Apple should not have to pay taxes

Apple should not have to pay taxes

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Apple, the most highly valued technology company and the creator of wonderful products that millions enjoy and use to enhance their productivity, has been accused of not paying enough taxes at a congressional hearing where CEO Tim Cook was grilled yesterday. (See the story here). More specifically, Apple was accused of avoiding $9 billion or more in U.S. taxes by using tax shelters in Ireland.

Never mind that Apple is one of the largest tax payers in the United States, having paid $6 billion last year alone—the government wants it to pay more, apparently because its representatives think no company has the right to the wealth it creates. According to the above Bloomberg.com article, Senator Carl Levin (Dem), the chair of the Senate Permanent Subcommittee on Investigations that conducted the hearing, said: “Apple’s a good company but no company, no company should be able to determine how much it’s going to pay in taxes.” His argument is based on the mistaken view that companies (or individuals) owe money to government, and government knows best how to spend that money (on things such as Obamacare, corporate bailouts and subsidies, and other welfare programs of its choice).

Senator Levin and his fellow senators who supported him, such as John McCain, are wrong. Government does not have a right to the wealth created by companies and individuals. By forcing us to pay taxes—the amount it determines—government undermines our prosperity and well-being.

Our prosperity and well-being requires, first and foremost, that we are free to pursue self-interest, without anyone initiating force against us, such as government extracting taxes. Only when we are free to pursue self-interest, can we maximize wealth, through innovation and productiveness. And when we create as much wealth as possible, we are not the only ones who benefit. Everyone else gains from our production and trade, even those who are only remotely linked to our business, such as the lunch cafeteria owner whose business our employees frequent, or the dishwasher who works for him, or the car dealership salesperson where our employees buy vehicles.

Look at all the labor-saving, productivity-enhancing, and enjoyment-providing products from MacIntosh computers and laptops to iPhones that Apple has created, the productive jobs it has provided, and the wealth it has created for its shareholders. Wouldn’t it be wonderful if Apple was able to do more of that, if it had more money to invest in its operations? Apparently not, in Carl Levin’s and the government’s view. Instead of encouraging Apple to produce and prosper, and the American economy with it, the government wants to squeeze more taxes from the company—to squander them on wasteful, unproductive projects, or to finance its own bloating bureaucracy.

If the government was truly concerned about the prosperity and well-being of its citizens, it should not  tax Apple and other productive companies more but less—and for a truly flourishing society, not at all. This, not vowing to pay all of Apple’s taxes, should have been Tim Cook’s argument in defense of his company.

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One Response

  1. Reblogged this on Right From Yaad and commented:
    Milton Friedman had stated during one of his lectures that companies and corporations don’t pat taxes. He said the taxes paid over to government is borne by the consumer of said company’s products.

    Because of economic illiteracy, the common man on the street does not understand that economic principle. The company must bill the consumer enough to pay whatever the government demands of it. APPLE is the largest taxpayer in the United States, but the Federal Government says it’s not enough and they must pay over more!

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Jaana Woiceshyn teaches business ethics and competitive strategy at the Haskayne School of Business, University of Calgary, Canada.

She has lectured and conducted seminars on business ethics to undergraduate, MBA and Executive MBA students, and to various corporate audiences for over 20 years both in Canada and abroad. Before earning her Ph.D. from the Wharton School of Business, University of Pennsylvania, she helped turn around a small business in Finland and worked for a consulting firm in Canada.

Jaana’s research on technological change and innovation, value creation by business, executive decision-making, and business ethics has been published in various academic and professional journals and books. “How to Be Profitable and Moral” is her first solo-authored book.

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