Workers and small business people complain a lot about taxes — and rightfully so. Too often, however, some especially in the middle class buy into the right-wing argument that their taxes are high because of “wasteful” government social programs meant to alleviate the worst aspects of poverty in the U.S.
Nothing could be further from the truth. The bulk of federal revenue is spent on militarism and repression to promote the domestic and global interests of huge U.S. corporations and banks, as well as pay interest to the banks on the debt. Needed functions like education, health and anti-poverty programs are all being cut in this season of harsh “austerity.”
What makes this even more criminal is that the huge corporations whose profits are protected by the capitalist government pay very little in taxes themselves. And while it’s always been true that the rich create ways to avoid taxes, it seems that today it’s worse than ever.
Recently, a U.S. congressional report into Apple’s tax arrangements says that “Apple Inc. established an offshore subsidiary, Apple Operations International, which from 2009 to 2012 reported net income of $30 billion, but declined to declare any tax residence, filed no corporate income tax return and paid no corporate income taxes to any national government for five years.” (BBC News, May 21)
Another Apple subsidiary, based in low-tax Ireland, buys finished Apple products from low-wage suppliers in China, resells them to other Apple subsidiaries “at a substantial markup,” and retains the profits. This subsidiary generates $74 billion in profits! But Apple Inc., according to the congressional report, “may have paid little or no income taxes to any national government on the vast bulk of those funds.”
Apple Inc. has $100 billion stashed overseas. It recently borrowed $17 billion to finance investments and pay shareholders rather than bring any of that hoard “onshore,” just to avoid having it taxed. (Forbes, May 21)
Such strategies are used particularly by high-tech firms like Google, Hewlett Packard and Microsoft.
The tax code, particularly the corporate tax code, is the corrupt product of an army of well-paid lobbyists conniving with well-bribed members of Congress. The Senate committee investigating Apple is probably being conservative when it estimates that the company’s tax-avoidance schemes allow it to lower its U.S. tax bill by more than $10 billion a year.
Not just Apple does this. In December, the European Commission, the governing body of the European Union, said that corporate tax “avoidance” costs the EU $1.29 trillion in tax revenue a year. This comes at the same time that much-despised “austerity” measures by those governments have aroused massive resistance by European workers. It also coincides with “sequestration” in the U.S., which is austerity by another name.
Just because Apple has an overseas hoard of more than $100 billion does not mean the money is actually overseas. In fact, as the New York Times reported on May 21: “Apple’s $102 billion in offshore profits is actually managed by one of its wholly owned subsidiaries in Reno, Nev., according to the Senate report on the company’s tax avoidance. The money is tracked by Apple company bookkeepers in Austin, Tex. What’s more, the funds are held in bank accounts in New York.”
So it’s no wonder that Wall Street bankers applaud Apple’s tax-avoidance schemes. They want the workers to pay for the government that suppresses them. And the rich have been so successful in this reactionary period that the corporate share of U.S. tax revenue has fallen from 32.1 percent in 1952 to 8.9 percent today.
What the corporations pay in taxes really comes from the exploitation of labor. In Apple’s case, that often means reaping profits off the labor of workers in countries with low pay, forced overtime, and harsh and unsafe working conditions.
Years of struggle by workers’ organizations and left parties have forced capitalist governments to spend a portion of tax revenue to lift the living standards of the workers. But multinational corporations like Apple will use any trick in the book to evade even the weak tax laws that exist. As one Apple executive put it last year: “We don’t have an obligation to solve America’s problems.” (Huffington Post, May 22)
Only by overturning this corrupt, rotten imperialist system can the wealth produced by the workers be used to improve the lives of all.