THE GREAT AMERICAN TAX CHARADE
MAY 2013
In an effort to try to inject some common sense into the financial calamity that we saw was about to take place back in 2008 we offered up our agenda for getting the country back on track. In the column, Santa Claus Is Coming To Town I took some serious shots at then President George W. Bush’s absurd idea of sending everyone in the country that makes under $75,000 a year a $300 check with child bonuses up to $1200. Also in the article I offer up some free market solutions on how to get the economy back on solid footing and growing again. Unfortunately for all of us, our fearless leaders opted for check writing and bailouts. One such item on my list of prescriptions was tax reform.
The tax code needs to be scrapped, burned, encased in lead and then shot into the sun, just to be sure that we will never hear from it again. We as a nation need to move in the direction of the John Linder Fair Tax plan or toward a flat tax, which is being utilized with incredible success in many countries around the globe. Our current tax code is an instrument of evil that politicians use to divide the country. The sad reality is that if you are wealthy enough, you can afford to pay certain Wall Street firms to get you out of paying anything. Wall Street, Hedge Funds, and Insurance Companies make a fortune aiding the wealthy in finding loopholes. They have a vested interest in having a tax code as complex and unstable as possible. Those firms just so happen to be supporting candidates that agree with the Byzantine and oppressive nature of the code.
The issue of tax reform has been making the media rounds as of late, and the usual suspects from both parties are calling for bipartisan reform. They are engaging in a ruse. There will be no meaningful tax reform as long as we the people continue to put the same types of people in positions of power. Without fail, every single time we change rules or rates, there are new and intricate ways that the powerful and politically connected find paths around the taxes. Without the new Obamacare rules the tax code is 73,608 pages long. When the income tax was passed over 100 years ago, it applied to the top one-half of 1% of the population and the form was one page. Do you think I am being too cynical? Look no further than the Apple Computer debt offering.
Apple Computer tapped the global debt markets for the first time in over twenty years this past May by borrowing $17 billion. It begs the question…Why would a company with $137 billion in cash on its balance sheet borrow $17 billion?
The answer: It is cheaper for Apple to borrow money to pay out the dividend than to repatriate their earnings back to the United States and face the highest corporate tax rate in the world.
I find it hilarious that Congressional leaders from both parties are all of a sudden getting their proverbial underwear in a bunch over Apple Computer’s “tax avoidance.”
Tax avoidance is not illegal. Tax evasion is.
When you deduct your mortgage interest on your tax form you are engaging in tax avoidance. Watching Senator Carl Levin and Senator John McCain whine and wag their finger at Apple is pathetic and disingenuous. These two statists, as well as some of their peers released a report that “alleges Apple avoided paying taxes on $44 billion in offshore, taxable income.” They also state that “Apple did not break the law.”
Really…If they did not break the law why are they forcing CEO Tim Cook to testify in front of them? Apple Computer is now retaining a top law firm and spending a fortune in order to protect itself from…following tax law. This is banana republic stuff.
The tax code, as I stated years ago, is big business for accounting firms, law firms and investment firms. The tax code is power. If the code were an SAT association question it would go something like this…
Yellow Sun is to Superman as Tax Code is to Politicians.
I hate the fact that we are on unequal footing in the United States when it comes to taxes. The local Mom and Pop is not going to be able to set up an offshore subsidiary to help them avoid paying taxes. However, I am not dumb enough to actually believe that the Apple hearings are anything more than a dog and pony show to try to convince taxpayers that our charlatan leaders care about the little guy.
Care about the little guy?
Bull-excrement! You subject us to an incomprehensible 73,608-page tax code and in the same breath say that you care about us.
The truth about corporate taxes is that they are nothing more than a tax on the consumer. Corporations just pass the cost on in the products they sell. Whether it is Exxon, Starbucks, Apple or the corner diner. The tax money comes from the products or services that are being sold. If Apple is wacked with higher taxes the price of their products go up. Congress loves to hold these stupid hearings every few years. Remember when they went after the oil companies a few years ago and Representative Maxine Waters threatened to socialize them because of their windfall profits?
It sure would be nice that something good could come out of the horrible scandal involving the IRS and the targeted audits of conservative groups. It would be quite refreshing if real tax reform would come from this latest government overreach of power. However, I would not hold my breath. I feel that the most prudent course of action by conservatives in Congress should be rather than going after the President for unscrupulous behavior in utilizing the IRS to target opponents, I preferably would take a stab at tax reform. The problem with that idea is that I do not think there are enough high character individuals to make reform a reality. Too many of our current crop of so-called conservatives love the power of the tax code as well. Unfortunately, I highly doubt they will do a darn thing about reform, except pay it lip service.
Sources:
Palmer Anna Apple Prepares For Washington Onslaught Politico 5/20/13
Rush Peter Needed: A Tax Reform That Offends All Special Interests Investors Business Daily 4/12/13
