A matter of ‘fairness’? Not Hillary’s plan for corporate taxes

Apple CEO Tim Cook, perhaps wondering how to talk some tax sense into Hillary Clinton and other liberals.  (AP file photo)

Apple CEO Tim Cook, perhaps wondering how to talk some tax sense into Hillary Clinton and other liberals. (AP file photo)

One thing the slow Trump shipwreck of 2016 has done is preclude a lot of discussion about what Hillary Clinton wants to do as president. And one thing she wants to do is carry on the left-wing drumbeat about who is and isn’t paying their “fair share” of taxes. Her campaign website’s top-of-the-page summary of what she’d do about taxes? “Mak(e) sure the wealthy, Wall Street, and corporations pay their fair share in taxes.”

It turns out that some of these folks already think they pay their “fair share.” And they aren’t all Republicans.

Tim Cook, CEO of Apple, reportedly will host a fundraiser for Clinton later this month that brings in as much as $50,000 a head. But he made some interesting comments about tax policy — and the billions and billions of dollars Apple is keeping overseas because of America’s punitive corporate tax rate — in an interview the Washington Post published over the weekend:

“Let me explain what goes on with our international taxes. The money that’s in Ireland … is money that is subject to U.S. taxes. The tax law right now says we can keep that in Ireland or we can bring it back. And when we bring it back, we will pay 35 percent federal tax and then a weighted average across the states that we’re in, which is about 5 percent, so think of it as 40 percent. We’ve said at 40 percent, we’re not going to bring it back until there’s a fair rate. There’s no debate about it. Is that legal to do or not legal to do? It is legal to do. It is the current tax law. It’s not a matter of being patriotic or not patriotic. It doesn’t go that the more you pay, the more patriotic you are.

“And so what we’ve said — we think it’s fine for us to pay more, because right now we’re paying nothing on that and we leave it over there. But we — like many, many other companies do — wait for the money to come back.

“In the meantime, it’s important to look at what we do pay. Our marginal rate, our effective rate in the U.S. is over 30 percent. We are the largest taxpayer in the United States. And so we’re not a tax dodger. We pay our share and then some. We don’t have these big loopholes that other people talk about. The only kind of major tax credit that we get is the R&D tax credit, which is available to all companies in the United States. That’s important to know. The second thing I would point out is we have money internationally because we have two-thirds of our business there. So we earn money internationally. We didn’t look for a tax haven or something to put it somewhere. We sell a lot of product everywhere. And we want to bring it back, and we’ve been very honest and straightforward about that.”

Cook might want to raise these issues with Clinton next week, because she and other Democrats don’t want to understand what he’s talking about.

It is absurd for the United States government to expect companies to bring money earned overseas back here and hand two of every five dollars to the government. It is only rational for companies like Apple to refuse to do so. Democrats’ insistence that we charge an exorbitant tax rate in the name of “fairness” only means that we get close to zero in tax revenues from those earnings, because as Cook notes it it legal for companies to leave the money elsewhere. To whom, exactly, is this arrangement “fair”?

This arrangement is good for no one: The companies themselves aren’t reinvesting the money in the U.S., where they clearly want to invest it (if they wanted to invest it where it is, they’d have done so by now). Jobs aren’t being created as long as the capital isn’t flowing here. The government isn’t able to do anything with the revenue that isn’t being generated. Cook made this point earlier in the interview:

“What I’ve always felt should happen is that every dollar should be taxed immediately with no deferral. But as a consequence of doing that, you should have free flow of capital. What would happen is if a system like that were put in place, it should have more investment going into the United States. We’re the only major country in the world that has a (taxation) system like this. It’s not good for the U.S., it’s not good for the economy, it’s not good for jobs, it’s not good for investments.”

Cook went on to say that he is “optimistic” about the chances of corporate tax reform next year because “there’s wide agreement to that in both parties.” But we could have had corporate tax reform by now if that “wide” agreement were enough. President Obama — who famously once said he’d keep capital gains tax rates high, even if it meant less revenue, for “purposes of fairness”has proposed lowering the rate. But to only 28 percent, with a one-time tax “break” of 14 percent for previously untaxed foreign earnings. Neither rate is be low enough to induce companies to bring that money back voluntarily. Nor are those rates low enough to justify as “fair” his other proposal to end the deferral of taxes on foreign earnings. There is nothing “fair” — or smart — about the U.S. being one of the few industrialized countries to tax foreign earnings and maintaining a tax rate that, even at 28 percent (plus state taxes), would be among the world’s highest.

Count me as less optimistic than Cook, if Hillary has anything to say about what happens next year.

Reader Comments 0

90 comments
ATLAquarius
ATLAquarius

Can we admit that companies will hire based on demand and not tax rates per se? That money Apple has sitting overseas will not go strictly to domestic hiring. Can we focus on effective tax rates especially given that some major corporations effectively have paid no taxes in years i.e. GE? Finally the Republicans are by and large not proposing to strip all loopholes and deductions for a standard rate nor has there necessarily but a great outcry from the public. We can evaluate tax structure but I think you'd have to concede that the supply side argument is off the table for a moment considering the nomination of Trump and the "experiment" out in Kansas. 

lvg
lvg

A matter of  fairness- part III



""But many tax professionals are not convinced. According to the Tax Policy Center, "Few, if any, analysts believe that carried interest represents entirely a return to capital rather than labor."

“I think it’s odd that people making that much money off of essentially labor income should be paying lower rates than…their secretaries are, to put it baldly,” Michael Graetz, deputy undersecretary of tax policy for George H.W. Bush, has written.

It all comes down to how one characterizes incentive fees. If you see them as capital gains on risky investments, like restructuring a flagging company, you’re likely to support the current arrangement. But if you see incentive fees as payments for services rendered to clients, reform might look more attractive.


Victor Fleischer, a tax law scholar and New York Times columnist, examined IRS data and determined that the total could be as high as $18 billion a year. That's enough to raise a little more than political hay. """"


http://www.ibtimes.com/what-carried-interest-tax-loophole-2100059

Lil_Barry_Bailout
Lil_Barry_Bailout

I don't care what the corporate tax rates are per se; all taxes the morons think are paid by evil corporations trickle down to actual people in some form or fashion, whether it's lower worker pay, smaller returns to retirees and shareholders, or higher prices to consumers.

What should matter to our so-called leaders is the effect on economic growth and employment of tax policy.

Democrats don't consider those effects (Obozo's statement on capital gains, e.g.)--they're only focused on taxes as a way to punish people or to be a piggy-bank for their various vote buying schemes.

Stupid.

lvg
lvg

@Lil_Barry_Bailout Yeah like paying folks 68 billion dollars from the government treasury so corporations can keep wages low for the working poor   

or 400 billion in corporate write offs .

Thank your GOP gurus for that.


But hey why should anyone pay taxes when the 1%, corporations and the working poor all get  special breaks and in many cases cash in their pocket?

lvg
lvg

A  matter of GOP hypocrisy and fairness on taxes- Part II

""""The portion of the EITC that reduces tax liabilities is counted as a tax cut while the refundable portion is considered an outlay; of the program’s estimated $68 billion cost in 2013, about $60 billion is considered spending, according to the Congressional Budget Office.

The program has also long had very high error rates — as much as 25 percent or $13 billion in over-payments in 2012 — that made it a poster child for government waste to many Republicans.

Then, during the 2012 presidential campaign, the issue of Americans not paying federal income taxes exploded when Romney was secretly recorded lamenting that the 47 percent that don’t pay income taxes would never vote for him.

Some Republicans now say it a more economically efficient way of increasing pay for low-income workers because, rather than having businesses absorb the costs, the EITC spreads that burden across taxpayers.

It also has political advantages.

“If we don’t sound like a bunch of Ayn Rand-reading weirdos, that’s a good thing,” said Ellis. “If we can transmit empathy, and transmit that we are actually concerned about people that are trying to improve their lot, then that’s a good thing politically.”"""



Read more: http://www.politico.com/story/2014/01/republicans-gop-earned-income-tax-credit-paul-ryan-marco-rubio-102294_Page2.html#ixzz4HaoQ7qqv 
Fk

$$$$$68 billion paid out by the GOP and the IRS to allegedly working poor so minimum wage will not have to be raised by those oppressed companies forced to employ low wage workers; $13 billion is fraudulent


Ah the GOP has such great ideas on corporate taxes and tax credits to help corporations make a profit.

What does your brilliant leader have to say about earned income tax credits???????????????????

SGTGrit
SGTGrit

Good grief, I see these poor misguided people who come over here posting their cut and pastes who have no idea of what it really takes to start up, grow and manage a successful small business. Which is the heart and sole of American prosperity. During the economic malaise of the last eight years how many start ups have we seen blossom into medium to large company employers? We used to see such growth but why not today?

MarkVV
MarkVV

@SGTGrit " I see these poor misguided people who come over here posting their cut and pastes who have no idea of what it really takes to start up, grow and manage a successful small business."

Perhaps it is because this blog is not about how to start up and manage a successful small business.

SGTGrit
SGTGrit

@MarkVV @SGTGrit 

Tax burden and to what extent it factors into economic growth in the private sector,which produces jobs and a vibrant national economy. Of course that fact is a bit over your head, isn't it?

MarkVV
MarkVV

@SGTGrit @MarkVV You have attacked people here for "having" no idea of what it rally takes to start up, grow and manage a successful small business." The fact that people who do have that idea do not necessarily understand "the tax burden and what extent it factors into economic growth in the private sector" is bit over your head, isn't it?

Lil_Barry_Bailout
Lil_Barry_Bailout

@SGTGrit

During the Obama regime more small businesses have closed than have been created.

Heckuva job, Barry!

Lil_Barry_Bailout
Lil_Barry_Bailout

The "fair share" scumbags who aren't pulling their weight should shut their filthy mouths. And if you're not sure if you're pulling your weight, check your tax return for last year and see if you paid your $12K per family member in income taxes. That's what your government spent on you.

lvg
lvg

@Lil_Barry_Bailout Stupid Party members think every one else are "scumbags". This is why they got a leader like Trump who is illiterate and incapable of having a coherent and consistent thought on anything.

stogiefogey
stogiefogey

Interesting how the "fair share" narrative rarely touches on the fact that roughly one-half of working Americans pay no federal income tax.

How "fair" is it that people who receive the same, arguably even more, government services and benefits as the evil one-percent have no skin in the game at all.


MarkVV
MarkVV

@stogiefogey What you are presenting is the old, extremely simplistic notion about taxes. You have never understood why tax rates are progressive, have you?

Lil_Barry_Bailout
Lil_Barry_Bailout

Yes, it's the old-fashioned notion that all citizens should contribute to their country, instead of being irresponsible moochers demanding more of other people's money.

Try to remember what it's like to be an American.

SGTGrit
SGTGrit

@MarkVV @stogiefogey 

Why should tax rates be progressive? Is that an incentive or a non-incentive? And how do progressive tax rates spur national economic growth?

Lil_Barry_Bailout
Lil_Barry_Bailout

Well that's weird. Hillary Clinton just told us raising taxes is central to her plan to grow the economy.

MarkVV
MarkVV

@SGTGrit @MarkVV @stogiefogey Just as stogiefogey above, apparently you have no idea what taxes are for, and why almost every developed, industrial country in the world has progressive tax rate system. I give you a hint: The basic purpose of taxation in not to spur national economic growth.

SGTGrit
SGTGrit

@MarkVV @SGTGrit @stogiefogey 

Bingo.....the democrat strategy is to utilize high taxation as a means to garner votes from the dependent class. Thank you for your honesty.

lvg
lvg

@stogiefogey Buddy- your "fair share" party has continuously backed the earned income tax credit  that gives people millions of dollars from the IRS every year. Try to figure out how this is just another GOP version of  corporate welfare to keep wages down for the   working poor. It might overload your brain cells.

RafeHollister
RafeHollister

The Obama regulations are getting so ridiculous that now convenience stores are afraid they will be ineligible to accept food stamps, unless they also offer arugula and kale for sale.  


You know those will be kept until they turn brown and then thrown out at the QT, just like Michelle's lunch room entrees are tossed at the government schools. 


Enough with the regs and telling folks how to live their life. 

anguslee
anguslee

@RafeHollister Looky thar. An Ole Boy who afraid of vegetables. Run from 'em son, they prolly won't catch ya.

anguslee
anguslee

I ain all at sure Kyle done his research on they international tax codes. But I be guess'n he likes Tim Cook and who he likes fer president. Jes lower them taxes.

lvg
lvg

A matter of fairness:  400 billion dollars in corporate loopholes, tax credits and other corporate welfare  give a ways of the GOP and how GE managed to go five years without paying a dime. 


http://www.huffingtonpost.com/frank-clemente/families-advance-with-rec_b_8861986.html


Kinda like  their boy Trump getting $150 million tax write off for Trump Tower while it pulls in at least 5 million  a yea profit plus depreciation credits. How many police and firemen could that pay for?



CJO
CJO

I'm confused by this article. Kyle seems to be conflating corporate marginal income tax rates (top marginal tax rate is 35 percent) with corporate effective income tax rates (actual taxes paid divided by total profits) with capital gains taxes (top marginal rate is 20 percent).


Another source of confusion: The article that Kyle linked to in the second-to-last paragraph indicated that tax rates would likely increase with if capitals gains taxes were increased.


In terms of "fairness", if Apple is paying an effective tax rate of 30 percent, then they would seem to be the exception because even though our marginal rates are higher, credits and deductions are such that actual taxes paid by corporations in the U.S. are not out of line with those paid by foreign corporations: http://www.forbes.com/sites/taxanalysts/2015/03/25/the-truth-about-corporate-tax-rates/#2f1ea56820a5

Lil_Barry_Bailout
Lil_Barry_Bailout

I guess all that cash that isn't being brought to the U.S., and all those companies moving offshore are just illusions.

No doubt these companies are moving offshore in search of higher taxes, more regulation, and more liberal fascist hassling.

Infraredguy
Infraredguy

Hillary says she will make the Corps and the 1% pay their fair share? He said " She will say change but do nothing. "

Lil_Barry_Bailout
Lil_Barry_Bailout

Corporations can borrow money practically free these days, so if they want to invest, they can go that route.  Bringing cash back to the U.S. and losing 40% of it to taxes would be a dereliction of the fiduciary duty to the company's owners (shareholders).

McGarnagle
McGarnagle

Cook has some interesting points. Hopefully he'll have some influence over Clinton's policy after this crazy election is over. Trump on the other hand, will reverse back to the days of the wild west. So my vote is for sanity.


Jefferson1776
Jefferson1776

Cook does not need to cry when he wants US backed copyright protections for his "offshore" company.  Maybe he should live there too.  


I say change the law to not allow what they do, close the holes.


Fair is in the eye of the beholder.

anguslee
anguslee

@Jefferson1776 Copyright protections, like tax law, are complex. I'm not either kind of lawyer. But many countries, China, Turkey, India, and others ignore copyrights or insist on bribes to allow business to proceed. Kyle wants it all to be reduced to lower taxes will set us free. Maybe he wants shock and awe to enforce our patents, I dunno. Drumph I know. So Tim Cook should get US assistance protecting his copyrights and patents. How much? Maybe some amount commensurate with his tax $'s? The federal government helping American business and American taxpayers. As it should. It is an interesting question as to why if 2/3 of his business is outside the US, headquarters remains here. I think it probably best for us if he does. 

MarkVV
MarkVV

Cook may be right on this issue – although I would like to hear if some respected economists have a different view. But in the context of the presidential campaign, what is more telling is Cook’s support for Clinton.

 

Lil_Barry_Bailout
Lil_Barry_Bailout

@MarkVV

There are respected economists who hold views on both sides of the argument.  Well, they used to be economists--now they're water-carriers for liberal fascists like Hillary and Obama and they write for the New York Times.

RafeHollister
RafeHollister

@MarkVV As Trump says, Clinton has so many owners, there is little left for her to decide.

MarkVV
MarkVV

@RafeHollister @Lil_Barry_Bailout @MarkVV As usual, your comment is pathetically incompetent. Why don't you spell out their names, if you know who they are, and tell us what they say about this subject? I have not mentioned any names, I only wondered if there are some who had different views, so that we could compare the arguments.

Lil_Barry_Bailout
Lil_Barry_Bailout

There's no shortage of leftist "economists" for you to latch onto to justify your pre-existing policy preference.

RafeHollister
RafeHollister

@MarkVV @RafeHollister @Lil_Barry_Bailout Paul Krugman and Austan Goolsby are two among many, so what does that prove?  


They are lap dog supporters of Obamanism, which has been a failure.  Longest recovery since the Great Depression, no quarter of economic growth over 3% for the first time in history, increasing the national debt more than the 43 previous combined did, decline in median income for the middle class.

RafeHollister
RafeHollister

Well said Kyle, I'm glad you included that quote from Obama where he followed the proggie line of better to exact retribution against the successful folks, than worry about what it costs. 


Most folks think the Dems just don't understand how to grow and expand the economy, but that is not it.  They know, they just like the power of going after those that oppose their socialist ideology more than they like a growing economy.


This refusal to allow the money to return goes to their desire for a perpetual underclass, that will always vote for the proggie platform.  A growing economy provides growth and opportunity for all who will get after it.  If folks are happy and prosperous the proggies lose one of their most perpetual potent campaign theme, which is, our economy is unfair, and THEY got money and we are going to help you get some of it.


One sure way of putting some fire and energy is this stagnant,and dismal economy is to give "amnesty" to the corporations for bringing the money home.  The proggies are always willing to give amnesty to those who sneak into the country and require us to spend ever more and more money to support them, but amnesty for something that will help us with our budget and economy, is "unfair".  I'm "selfish" if I don't want to help support the importation of their new voters.  Why aren't they selfish, if they refuse to help the economy and jobs, by not being willing to give up their prime campaign theme of "get the rich, Wall Street, and big corporations?

JFMcNamara
JFMcNamara

Use our schools, roads and infrastructure to create your product.  Use our embassies and military to guarantee your overseas production.  Use our Visa program to bring in the best people in the world often at the expense of American workers. 


Pay the taxes we should pay?  Heck no, its too much so its not fair...Unlock and iPhone that could help solve a terrorist attack?  Heck no, because terrorist have privacy.  I'm a little tired of Apple not doing what they should.


Also, he held a fundraiser from Republicans.  I'm not sure what party he belongs to.  I think he belongs to the party that will help Apple get whatever they want.


http://www.theverge.com/2016/6/20/11981094/apple-ceo-tim-cook-republican-paul-ryan-gop-fundraiser

Lil_Barry_Bailout
Lil_Barry_Bailout

@JFMcNamara

Should they pay taxes to use the infrastructure in other countries where they do business?  Should they then pay taxes again to the U.S. on that income?  Does it seem "fair" that they might pay 70% combined to the country where it was earned and to the U.S.?

What am I thinking--to a leftist, anything short of 100% tax is "corporate welfare".

anguslee
anguslee

@Lil_Barry_Bailout @JFMcNamara your #'s are wrong.
The taxes paid abroad are deducted from the tax in the US. The taxes paid abroad are used for many things: road use,yep, free schools for Americans, and health care at no extra charge. Tax law might be to complex for you and yours

RafeHollister
RafeHollister

@JFMcNamara @Lil_Barry_Bailout Obama adds thousands of pages of new regulations every month, so what do you mean they were there when they set up those businesses?  New taxes at local, state, and federal pile up like ticks on a dog.  


Businesses are regulated to death after they are established under a business plan that was reasonable at start-up time, but new regulations now make the plan unworkable.

JFMcNamara
JFMcNamara

@Lil_Barry_Bailout @JFMcNamara , Should they be able to use U.S. trade policies to actually conduct business overseas meaning they don't have to pay for infrastructure in other countries?  America does a lot for Apple, and then they want to tell us what is fair?


To a righest, anything short of no taxes is "tyranny".  The rules were there when they set the business up.  Abide by them.

JFMcNamara
JFMcNamara

@Lil_Barry_Bailout @JFMcNamara , Well, Tim Cook is the one's who are complaining technically.  My point is that they can simply pay the tax rates since they were established at the time the business was conducted.  They choose not to...

Lil_Barry_Bailout
Lil_Barry_Bailout

@JFMcNamara @Lil_Barry_Bailout

Apple is paying tax rates that are in current law.  You can't legally choose not to do that.

What Apple IS choosing to do is not subject foreign earnings to U.S. taxes.

The U.S. could choose to lower tax rates in order to get companies to bring their property (cash) back to the U.S. to do some good here.

It appears Hillary will not make that choice and simply continue down the failed economic path of the last seven years.

Hedley_Lammar
Hedley_Lammar

@RafeHollister @JFMcNamara @Lil_Barry_Bailout Businesses are regulated to death


I hear this all the time. Its total BS


I know many many people who own small business. The are NOT regulated to death. They hardly do any paperwork at all 


This is just a BS line that gets repeated over and over.