Newsweek's Gross: Apple 'Too Greedy For Its Own Good'
As we've documented time and again, Newsweek global business editor Daniel Gross has a history of anti-business and pro-big government bias.
Gross stayed true to form in his latest attack on a successful American business enterprise in his May 29 Newsweek feature, "Is Apple Too Clever By Half?" Gross's answer, unsurprisingly, was yes, and that the company was greedy because it has followed U.S. tax law scrupulously in a manner that lessened its tax bite.
Gross began by oddly portraying Apple CEO Tim Cook's very appearance before a Senate committee recently as evidence that his company was or should be in the doghouse:
Apple always seemed like the perfect company. Not so fast. When CEO Tim Cook testified before Congress on May 25, he didn’t come to talk about Apple’s latest amazing gadget or the need to grant more visas to computer programmers. Rather, in his maiden voyage to Capitol Hill as Steve Jobs’s successor, Cook had to defend the company’s tax-avoidance efforts. What should have been a triumph for Cook was instead an awkward encounter.
Yes, it is an awkward encounter when the CEO of a popular -- the company has a 74 percent approval rating -- and profitable company is lectured by a bunch of politicians -- congressional approval rating clocks in at 16 percent -- who would be run out of the corporate boardroom of Apple -- heck, any sane corporate boardroom -- on a rail had they did to the company's books what Congress has done to the country's finances.
Apple is insanely profitable, an excellent credit risk for bond holders, and has gobs of cash-on-hand, which is a far cry from the health of the U.S. government's balance sheets.
But alas, that's not where Gross was going:
The Senate Permanent Subcommittee on Investigations documented the ways in which Apple avoided billions of dollars in American taxes by funneling activities through subsidiaries in Ireland, where it had negotiated a special 2 percent tax rate and with some Apple subsidiaries appearing to be the business equivalent of duty-free zones—residents of no country and, hence, immune to taxation. So Cook was left defending the company by waving around its progressive bona fides. “We believe in President Kennedy’s phrase ‘To whom much is given, much is required.’ ” By turns humble and combative, he noted that Apple paid about $6 billion in U.S. taxes in 2012. “We expect to pay even more this year,” the 52-year-old Alabama native said. “We pay all the taxes we owe.”
But the Apple fanboys and fangirls in the world’s greatest deliberative body weren’t buying his protestations that the company doesn’t use too-shrewd tax tricks. In fact, senators on both sides of the aisle pointed out that Apple has a superior tax-planning department that is a source of profits no less important than the beautiful, simple interface of the iPad. Sen. John McCain, in particular, sounded indignant. “For years, Apple has opted to forego fully contributing to the U.S. Treasury and to American society by shifting profits and circumventing U.S. taxes,” he said.
But all of this presumes two things a) it's greedy for a CEO to look to maximize profit, which, of course, ultimately benefits thousands if not hundreds of thousands of shareholders, including fixed-income retirees and b) it's greedy because the U.S. government has some moral right to more of the fruit of Apple's labors than is required by the letter of the law.
Apple is being "greedy" by not paying both the United States and who knows how many other countries more in corporate taxes, even though doing so would erode the company's profitability and undermine investor confidence, particularly when other tech companies are all too eager to similarly plan their business around the complexities of the U.S. tax code. Needless to say, doing so would ultimately harm the company's employees and suppliers, who would doubtless suffer pay cuts or layoffs as a result over the long-run as the company thought more about politically correct tax receipts than maximizing profitability.
Unlike governments, Apple makes its money by voluntary exchange where customers willingly, --often quite eagerly after having camped out for a new iPhone or iPad -- part with their money for a product they thoroughly enjoy. Apple has to manage its finances in a way to attract customers and capital and on top of that negotiate the whims of greedy politicians who covet more and more of the company's cash.
The Daniel Grosses of the world may not appreciate it, but something tells me that they are little more than background noise to the Tim Cooks of the world.
Full disclosure: I own a few shares of Apple stock, a MacBook, and an iPhone 4s, but I'd write this even if I didn't. And no, I've never camped out for an Apple product. Yet.