Abolishing corporate tax would send wrong message
Kevin Rafferty says scrapping corporate tax is neither fair nor workable
Apple's chief executive, Tim Cook, did not cower when he testified before the US Congress. He came out fighting and boldly told his senator inquisitors: "We pay all the taxes we owe, every single dollar."
Maverick Senator Rand Paul leapt to the company's defence and declared that the senate committee "should apologise to Apple", which he called, "one of America's greatest success stories".
What kind of message would it send to unemployed America and the world?
Some economists and commentators say that the grilling of Cook shows it is time to abolish income tax on companies. Some do so for ideological reasons - that companies create jobs and economic growth, and should not be penalised or discouraged by taxes from doing so. Other critics assert that there are practical grounds for abolishing corporate tax, either because it is an inefficient way of raising revenue or that international companies will always be able to avoid or evade the short reach and limited imagination of national tax authorities.
Apple, Google, Amazon, Microsoft, Starbucks and a growing list of powerful multinational companies seem determined to disprove the old axiom that only two things are inevitable, death and taxes; while conquering death is still remote, defeating taxes has become standard art.
Apple has invested huge sums in time, money and tax lawyers to diminish its tax burden and it now has more than US$100 billion sitting offshore. Over the past three years, it paid just 2 per cent in taxes on US$74 billion in overseas income.
But Apple is only one among many companies that have piled up dollars offshore. The offshore profits of 83 US-based companies now total US$1.46 trillion. According to Bloomberg, the untaxed offshore sums have increased by US$183 billion, or 14.4 per cent, in the past year.