THE BLOG

Senate Permanent Subcommittee on Investigations v. Apple: Not With a Bang, But a Collective Whimper

05/28/2013 04:15 pm ET | Updated Jul 28, 2013

Forget Benghazi-berating, IRS-targeting and AP-hacking. Here's the outrage! Congressional investigators reported that Apple Inc. has dodged an estimated 70 billion in U.S. taxes over the last few years by diverting funds from our shores and our coffers and stashing them in low-tax overseas tax havens.

I expected the first sound we would hear would be shattered glass from an apple-sized rock hurled through the plate glass window of an Apple store by an irate taxpayer. The next sound would be the whoosh of a tripartite millstone plummeting from Barack Obama's neck -- accompanied by a sonorous sigh of relief. The last sound to reach our ears would be the splatter of GOP gallstones, coughed up with -- what else? -- elephantine gall!

But that was on Monday, May 20. Tuesday, the 21st, brought a different chorus of sounds. The same bipartisan gaggle of grousers, collectively identified as the U.S. Senate's Permanent Subcommittee on Investigations, who were poised and primed to confront Apple via its chief executive, Timothy D. Cook, rolled over and practically purred their admiration of all things Apple. Their highly anticipated, heated rebuke to Cook was "We love Apple!" -- almost verbatim and definitely ad nauseam. If Steve Jobs is rolling over in his grave, it's because his sides are splitting with laughter.

Overlooked and unconsidered by both chief Cook and Apple polishers was the nonaffluent, noninfluential, overburdened citizen tax-payer. The government of the United States is in the strangleholding hands of big business -- and the hands of big business are in the pockets of the American people, intent on turning them inside out and emptying them. And you know what? Neither the press nor the public seems to care! Not even those bearing the biggest brunt of it. Are we numb to everything in this country but for bombings and mass shootings, natural disasters and the Super Bowl?

Contrary to its innovative technology, Apple's tax tactics -- or more aptly, tax-avoidance maneuvers -- are notably unexceptional. Microsoft reputedly performed worse tax alchemy, and, by any respectable measure, Romney-Bain-Vulture-Capital certainly did. You don't have to dig too deeply to find that a whopping majority of American businesses pay no corporate income taxes whatsoever. And the government tolerates it. Business as usual.

Apple does what others do. American business behemoths divert as much income as possible to virtual empty-shell subsidiaries in overseas countries where taxes are strikingly low, while earmarking highly-deductible expenses to their corporate headquarters in the U.S. to offset their taxes. Apple's greatest asset is its intellectual property, so guess where that resides: with an incorporated "subsidiary" in Ireland, where Apple has a "negotiated" tax rate of 2 percent -- if, in truth, the Irish take any money from Apple at all. After all, billions of Apple-dollars gather interest somewhere -- more likely in an Irish bank than a shoe box -- if not for the Irish, than for Apple.

It's all legal under the Internal Revenue Code of 1986, i.e., the U.S. Tax Code, and none of the money is taxable -- ever in Ireland and only indeterminately in America. One of the Tax Code's greatest gifts to corporate America is its "check-the-box" feature whereby business entities are entitled to classify themselves as they wish. Unsurprisingly, they bypass "corporation," "partnership," "single-owner" et al, and unabashedly opt for "disregarded entity." Why take such a modest back seat on the big business express? Because a "disregarded entity" is not subject to U.S. income taxes at home or abroad! Take a long look at how royally you, the American taxpayer, are being bilked! And how easy your congressional representatives have made it for the piranhas. Moreover, even should a company eventually opt to return the profits to the U.S., its officers' intentions are predictably to induce the government to settle for a reduced rate, rather than the full one, or indeed forego the tax to add money to the economy, for the repatriated profits. Either or both of which choices the powers that be, having little or no alternative, will bankably agree to.

Given what we know, the media, the press, the people, someone, should be asking, loudly, what happened in the 24 hours between last Monday, May 20th and Tuesday, the 21st, to change -- dramatically reverse -- the tenor and course of the hearings. I am. Did executive officers or surrogates for Apple and other megacorporations intercede (news-speak for "threaten")? Were Senators Carl Levin and John McCain, the chair and ranking member of the investigating subcommittee respectively, and the twelve other senators of the subcommittee, urged -- or warned -- to pull back or else risk provoking Apple and other multinationals to re-locate outside of the United States, where taxes would be cheaper and governments more grateful? Were Levin, McCain and the others cautioned that they didn't really have anything "new" on Apple, and if they pressed Tim Cook as firmly as they indicated they intended to, they were going to look ridiculous?

What is the hold corporate America has on our leaders, who can't, or won't, even lead from the rear? Is it fear? If yes, of what: fat cats and head honchos, bankers and brokers, withholding campaign contributions -- even worse, reallocating them to an opponent? Is Apple so prodigious an American icon that our elected representatives fear a voter backlash? Is that what all their unseemly, inane fawning was about?

For better or likelier worse, even if what Apple and others are doing with their tax machinations is perfectly legal, is it remotely ethical? Even if, as is glaringly evident, the prime culprit is the Tax Code, and the malady the Sisyphean task of revising it in the obstruction capital of the free world, is exploiting it without compunction just? Is putting profits before products and people immoral -- or, in the grand scheme of things, no more than ho hum? Are Washington and Wall Street the new Wild West?

In addition to our legal courts, perhaps the time has arrived for our country to establish ethical courts.