Apple and Taxes

When the fox eats all the chickens, the farmer doesn’t get to blame the fox for the shoddy henhouse construction. The fox is just doing what a fox is supposed to do. It is up to the farmer to secure his chickens.

Same goes for lawmakers lamenting the sorry state of US tax laws.

It is difficult to criticize a company for following the rules. It can be done, but not with any credibility. I assume these lawmakers are making a big deal about it because Apple are following the rules and still making a profit, which pisses off those companies that are actually breaking laws and still can’t win. When the boss has a bad day, you have a bad day.

You can find a PDF of Apple CEO Tim Cook’s prepared remarks before Congress here.

Apple has an effective US corporate tax rate of roughly 21% after various adjustments. This is far higher than most companies. As they begin to make more of their products in the USA, that rate should increase. And all that money parked overseas? Those aren’t hidden US profits. Sixty-one percent of Apple’s revenue are from activities outside the USA. From a shareholder perspective, it would be irresponsible for Apple to bring that money into the USA under the current tax code.

Admittedly, the “incorporate in Ireland, conduct business in the USA” model is sneaky. Or, as the lawyers who came up with it probably call it, good business. Laws can be amended, but you can’t prosecute a corporation for following the rules.

But in America, everyone hates a winner.

“We promise not to screw it up.”

I’m an inveterate Tumblr consumer. I have a Tumblog, Fiat Justia, but I rarely (read: never) post there. Instead, I rely on Tumblr for All Things Fandom, and I don’t really want to have to find a new place for animated GIFsets and wacky mashups. So Marissa Mayer’s acknowledgment of the Tumblr Community’s (Tumbmunity?) concerns is touching.

She comes from Google. Motorola Mobility notwithstanding, they have been pretty good at acquisitions. Case in point: YouTube. You’d barely know it was acquired by Google in 2006.

By some reports, Tumblr had only a few months of cash left anyway, so this is a win all around. The investors get paid, the users get peace of mind that the platform won’t fold up, and Yahoo (I refuse to type the exclamation mark; I find it silly and unbecoming of a company that can shell out $1.1 Billion for pet GIFs and Doctor Who / Sherlock crossover fiction) gets the kind of credibility with the kids that you can’t normally buy.