Jon Stewart pokes fun at Senate, Apple, over tax hearings, highlights bigger problems in tax code

Jon Stewart pokes fun at Senate, Apple, over tax hearings, highlights bigger problems in tax code

On last night's Daily Show, host Jon Stewart took time to make fun the United States Senate, as well as Apple, over the testimony given by CEO Tim Cook on Tuesday with regard's to Apple's tax practices. Stewart took Senators to task for their positive treatment of Apple and pointed out the flaws in Tim Cook's call to simplify the corporate tax code, while also poking fun at Maps and the infamous iTunes End User License Agreement.

As usual for The Daily Show, the segment is very funny. Check out the video below.

Source: The Daily Show

Joseph Keller

Joseph Keller is a news reporter for iMore. He's also chilling out and having a sandwich.

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Jon Stewart pokes fun at Senate, Apple, over tax hearings, highlights bigger problems in tax code

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Stewart rightly points out that the tax code is complex because individual corporations and industries have successfully lobbied for exemptions. There is no reason to believe this will ever stop; politicians get re-elected in part by bringing home the bacon to the corporations in their district/that donate to them.

Cook argued that a dramatically simpler corporate tax code, with lower rates, would induce Apple to repatriate more of its funds. Unless Cook suddenly lost all facility with numbers, this is patently absurd of him to claim. Apple is one of many firms to use a Double Irish with a Dutch Sandwich [ https://en.wikipedia.org/wiki/Double_Irish_arrangement ], a tax strategy generally lets the company in question pay somewhere in the neighborhood of 2% on offshore operations. A company faced with a choice between 2% and 39% (assuming they had the worst accountants in the world, and so paid full statutory rate) will keep the money offshore. It takes a special kind of credulity to think that company would make any different decision if the choice was between 2% and 20%, or 2% and 10%.

No, Apple specifically does not use the sandwich trick. This trick requires the funneling of domestic profits through the Irish and Dutch subsidiaries. Apple does no such thing. All of the domestic US profits remain here and they pay the taxes on those funds. The profits generated outside of North America are taxed at the jurisdictions where they are generated, and the remainder is in turned stored in the Irish subsidiary AOI. These funds are stored in dollar-denominated funds, too. The only taxes being "avoided" here are upon repatriation of those profits. There is no trickery taking place here. Apple *DOES* pay US taxes, including repatriation taxes, on the dividends generated by the funds stored in AOI in Ireland.

The Senate subcommittee brought in two high-level economics guys to provide testimonies and answer detailed questions on Apple's financial practices. They both declared, numerous times, that none of these practices are illegal in any way. They are quite well understood, despite the drivel from the media, and are perfectly valid. As a result of the practices, Apple cannot use any of the funds, stored with AOI in Ireland, for domestic operations. This money can be spent in the regions outside of North America, however. None of it can be touched by Apple, Inc. (the company we know as "Apple").

All of this was explained very clearly at the hearing and in prior statements. If the Senators can't figure it out, then they need to find another job. This hearing was not a trial or indictment of illegal practices; it was barely even a "finding of facts" hearing. As with all Congressional hearings, at best it was a witch hunt and a media circus.

Apple not only uses the technique, they are widely recognized as one of its first users of decades back. [ https://en.wikipedia.org/wiki/Criticism_of_Apple_Inc.#Tax_practices ] If you think there is no trickery involved in having 30% of your worldwide profits go through a company that virtually no tax obligations in any jurisdiction, and which just coincidentally never physically controls products or components, has no employees, and which is managed from the United States, well, you have a different definition of "trickery" than most. If the NY Times, CNN, or Wired are too dry for you, a simple (though admittedly biased) summary can be found at http://qz.com/86740/the-seven-craziest-findings-in-the-us-investigation-... .

Note that *nobody* -- not Congress, not the media, not even that summary site, and not I -- is claiming that any of these practices are illegal. They clearly are legal. Companies that do this are simply playing the game the best way they can. Were I Apple's CFO, I would be doing the same thing.

But to insinuate the legality of the techniques makes them above discussion or reproach, or that simply cutting the corporate tax rate (unless cutting it to less than 2%) would put a stop to them, is ludicrous.

I say just close the loopholes and make them all pay their taxes just like regular working people. Don't shift the tax burden to regular people who can't hide money in the Cayman Islands.

You do realize that the top 5% pays most of the taxes in this country right? Apple is a top corporate entity right now and does that for corporate tax. Every dollar out of 40 corporate tax dollars is paid by Apple.

In other words, regular working people hardly pay their fair share. Below certain income levels, they pay hardly anything at all.

The solution isn't to increase taxes on those already responsible for the majority of US tax revenue. The solution isn't to increase taxes on the "regular" working people. IMO, we should be cutting taxes, not increasing.

The problem is (wasteful) spending stemming from flawed systems. Always has been. I propose instead of worrying about burning up the tax code and starting over, we burn up the federal budget and start over. A total rehaul. Redefine what the federal budget should be. What role should the fed gov be doing? It's evolved into some freakish nightmare. This should be done by states as well.

"The problem is (wasteful) spending stemming from flawed systems. Always has been. I propose instead of worrying about burning up the tax code and starting over, we burn up the federal budget and start over. A total rehaul. Redefine what the federal budget should be. What role should the fed gov be doing? It's evolved into some freakish nightmare. This should be done by states as well."

Agreed and very well put. As a former government auditor I could tell you stories of waste that would make the stories you actually hear sound like nothing.

I don't care what the to 5% pays. Paying $1 in 40 isn't to be lauded if you owe $2 out of every 40. You've stated they pay alot but ignored that they owe a lot. That's like saying, "you should get away with not paying the whole bill because you paid most of it and it's a big bill." No, you owe it all you pay it all. And bottom line of my point, They still shouldn't get loopholes to hide money. And while they've hid money overseas their wealthy neighborhoods have hoarded the benefits of tax revenue while poor people got screwed, got their education defunded, their police and fire and hospitals unfunded. “The general American public should not have to make up the balance as corporations avoid paying billions in U.S. taxes,” Senator McCain said at the hearing and he's spot on. And over 40 years the CEO income has skyrocketed while the average worker hasn't. So all the are doing is hoarding profits. Then promoting political policies that favor the rich privileged 1%. You surely don't see Tim Cook Living in East Oakland or Hunters Point improving impoverished communities. Yeah regular people pay plenty of their share. Corporations just dodge their share.

Apple is a tax dodger plain and simple. And nobody has said increase taxes. They need to pay what they owe already. They hid their money offshore and didn't pay the taxes they were supposed to. They shouldn't get to dodge taxes just cause they are Apple.

I don't care about Apple. Apple's not my friend. Apple doesn't put food on my table. It's a product. It can easily be replaced too. That's the greatness of capitalism and the consumer marketplace. Apple is fine.

Want to get rid of wasteful spending fine? Im all for it. slash the military budget in half. We don't need to be the worlds policeman or hand out subsidies to keep military bases all over. And the military blows trillions yes trillions of dollars. http://www.sfgate.com/news/article/Military-waste-under-fire-1-trillion-... Second, end corn subsidies (which will never happen cause the banking industry needs the seed loan business), then end all the very corporate loopholes that allow them to dodge taxes. And get rid of things like the Graduated Corporate Income Credit, subsidies for Inventory Property Sales, Research and Experimentation Tax Credit, Deferred Taxes for Financial, Firms on earned income overseas, Alcohol Fuel Credit, Accelerated Depreciation of Machinery and Equipment, a deduction for domestic manufacturing, the ability to exclude Interest on State and Local Bonds, and Deferral of Income from Controlled Foreign Corporations. They cut funding to public schools in poor neighborhoods and public services, Let's cut them in wealthy neighborhoods same as they do in poor neighborhoods. Here's some more, end the "drug war" that's expensive and done nothing, end Nuclear power subsidies. I'm not even against nuclear power. I just don't want to pay to help them. And their are plenty of other handouts given to top companies.