Should we ever have a conversation about taxes, tax codes and tax equity, can we embrace some difficult truths and jettison the usual bromides that color the debate?
Sunday's lengthy New York Times article also published in The Bee describing how Apple does an end run around on taxes, is a good place to start.
Apple, we learned, paid less than 10 percent in taxes on its overall profits in 2011.
Rather than California, where the company is based, profits are collected and invested at a nondescript office in Reno. There, Apple can take advantage of Nevada's zero percent corporate tax rate while dodging tax obligations in 21 other states, including California, whose corporate rate is 8.84 percent.
Through these legal loopholes, Apple last year paid $3.3 billion in taxes on $34.2 billion in profits worldwide, a rate of just 9.8 percent, instead of the national corporate rate of 35 percent. Without the loopholes, Apple would have paid an additional $2.4 billion more in taxes to the United States government.
Apple applies the strategy globally, too, with subsidiaries in low-tax nations such as Ireland, Luxembourg and the Netherlands, sometimes establishing its presence with little more than a post office box.
My first thought wasn't fairness, but the cliché that the nation's corporate tax rate is too high. How can that be if a corporation required to pay 35 percent isn't even paying 10?
Last year, the advocacy group Citizens for Tax Justice found that 30 major corporations paid no federal income tax between 2008 and 2010. Some, like General Electric, even got refunds.
Recently updated 2011 figures show that 26 of those 30 companies paid no federal taxes from 2008 to 2011. Of the remaining four, three paid four-year effective tax rates of less than 4 percent; the other paid 10.9 percent.
Meanwhile, from 2008-11, these 30 companies made $205 billion in pretax profits.
Additionally, 280 of the Fortune 500 companies 62 percent collectively paid an effective federal income tax rate of 18.5 percent half the statutory 35 percent while receiving $223 billion in tax subsidies.
Some argue that corporations would gladly stay and pay their taxes were it not for California's confiscatory rates.
Does anyone believe that a company as big as Apple would suddenly decide to happily pay even 5 percent on every dollar of revenue when it can still cross the state line and pay zero? How do you compete against that?
Does the fault lie with those who make the laws, rather than those who try to live with them? Couldn't we elect representatives who would tighten the tax code? Yes, but what if those lawmakers are bought and paid for by corporations? How many lawmakers are not beholden to some corporation, union or special interest?
Those 280 companies? They spent a total of $2 billion lobbying on tax and other issues between 2008 and 2010.
Since 1996, California's lawmakers have thrice increased the state's research and development tax credit, allowing hundreds of companies to avoid billions in state taxes. Apple says those three legislative breaks have saved it $412 million over the years.
Under further lobbying pressure, state lawmakers granted another tax reduction in 2009 that the Legislative Analyst's Office said would cost California $1.5 billion in tax revenue annually.
Unfair as all this sounds, one can't help but ponder how government officials might squander all this missing revenue if they had it. Pay off a tiny percentage of the national debt? Build more drones? High-speed rail?
Apple execs privately say it's unfair to criticize them while hundreds of other companies benefit from the same breaks and loopholes they do. Like many corporations, they create thousands of jobs, pay lots in taxes, and the ripple effect of their workforce is sizable.
Yet, like many other companies, they also export jobs to countries where they can exploit workers. They can lobby and buy political representation that you and I cannot.
Domestic-only small business owners face the same tax mandates as their corporate big brothers but without access to the spoils multinational corporations enjoy through their global reach and political influence. That seems terribly imbalanced given how small business employs roughly two-thirds of all Americans.
If nothing else, can we at least agree that Apple's tax tactics illustrate how tax codes written for a different era fall woefully short in today's economy?
Can we stop generalizing that corporations pay 35 percent tax rates? Many do, but many don't. Unfair as that seems to individual taxpayers, it's especially so to the companies that actually do pay their "fair share."
And finally, let's be honest: So long as a "bottom-line assisting loophole" exists somewhere, companies will go through it no matter what kind of breaks you give them here. Our tax policy is complicated enough; rabble-rousing rhetoric and reckless sloganeering needn't muddy it further.