05/01/2012 12:08 pm ET Updated Jul 01, 2012

Apple Sidesteps Taxes -- What's Wrong With That?

A front-page article in Sunday's New York Times entitled "How Apple Sidesteps Billions in Taxes" is getting quite the buzz.

A couple of things about the article.

While the Times piece recognizes that there is nothing illegal about the techniques that Apple uses to minimize its taxes, it insinuates, I thought, that Apple is still doing something wrong and unfair. That would be wrong. There is nothing wrong with Apple taking advantage of the tax rules as written. As far as unfair, it's the tax code, given to us by our elected officials, that is unfair -- let's put the blame where it belongs. (And the answer that most of our elected officials have for fixing an unfair and broken tax system: create new and different winners and losers.)

The piece reports that Apple also legally minimizes the taxes it pays to California, where its corporate headquarters are located. But it insinuates that Apple should do more anyway because California is in a bad way and has to cut back on a community college right in Apple's back yard (this point is made quite emotionally). No it doesn't. California is in bad shape because it has made stupid, and sometimes irrational, fiscal policy decisions over decades (I know; I used to live there). How is that Apple's problem? A tax code exists to collect revenue, not as the charitable arm of the state. Taxpayers, corporate or individual, have the responsibility to pay the taxes the law requires, and only the taxes the law requires, and the right to give the rest of their money, or not, to whomever they want.

Or is this no longer correct?

We are currently having a debate in this country about fairness and our tax systems. That's a good debate to have because our tax systems at the state and federal levels are all almost consistently unfair. But I worry about that debate as well. Insinuating that someone who pays a lower effective tax rate than you - say Mitt Romney or President Obama - is somehow doing something unfair to you does not help the debate. (By the way, you will note that neither gave a "contribution" to the federal government to make sure they paid the maximum rate.)

What's often insinuated into the debate is that for those who have less, especially a lot less (for several different reasons, including being just-plain stupid like California) they should expect the government to take from those who are successful -- because "successful" means they got their money because they were lucky or, worse, cheated -- and give it to them.

I don't think that makes for a fair debate. And it's no way to run a railroad (or a tax system) unless you want to eventually run it without trains.

See Tax Notes on Feb. 13, 2012, p. 777 and Aug. 1, 2011, p.459. for Martin Sullivan's original articles on Apple.