Apple Tax Hearing – Two Simple Suggestions

Dave Johnson

The “Apple hearing” is underway (Go Sen. Levin!!) with Apple CEO Tim Cook explaining why Apple “can’t” bring back over $100 billion they have parked outside the country because they would have to pay the taxes they owe.

Senator after senator is explaining that our tax rate is not “competitive.” Not sure what this really means, but I guess it sounded good when it as tested in focus groups… But several years ago we lowered corporate tax rates to be “competitive” and what happened was other countries lowered their tax rates to be “competitive” and now governments around the world are defunded… If we lower corporate tax rates even more other countries will be pushed by their corporations to follow, and governments around the world will be even smaller in relation to the giant corporations. And the vast gap between the wealthiest few and the rest of us will grow even wider.

Here are two simple suggestions:

1) Just repeal “deferral” right now — meaning stop letting companies off from paying their taxes just because they hold the profits out of the country. This changes “can’t” to “have to” when they say they “can’t” bring the money back. The would be saying “We have to pay our taxes so we might as well bring the profits back.” This would bring $1.7 trillion that should be in the country back to the country and hundreds of billions of dollars that is already owed (but “deferred”) to fund our government right now.

2) Some have suggested that in the future we allocate a company’s taxes based on their sales. If 25% of their sales are in the US, then 25% of their total revenue is taxed by the US.

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