Vincent J. Curtis
3 Oct 2016
The New York Times
is a fine, upstanding, patriotic progressive organization that, regrettably,
was caught with its pants down when it tried to smear Donald Trump for allegedly
avoiding paying taxes for eighteen years.
The Times it turned out wound
up paying no Federal taxes itself in 2014, and in fact received a $3.8 million
tax refund, in spite of showing a $29.9 million pre-tax profit that year.
But paying taxes is the patriotic thing to do, so let’s look
at some highly, highly successful progressive businesses and see what taxes
they pay. Let’s look at Amazon, Apple,
and Google. I’m going from memory on a
lot of this, so the numerical details may be a bit off.
Amazon has been around since the 1990s, and was founded by
Jeff Bezos, who recently bought the Washington
Post for approximately $1 net. From its inception to the most recent quarter
of 2016, Amazon has never reported a profit.
Yet somehow, over the last twenty years – through the dot-com bubble of
2000 and market meltdown of 2008, Amazon grew into what is now evaluated on
basis of its stock price as a company worth hundreds of billions of dollars. Without ever showing a profit.
And because it never showed a profit, presumably it never
has had to pay net Federal corporate taxes, which are presently at a rate of 35
%. How did it manage this? The Amazon accountants were clever enough to
re-route monetary profits into expanding the business before the company had to
show that it made money. Thus a smart,
progressive company grew from nothing to being worth hundreds of billions by
redirecting money it would have to pay Uncle Sam into growing the business, and
most people would agree that the world is a better place because of Amazon as
it is rather than as some shriveled idea.
Apple is another world-famous progressive company. It started in the 1970s, and nearly went
extinct a few times before finally catching fire under Steve Jobs in the early
2000s. Apple is famous as the company
that has hundreds of billions of dollars parked in Irish banks because it doesn’t
want to subject those profits a second time to U.S. tax rates of 35 % as it
would if it returned those profits to American investors as dividends. The Irish tax rate is something like 12 %,
and Apple is content to appear to be an Irish corporation for purposes of tax
liability. For their part, American
investors are content to let Apple keep its money in Ireland because Apple is
more likely to do better things for those investors than Uncle Sam would. They are content to hold Apple stock at $100
a share, rather than at $80 a share and have $20 in cash subject to 35 %
tax. Meanwhile, Apple would have deprived
itself of the means of creating the next generation of iPhone, or iPad, or whatever
by paying the dividend.
Google is much the same.
For tax purposes it has renamed itself Alphabet, and also has some
European tax structure that allows it to pay U.S. taxes at a very low rate
relative to overall corporate profit.
What has become a tax game under Barack Obama is for
American corporations to reverse-buy themselves. They’ll acquire some tiny European
competitor, and then restructure itself as that European company with an
American name. Thus, the company looks
American for sales purposes, but is a tax-haven European company for tax
purposes. This game is becoming so
popular that the IRS is concerned about it, and is something that Donald Trump
has featured as part of his tax reform and trade reform platform. When Trump talks about a tax holiday for
companies like Apple, he is talking about bringing back into American banks at
least $2.5 trillion held overseas by American corporations for purposes of
avoiding taxes.
When Trump talks about American corporations like Ford and
Carrier moving manufacturing plants out of country, he is talking about these
companies not only moving jobs out of America, but their profits also, on a
sale of goods still to the American public.
What the company charges itself for goods made in Mexico and sold in
America determines the distribution of profits reported by the company to the
Mexican government and to Uncle Sam. If
Mexico charges less in taxes, then the company will report more profits south
of the border for goods sold into America.
If paying the maximum possible in taxes were patriotic, America
would have remained an impoverished rural country throughout the twentieth
century, all for the sake of patriotism.
Luckily for the good of America, some Americans are both patriotic and
smart. One of them is running for President.
The Times, now
owned by Mexican billionaire Carlos Slim after it was mismanaged into the
ground by its previous American owners, can try to impress some foolish and
unsophisticated people, who know nothing about business except that they hate
it, by accusing Trump of lack of patriotism because he legally used U.S. tax
law to benefit his company twenty years ago.
These people will happily buy an Apple product, use Google, or buy from
Amazon all the while thinking that these are great, smart, American companies. And they are, but they are each more guilty
than Donald Trump is when it comes to paying U.S. corporate taxes
patriotically.
The New York Times
is not so much calling into question Donald Trump’s patriotism as it is exposing
why it was such a business failure that it required a Mexican bailout to remain
in business.
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