as guilty when there is no trial, no charges, no nothing. The recent IRS scandal is a great example. If all of the groups and people targeted spoke out WHEN IT HAPPENED, would things be a bit different now? I’d argue that yes it would. We Americans can get pretty indignant about false accusations, but too many are afraid of their very own government to show their indignance. Congress has an apporval rating of around 6%. Take the opportunity NOW to push back on these fools and buffons like McCain, Levin, Markey, Pelosi and the rest of the lying cheating stealing scum in our Congress. In Apple’s case, they have enough money to run commercials explaining why the Congress is hurting them from providing more jobs. Go on the attack.