The New York Times is in a state of the highest dudgeon this morning as it reported that, “Even as Apple became the nation’s most profitable technology company, it avoided billions in taxes in the United States and around the world through a web of subsidiaries so complex it spanned continents and went beyond anything most experts had ever seen, Congressional investigators disclosed on Monday.”
It made this the lead story, not the terrible tragedy in Oklahoma. It even devoted the Quote of the Day to the story, quoting a law professor, “There is a technical term economists like to use for behavior like this. Unbelievable chutzpah.”
Timothy D. Cook, Apple’s chief executive, will testify today at a Senate hearing, a hearing the Times expects to be “explosive.” The whole tenor of the article is that Apple did something wrong, that it’s a “greedy corporation” that dodged paying its fair share.
But the Times admits that, “Investigators have not accused Apple of breaking any laws and the company is hardly the only American multinational to face scrutiny for using complex corporate structures and tax havens to sidestep taxes.” In other words, Apple management lived up to its fiduciary duty to its stockholders to minimize the amount of taxes it pays to various governments. Outrageous!
The problem lies not with Apple, but with out-of-date corporate tax law that needs to be overhauled from top to bottom to take into account the new integrated global economy. All Apple did was make the problem obvious. This is not unlike the situation in the late 19th century when industrial corporations of unprecedented size arose and the laws needed to govern the new situation took years to develop. Standard Oil didn’t break any laws; it showed what laws were needed.
Undoubtedly, the senators before whom Mr. Cook will testify today will be in the same state of high dudgeon as the Times, and will beat up on him pretty bad. But instead, they should thank Mr. Cook for making the Senate’s duty plain: Rewrite the corporate tax laws.