Why is Wal-Mart — a spectacularly successful non-union company that buys schlock merchandise from Third World companies that pay workers a pittance and sells those products at ridiculously cheap prices to poor and working class people — a villain that is unwelcome in cool, liberal LA?
Why is Apple — an even more spectacularly non-union company that ships most of its jobs overseas to China where where suppliers pay workers so little and push the so hard they are suicidal — the darling of cool, liberal LA where so many are willing to pay a huge premium for its products and become captive consumers to even more Apple products?
Maybe it’s because Apple is such a creative, cool, liberal company it has written the book on how the world’s richest company and others like Google and Amazon that rank in the upper 1 percent of profitability worldwide — avoid billions of dollars in local, state and federal taxes, according to a massive New York Times investigation published Sunday. (How Apple Sidesteps Billions in Taxes)
It’s called the “Double Irish with a Dutch Twist” — basically a scheme to drive profits to low tax states and countries like Ireland where Apple’s patents are located so the company can put $110 billion in the bank, make billionaires of its and millionaires of its shareholders at the expense of everyone else, including Apple’s adoring followers.
With a handful of employees in a small office here in Reno, Apple has done something central to its corporate strategy: it has avoided millions of dollars in taxes in California and 20 other states.
Apple’s headquarters are in Cupertino, Calif. By putting an office in Reno, just 200 miles away, to collect and invest the company’s profits, Apple sidesteps state income taxes on some of those gains.
California’s corporate tax rate is 8.84 percent. Nevada’s? Zero.
Setting up an office in Reno is just one of many legal methods Apple uses to reduce its worldwide tax bill by billions of dollars each year. As it has in Nevada, Apple has created subsidiaries in low-tax places like Ireland, the Netherlands, Luxembourg and the British Virgin Islands — some little more than a letterbox or an anonymous office — that help cut the taxes it pays around the world.
So how lucrative is Apple’s tax avoidance scheme?
Apple’s federal income tax bill last year would have been $2.4 billion higher if it paid its fair share. Instead, it paid a total of $3.3 billion in cash on profits of $34.2 billion — a 9.8 percent tax rate. And that’s not what it pay the U.S. government; it’s what they paid to all the governments in the world in income tax.
“By comparison, Wal-Mart last year paid worldwide cash taxes of $5.9 billion on its booked profits of $24.4 billion, a tax rate of 24 percent, which is about average for non-tech companies,” the NY Times reported.
It isn’t just the government that provides the military-diplomatic support for companies that Apple and other high-tech California companies screw.
In 2009, they bought the California Legislature — presumably for a penny on the dollar with 10 free I-Pads thrown in — and got tax breaks that save Apple alone $1.5 billion a year in state taxes.
That’s a lot money in a state with a perpetual budget crisis that has led to massive cuts in public services, let the poor to live or die on their own and jacked up taxes, rates, fees and penalties with far more to come.
What’s happened to De Anza Community College, barely a mile from Apple’s Cupertino headquarters, is the face on this story.
It’s the school Apple co-founder Steve Wozniak attended but now it has cut more than a thousand courses and 8 percent of its faculty and faces a budget gap so large, it is in a “death spiral,” according to the school’s president, Brian Murphy.
“I just don’t understand it,” he saidl “I’ll bet every person at Apple has a connection to De Anza. Their kids swim in our pool. Their cousins take classes here. They drive past it every day, for Pete’s sake. But then they do everything they can to pay as few taxes as possible.”
Steve Jobs, hero to so many, personally went before the Cupertino City Council shortly before his death last year, to demand approval for a new corporate headquarters building.
Only one Council member had the courage to even suggestion that Apple might doing something nice and generous for the city like providing free wireless Internet for everyone.
“That’s why we pay taxes. Now, if we can get out of paying taxes, I’ll be glad to put up Wi-Fi,” Jobs responded.
That remark clearly is the tone Apple likes to take toward anyone who dares to question how the company behaves. Apple issued a statement to the NY Times, counting among the company’s good works the taxes paid by its employees which make “us among the top payers of U.S. income tax …Our focus has been on doing the right thing, not getting credit for it.” (Apple-NYT statement)
So I ask you what is so cool and liberal about Apple?
What is so rotten about Wal-Mart that the City Council, kowtowing to union demands, has kept them out of the city as much as possible, even trying to stop them from setting up a badly-needed grocery store in Chinatown in a building built with public money and left empty for 20 years?
And if the company wasn’t providing something of value, why would residents of the predominantly Latino community of Panorama City be welcoming a Wal-Mart grocery story in an abandoned eyesore shopping area?
Maybe it’s because the real people value jobs and taxes and fresh food more than the City Council that is more concerned with who gets the jobs and who they give the tax breaks too while posturing about the food deserts of LA they created with their destructive policies.