Tim Cook, Apple’s CEO should teach US senators effective resource management. They might stop wasting tax payers funds gained from their excessive taxation policies. Isn’t the United States the bastion of capitalism? The country where folks aspire to the American dream? It’s sprouted corporations like Apple, Microsoft, Amazon, Whole Foods, Walmart. However, today it seems to be sputtering. Many home grown corporations are finding greener pastures abroad. Among other reasons, the United States has the highest corporate tax rate in the world. Not only is the corporate tax rate highest, but the tax code is complex, and the tax system operated by unionized bureaucrats determined to bully selected groups.
Tim Cook Would Not be Doing His Job if he Brought Cash Back to the USA
What did the Senate sub committee hope to achieve by hauling in Apple’s CEO, Tim Cook? The tax code allows firms tax-free retention of profits earned abroad. It taxes only funds brought into the United States. Therefore, what’s the issue? Clearly, the inquisition was just another public corporate bashing. To be sure, it will mislead the ignorant masses to believe big businesses are the bad guys. More important, it was one more sad showing of how anti capitalist the United States is becoming? Has become? Informed folks should commend Tim Cook and other leaders for looking after stakeholders’ interests by keeping profits abroad.
Why should Apple or any United States company opt for reduced growth at home when legally they can expand overseas with untaxed profits? Apple and several companies take advantage of the oppressive, complex tax system for the benefit of their stakeholders. To do otherwise, would be to act incompetently like those senators who bully big businesses. Thankfully, at least Senator Rand Paul gets it. He said, “if anyone should be on trial here, it should be Congress.” Right on, senator Paul!
Retained Profits Create Jobs
Apple and other firm’ tax strategy of not bringing to the USA, cash earned abroad, will provide economic benefit in some country. Firms will have more funds to reinvest and create jobs, and, or send to shareholders. This will help to grow the economy and create jobs. This is a point politicians miss. Over time, retained profits will flow to different regions. That’s why countries must compete for these funds through taxation and other policies. No doubt, the United States government prefers the bullying approach instead of healthy competition. For the skeptics, this would be a valid question: What happens if a company just sits on retained profits?
Ultimately, Market forces and shareholders’ pressure will get firms to buy back their shares, pay dividends, or invest. Each of these actions puts funds into the economy. The funds might not end up in the United States. But they will go somewhere else. Hopefully, senators will realize the US tax system is broken, and will try to fix it. That’s not rocket science. But for inept and ineffectual senators and government bureaucrats this could be a stretch. Unionized keepers of the status quo tax system will want to grow government employment; thus the more complex the taxcode, the better.
Leave More Funds With Businesses To Create Jobs
Governments must leave more funds with businesses. Firms create productive jobs. Governments are wasteful. Governments must learn to do more with less. They must shrink. What if the private sectors’ good stewardship practices applied to governments? Imagine how many programs and departments would be cut to curtail blatant waste and abuse! There is no evidence government uses funds wisely. Government collects taxes, increases debt, and runs budget deficits. Meanwhile, problems it’s meant to fix keep growing! Rather than wasting Tim Cook and other corporate executives’ time to find out they followed tax rules, the Senate committee ought to be looking at ways to encourage businesses to expand at home. If they want funds returned home, they must provide incentives, not penalties! Will the senator who paid more taxes than due, please step forward?
To be sure, many firms abuse tax and other systems. Several executives overpay themselves. Still, the firm is the only viable productive jobs’ creator in the economy. Governments must encourage firms to invest profits at home. This will create jobs. They must provide the appropriate environment. Ideally, zero tax on corporations so they have more to reinvest and pay dividends. As well, less government, fewer regulations and reduce involvement in the economy.
Article first published as Apple’s Tim Cook Should Teach Effective Resources Management To Senators on Technorati.
Copyright © 2013, Michel A. Bell