Where are all the iTaxes?

Greg Critser 's next book, "City of Genius," is about Silicon Valley.

Steve-Jobs-apple-100.jpgIf we had a prize for Most Celebrated Business Hero in America, it would have to be Steve Jobs, the late founder of Apple.

The agile doge of Silicon Valley had a "death stare" you couldn't escape.

He had a up-from-orphan back story you couldn't resist.

And he had the vision of ten of his fellow technology executives

That's why — we're told — Apple was so good at making the things we love. All things "I", that is — from iPads and iPhones, to iPods and iTunes.

Lately, it also seems that Jobs and the company he left behind were also awfully good at all things Me.

Nothing illustrates that as well at Job's 2011 remarks to a Cupertino city council member, recounted recently in the New York Times. Jobs was asked if he would consider giving the cash-strapped Apple hometown free wireless service. (He was asking for permission to build a new infrastructure-needy headquarters.) "See, I'm a simpleton," he told the council. "I've always had this view that we pay taxes, and the city should do those things. That's why we pay taxes. Now, if we can get out of paying taxes, I'll be glad to put up Wi-Fi."

The notion that the company should pay more taxes to pay for more of the things the city needs was death-stared down. Apple, he said, paid its fair share of taxes.

In fact, Apple, like almost all other technology companies, pays about one-third less than all other companies on the Standard and Poors 500. That's because its tax department has used every dodge in the books to avoid paying them, dodges with such Tony Soprano-sounding names as "The Double Irish" (using that country's low tax rates to wash US revenue), "The Dutch Sandwich" (ditto above, except the Netherlands), and, "The Reno" (moving its revenue collecting area to zero-tax Nevado, apparently to avoid all those nasty city councils at home.)

The true Apple ethos — far from the progressive stereotype rendered by its ranks of official hagiographers — is one of exploit, avoid, and hide.

  • The company's safety and labor practices in China — to which it exports manufacturing jobs we desperately need here — are under scrutiny by international labor groups and governments for safety and other workplace violations
  • The company's pricing practices for the fast-growing eBook market are under investigation for price-fixing.
  • And its tax reporting practices, in the words of one economist who studies such things, "goes from fiction to the farcical." If the company was taxed like other firms, it would have to pay another $2.4 billion in taxes. But it isn't, and it doesn't.

That shortfall affects everybody from Joe Sixpack to Jane iPad, especially in California.
A new study released by CALPIRG found that the average California taxpayer in 2011 "would have to shoulder an extra $423 tax burden to make up for corporations and wealthy individuals shifting income to offshore tax havens."

Small businesses in California have to foot an extra bill of over $2,010 on average.
State, local and state tax revenues are so diminished that college students are fasting to protest huge fee and tuition hikes.

Roads and bridges are all on "deferred maintenance schedules."

And the children of the folks that clean Apple executives' comfortable homes can't get health care.

How...cool.

There is a natural reluctance, especially by local governments in need of property tax dollars, to make taxes an issue. It is a reluctance fortified by an implicit threat: treat us in anything other than a deferential way, and we'll move. ( Jobs threatened to move Apple if the City Council was so unhappy.)

But not everybody is cowed. As the ballsy Brian Murphy, head of De Anza College located in Cupertino, put it to a Times reporter recently, "When it comes time ...to pay their fair share, there's a knee jerk resistance. They're philosophically anti-tax, and it's decimating the state."

To almost all of today's tech tycoons, taxes are antithetical to capitalism. But that hasn't always been the case. Andrew Carnegie, the Gilded Age tycoon who later turned his fortune to building public libraries — his day's Wiki — lauded the British system of high taxes on inherited wealth. And he required that any city that got one of his grants also pass an ordinance establishing a tax to support the library's operating expenses.

It's time for the technology barons of our own age to start thinking a bigger.

They compete in the world. They live in America.


More by Greg Critser:
My San Francisco diary
Where are all the iTaxes?
Close to markets or not, fat poor kids are different than fat rich kids
Previous Native Intelligence story: Only in LA: Tough town to park in *

Next Native Intelligence story: May 19-20: 'Sportsageddon' in Downtown L.A.?

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