This week those in the Government Class have shown us that they’ve become so accustomed to acting as rulers that they’ve lost all sense of their supposed role as public servants.
Today, Lois Lerner, the director of the exempt organizations unit at the Internal Revenue Service, refused to answer to Congress over her apparent role in politically persecuting certain Americans because they had particular political views that someone in the executive branch doesn’t like.
Contrast that with yesterday’s scene where Apple CEO Tim Cook, who heads a company that paid over $6 billion in taxes last year, voluntarily showed up before a congressional committee to be harassed because some in Congress feel that Apple didn’t pay enough in taxes.
Under oath, Mr. Cook said, “I can tell you unequivocally Apple does not funnel its domestic profits overseas. We don’t do that. We pay taxes on all the products we sell in the U.S., and we pay every dollar that we owe.”
And that’s almost certainly true. Because of the repercussions, companies like Apple must be fastidious about complying with U.S. law, and it’s not as if IRS agents can’t stroll into Apple’s executive suites pretty much any time they want and do an examination if they have some evidence that Apple isn’t in compliance.
This tendency of Congress to demonize U.S. companies for not paying enough taxes is nothing new. Last year Microsoft and HP got similar treatment, and GE has also been under fire.
And it’s not unique to the U.S. For the better part of the last two years, something like a witch hunt has been going on in the U.K., with companies being berated for taking full advantage of tax law to minimize their taxes.
Who gets to decide how much a company should pay in taxes? If a company is complying with existing tax law, there are no grounds to argue that it isn’t paying its “fair share,” and no means to try to compute what that “fair share” should be.
The legislators who are complaining about Apple’s tax compliance are responsible for the existing tax code in the first place. If they don’t like the results, change the tax code. Which is exactly what Mr. Cook suggested.
Instead of engaging in easy demagoguery, Congress should do the hard work of modernizing our tax code to reflect the reality of global competition, capital mobility (human as well as financial), and the fact that U.S. companies today do the majority of their business overseas.
Mr. Cook said yesterday that the current tax system has “not kept pace with the changing global economy,” and that comprehensive tax reform was a “necessary step to promote growth and enable American multinational companies to remain competitive with their foreign counterparts in both domestic and international markets.” He’s right. Congress should spend its time fixing the tax code instead of harassing American companies for succeeding.
May 22, 2013