The NY Times on May 26th, 2013, in their lead editorial titled “A Is for Avoidance” with a sub-headline of “Apple Is the Latest Example of how American Multinationals Avoid Taxes” continued the demonizing of American business. They specifically mention Apple, Microsoft, Google, Amazon, Starbucks, Hewlett Packard, and General Electric for using aggressive use of tax havens and other tax avoidance tactics to avoid paying their fair share of taxes, and it’s not right. Here is the link to the article: http://www.nytimes.com/2013/05/26/opinion/sunday/a-is-for-avoidance.html?_r=1
This has been a consistent mantra of many in our government and media. It is a very dangerous chant that will foster hate on the business community and the preponderance of law abiding people in it.
So the question I ask to the business managers of these companies is, “Why aren’t you fighting back and presenting the facts that you create a huge amount of tax money?
Start by succinctly stating the facts on your contributions, such as:
- The number of employees you have and the amount of taxes they pay on the salaries you give them.
- The amount of purchases you make on services and supplies in a year and the profits you create for these suppliers, which are then taxed to the tune of x dollars.
- Your suppliers, whose growth is assisted by your purchases, hire x amount of people to service you who then pay x amount of taxes.
- The amount of money you borrow each year and the interest you pay on it. The lenders receiving this interest pay taxes on this income, and more jobs are created to handle their growth.
- The amount of dividends you pay out to stockholders each year and the taxes subsequently paid on these dividends.
- The amount of stock value of your company that is redeemed each year and the taxes the sales create.
- The efficiencies your products and services create and the resultant additional profits generated and the taxes they foster.
- The high cost of your R&D to generate new products for customers and the dollars lost in products that fail. The more the government taxes away your profits, the less new products will be developed, which adversely affects consumers, job creation and additional taxes.
I would also point out that if this idea of legal tax avoidance is demonized, by the same logic we can say that philanthropists can also be called out for not doing the right and fair thing because their contributions allow them to pay less taxes.
Also why should non-profits who pay no taxes be able to spend large sums of money on politics? Is that fair and right? How many tax dollars are avoided here?
Further, with this NY Times logic, should we be demonizing Warren Buffett and Bill Gates for giving 95% of their estates to charity, which of course are exempt from estate taxes?
If any CEO of any size corporation, whether multi-national or domestic, paid more taxes than required and thus reduced profits, they would be in danger of losing their job and opening their company up to many lawsuits. This would also apply to the media companies whining about business tax avoidance even though it’s legal.
The spotlight the media should be shining should be on Congress who need to work on revising the tax laws to make them more simple, eliminate loopholes, and fairer where needed. They might also shine a laser light on reducing expenses, which would reduce the amount of taxes needed.
The public needs to know the facts and to realize that Business is not the enemy. Government and the media must stop scapegoating business for their and the country’s problems. Business can contribute to solutions.