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Blogs, Macroeconomic policies

Apple: When perfectly legal schemes can place human rights at risk

Apple CEO Tim Cook testified in front of a very self-righteous Senate committee on Tuesday, where he was asked to account for the hundreds of billions of tax-free revenues Apple has made since 2009. During this time, Apple has shifted portions of its operation to shell-company subsidiaries in Ireland, creating a situation in which, on a large portion of its revenues, the company could not only avoid paying taxes in the United States, but could avoid paying taxes at all, to anyone, anywhere.  The details are complicated, but the end result is clear: without breaking any laws, Apple saved itself billions of dollars that could have been spent avoiding some of the harsher elements of sequestration.  (Sequestration is the mandatory across-the-board spending cuts that the U.S. government has imposed on its people because of its inability to reach a sensible agreement on deficit reduction.)  While food pantries, public elementary schools, and medical clinics are stripped of funding, Apple rolls in the dough.

This is a fitting contrast for a company that has somehow convinced us all that it is something that it is not.  Buoyed by the cult of personality surrounding the late Steve Jobs, Apple has never taken the public relations hit it deserves for its overseas labor practices.  This says a lot more the global financial system as a whole than it does about Apple.  As the company’s defenders are quick to point out, if Mr. Cook did not maximize shareholder value within the law, the company would replace him and find somebody who could.  This simple trait of global capitalism is exactly why the world needs financial regulations that protect society as a whole, and the poor in particular.

This brings us back to Mr. Cook’s visit to Capitol Hill.  While the criticism of Apple is understandable, of course, it is obviously hypocritical of Congress to sit in judgment of a company that has utilized the very tax loopholes those same lawmakers are so hesitant to shut down.  The case was made by a number of senators that Apple went beyond the norm of tax evasion, and that’s true.  But it doesn’t change the fact that the problem is the law, not one profit-seeking corporation’s decision to profit from it.

The solution is simple.  Close loopholes that allow companies to stash profits off-shore.  End tax breaks for companies that ship jobs or profits overseas, including in cases such as Apple’s.  This is about a much bigger problem than just Apple; while Tim Cook and Company may have shirked paying roughly $8 billion in taxes over the past few years, a report released by Senator Bernie Sanders indicates that American companies have used loopholes to avoid over $120 billion in taxes. Meanwhile, American companies continue to suck dollars out of a strapped treasury through dubious tax deductions, including a manufacturing tax credit that was stretched to include Starbucks at the behest of lobbyists, who argued that Starbucks manufactures coffee.

Imagine what $100 billion or more could do for a country that ranks second-to-last in child poverty among industrialized nations (defeating only Romania).  Thanks to the sequester, unemployment benefits could drop 9 per cent, 100,000 formerly homeless men and women could lose their new housing, 70,000 kids could be dropped from head start, and several hundred thousand mentally ill individuals could lose care.Tim Cook may not have much to be proud of, but Tuesday, in that Senate hearing room, he was not the one with the most to answer for. That would be the folks pointing the fingers.

Andrew Hanauer is a freelance writer and regular blog contributor to Jubilee USA Network and Mama Hope. You can follow him on Twitter, @andrewhanauer

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