Frugal Friday: Does Apple owe the Government More Money?
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Happy Friday everyone! To all my US-based readers, I don’t know about you, but I am ready for a three day weekend! Memorial Day weekend is upon us and hopefully everyone has great weather this weekend to enjoy the holiday. Ever since we started our own business we have come to learn that we do not always get to take advantage of the long weekends, but that is ok. It looks like this go around that we actually will, which is great. Before I get started with today’s post I would highly encourage everyone to take some time to devote your thoughts/prayers to those families in Oklahoma who were ravaged last week by the gruesome tornado, if not giving as well. I don’t watch much in the means of news and to see what they have experienced is sobering to say the least.
That said, I would like to share some thoughts on an article I read on Yahoo Finance earlier this week about Apple CEO Tim Cook being grilled before Congress about Apple dodging paying federal taxes over the last number of years. I will say this was an eye-opening article and learned a few new things. Prior to reading the article I would put myself in the camp that Apple is just another greedy multinational corporation that will do what it can to pay no taxes at all and game the system to a fault. To be honest, it is clear that they are using the system to their advantage which does mean that they’re able to add even more to their massive cash hoard. But, as was cited in the article, a company or individual does have the right to pay the minimum in taxes that the law requires. Being business owners ourselves, I know that we do that. We’re constantly looking for ways to lower our tax liability and will do anything legally we can to keep more money in our pockets as opposed to the government coffers. Does that mean that we’re pariahs who should be questioned for what we do? Of course not, because we’re doing what anyone else would and looking out for ourselves while paying the minimum that’s required of us. The issue I see with Apple is two-fold really as they’re doing it on a much more massive scale and they can afford to hire the best tax attorneys in order to allow them to legally (but maybe not ethically) navigate the many tax loopholes the U.S. tax system affords them.
The article went on to detail numerous things Apple does to avoid taxes from shielding cash from taxes to the most ingenious act of setting up a system that allows them to have a subsidiary that has no tax residency anywhere. I’ll not go into the details of that last little nugget, but it is an enviable situation to be able to find yourself in. The easy thing would be to bash Apple and say they’re crooks, however let’s look at the amount they do pay in taxes. According to the article, Apple paid nearly $6 billion in taxes for the 2012 fiscal year and is likely the largest corporate tax payer here in the States. Beyond that, their taxes accounted for $1 out of every $40 collected from corporate tax payers last year. So, they do pay in taxes, but at the same time they also shielded nearly $10 billion in taxes in 2012 as well. Apple’s argument is that the tax system is antiquated and contains many loopholes which they’re going to take advantage of. I am not a tax professional, but I do know that the tax code here in the States is riddled with loopholes and numbers thousands of pages long. They claim that if the government were to simplify the tax system they would gladly pay more in taxes. Of course I question that, being the cynic that I am, but they bring up a great point that the tax system can and should be simplified to make it easier for everyone involved. I don’t know what that would look like and that’s not the purpose of this post, other than to say that change would be a good thing. Beyond whether or not you consider Apple or the government to be at fault, there is the question of ethics. Is it ethical for a company the size of Apple to do what they can to avoid paying taxes? While there may not be an easy answer, it is a question that needs to be asked. I know that many other companies do much worse than Apple, but should that matter? Should they be paying more because they’re so successful? These are all weighty questions that we should ponder, especially as we choose to spend our hard earned dollars as consumers.
Thanks for listening to my ramblings on the Apple topic. Now to the good stuff! It’s been another great week and I’ve had the chance to read some solid blog posts. If you’re not too busy this Memorial Day weekend, I encourage you to check out some of the selected blog posts.
Blog Post of the Week
The Perils of Working From Home on Club Thrifty
Holly writes about the things she has discovered now that she has recently taken the plunge and left her office job behind. I found myself laughing and also nodding my head in being able to relate to many of the things she described. Sure, working from home may not mean that you deal with that cranky co-worker anymore, but it has its own unique set of challenges. However, those challenges are more than balanced out by the numerous benefits like setting your own schedule and can be incredibly rewarding. While we may not have a co-worker like Pablo spending the day with us, we do have our cat Willie who is constantly knocking over the trash can digging for buried treasure. If you’ve not been over to Greg and Holly’s site, then I encourage you to do so and say congrats on taking the leap!
Other Blog Posts That Ruled
Pursuing What I Love or What Brings in the (Stable) Money on Making Sense of Cents
Out of Sight, Out of Mind: Debt Doesn’t Play That Game on Debt RoundUp
96 Month Car Loans are Insane on Sqirrelers
Why I Dislike Investing in the Stock Market even in Good Times on Financial Samurai
How to Become the Best of the Best at Your Company on One Smart Dollar
How to Save for Your Child’s College Education on The Heavy Purse
Odd Search Terms
Being frugally mean…That takes frugality to a whole new level
How to get rich online…Start a blog and you’ll become rich in no time at all!
Budget food shopping at Wal-Mart…Calling it food is being just a bit gracious!
I thought I graduated college…I think you’re just fooling yourself!
Can Wal-Mart buy my debt…Now that’s a question!
Should I pay down debt or eat healthier foods…I did not realize it was an either/or situation.
Why do I scratch my head every few minutes…One word – Lice!
Can we deduct the loss of a bottle of whiskey… If you only knew how many times that question crossed my mind!
What are your thoughts? Is Apple to blame for what they’re doing to avoid taxes, or are they only doing what the government legally allows them to do? Do you have any fun plans for the long weekend?
Photo courtesy of: Bryan Alexander