Posted on May 21, 2013 by John Hinderaker in Taxes

Rand Paul Stands Up Against Government Greed

The Senate Subcommittee on Investigations is holding a hearing this morning on Apple’s tax avoidance strategies. Rand Paul set the ringmasters back on their heels with an opening statement that questioned the whole rationale for the hearing. Here is Paul’s opening statement:

For those who lack the patience to watch it (that often describes me when it comes to videos), here is the transcript, supplied by Paul’s office:

I am offended by the tone and tenor of this hearing. I am offended by a $4 trillion government bullying, berating and badgering one of America’s greatest success stories.

Tell me one of these politicians up here that doesn’t minimize their taxes. Tell me a chief financial officer that you would hire if he didn’t try to minimize your taxes legally. Tell me what Apple has done that is illegal.

I am offended by a government that uses the IRS to bully groups such as the Tea Party but I am also offended by a government that convenes a hearing to bully one of American’s success stories.

I am offended by the spectacle of dragging in here executives from an American company that is not doing anything illegal. If anyone should be on trial here, it should be Congress.

I frankly think the Committee should apologize to Apple. I frankly think Congress should be on trial here for creating a bizarre and byzantine tax code that runs into the tens of thousands of pages, for creating a tax code that simply doesn’t compete with the rest of the world.

This committee will admit: Apple has not broken any laws. Yet, they are forced into a show trial at the whims of politicians, when in fact; Congress should be on trial for chasing the profits of great American companies overseas. You haul before this committee one of America’s greatest success stories and you want applause?

I say, instead of Apple executives, you should have brought in a giant mirror, so we could look at the reflection of Congress because this problem is solely and completely created by the awful tax code.

If you want to assign blame, the Committee needs to look in the mirror and see who created this mess, see who created the tax code that drives American companies overseas.

Our corporate tax is more than double Canada’s. I never thought I would be complimenting Canada’s tax code – our tax code is double Canada’s. Our corporate tax is over ten points higher than Europe. Instead of saying theirs is too low, why don’t we set about to work that ours is too high.

Apple has 600,000 jobs they’ve created, American jobs and we want to drag them before this committee to chastise them. I find it abominable. Just in my state, we have $700 million in sales from Dow Corning. They make Gorilla Glass.

They were virtually out of business. In the 1990s, Apple struggled – if I had to guess, unfortunately, I didn’t guess enough to invest in Apple, but the thing is that in the ‘90s, people were worried they might go out of business. You know they had one computer that wasn’t doing well and then all of a sudden the innovation that came about. And we want to bring them forward and chastise them for their success.

A couple years, we did repatriation of foreign capital. If we want the capital to come home, don’t double tax it. We tax it 35 percent. Let’s tax it at 5 percent.

I have a bill that would repatriate profits from foreign companies at 5 percent and put it into infrastructure. Our country is woefully short of money for infrastructure. But you’re not going to get it at 35 percent— you are getting zero. Let’s make it 5 percent and create and infrastructure fund.

There are probably 70 votes for that in Congress but nobody will bring it up. Why? They say, “Oh, it’s the sweetener for overall tax reform, which is illusive and a hill too tall to climb that it never seems to get here.”

Why not tomorrow pass it? Why do you think people are frustrated with Congress? Because we don’t do the right thing. Everybody admits, even those that want to drag Apple before this committee, they admit that the tax code is our problem.

But if we had repatriation at 5 percent, then they would bring money home. Why don’t we just pass it? Instead it has to be revenue neutral, scored by the CBO – just pass it if it’s the right thing to do.

I would say what we really need to do is to apologize to Apple, compliment them for the job creation they are doing, and get about doing our job.

Look in the mirror and let’s make the tax code better, fairer, and more competitive world-wide. Money goes where it is welcome and currently our tax code makes money not welcome in our country.

Thank you, Mr. Chairman.

Later on, when it came to his turn, Sen. Paul delivered an oration that I thought was even better; I will put it up later, if possible. The leaders of the lynch party, Carl Levin and John McCain, felt obliged to say that they are not vilifying Apple but are merely trying to shed light on the workings of the tax code. McCain delivered a rather sickening paean to Levin, and Claire McCaskill thanked him effusively for his bipartisanship.

I was never much of a fan of Ron Paul, to put it mildly, and I initially viewed his son with some skepticism. But it won’t take many performances like today’s to make me one of Rand Paul’s biggest fans.

Tim Cook is testifying now. He points out that Apple is the largest corporate taxpayer in the U.S., having paid $6 billion in income taxes last year. He concludes his opening statement with a rather impassioned plea for tax reform.

Posted on by Scott Johnson in jurisprudence, Minnesota, Political correctness, Supreme Court

Live from the Upper Midwest Employment Law Institute

At the moment I am listening to the ostentatiously liberal Judge Mark Bennett of the United States District Court for the Northern District of Iowa summarize the Supreme Court’s employment law decisions of the past year. Judge Bennett wants us to know that he has got his mind right (i.e., left), and how. I understood that from from his disparagement of the conservative Supreme Court justices as “the usual suspects.” That was enough for me, but then he added facetious praise of Chief Justice Roberts for the “craftspersonship” of his opinions, a purported word I am grateful never to have heard before this morning.

Continuing legal education is a multifaceted thing. I’m wondering if I can claim elimination-of-bias credit (I need three hours to satisfy the requirement imposed by the Minnesota Supreme Court) for meditating on Judge Bennett’s mind-numbing vocabulary.

Posted on by Steven Hayward in Climate

Waiting for a Tornado of Speculation

The news broadcasts of the Oklahoma tornado disaster that I saw last night and this morning were thankfully free of speculation that this tornado is proof of—wait for it—global warming, and therefore one more reason to hand over control of our energy sector to environmentalists.  I am certain this will come from the usual people starting today, but for now, note the New York Times’ Andrew Revkin discounting the thesis:

I’ll add a final thought about the persistent discussion of the role of greenhouse-driven climate change in violent weather in Tornado Alley.

It’s an important research question but, to me, has no bearing at all on the situation in the Midwest and South — whether there’s a tornado outbreak or drought. The forces putting people in harm’s way are demographic, economic, behavioral and architectural. Any influence of climate change on dangerous tornadoes (so far the data point to a moderating influence) is, at best, marginally relevant and, at worst, a distraction.

Meanwhile, Stephen Goddard points out that back in 1975, Newsweek (remember them?) blamed an outbreak of tornados on . . . global cooling:

Love how scientists are “almost unanimous” in their assessments of the effects of global cooling.  Sounds almost like a “consensus.”  You can download a complete facsimilie of the whole 1975 Newsweek story here.

Posted on by Paul Mirengoff in Immigration

Will Team Amnesty prevail?

While attention is focused on various Obama administration scandals, the Schumer-Rubio immigration reform legislation keeps chugging along in the Senate. What are the prospects for enacting this law, or some similar version?

I believe the Senate is likely to pass Schumer-Rubio. All or nearly all of the Senate Democrats will vote for it. That’s 55 votes or close to it.

The four Republican members of the Gang of Eight – Rubio, McCain, Graham, and Flake – can be expected to vote for their handiwork. That’s 59 votes or close to it.

Thus, only a small handful of other Republican votes will be required to invoke cloture. With big business backing amnesty so lustily, it’s likely that those votes can be found.

The Gang has said it is hoping for 70 yes votes, or thereabouts, so as to generate “momentum”” in the House. I doubt that Schumer-Rubio will get 70 votes. Mickey Kaus suggests that without 70, it will be difficult to get 60 because no Republican will want to be identifiable as having cast the vote that pushes amnesty over the top.

Kaus may be right. But a small number of Republican “yes” votes is not a tall order from a group as squishy as Senate Republicans.

As for the House, several sources have told me that the leadership is unlikely to bring up the massive Senate bill as such. Instead, pieces of it will be presented for vote, beginning presumably with provisions such as those calling for better enforcement.

This approach will present a dilemma for House Democrats. Like their Senate counterparts, they oppose enhanced enforcement unaccompanied by amnesty, a path to citizenship, and other goodies. But they will not want to vote against enforcement for fear of the political consequences.

I imagine that the Democrats will vote for stand-alone provisions such as those pertaining to enforcement. If amnesty/path for citizenship passes the House later on, then the Dems will be in business. If not, Senate Democrats will make sure that the stand-alone enforcement provisions aren’t enacted.

In any scenario, though, House Republicans should be able to pass a series of relatively non-controversial immigration reform provisions.

But what will happen with amnesty/path to citizenship?

The first question is whether the leadership will permit a vote on this. As I understand it, the leadership ordinarily will not permit a vote on any provision that doesn’t enjoy majority support within the Republican caucus. Amnesty/path to citizenship will fail this test, I’m confident.

But the leadership might bring it up anyway. We shouldn’t underestimate the influence that can be exerted on House leadership by the important portions of the Republican establishment – most notably business interests – that favor amnesty/path to citizenship.

If amnesty/path to citizenship comes up for a vote in the House, I would expect virtually unanimous Democratic support. That’s 201 votes or close to it. Thus, with 20 or slightly fewer Republican votes, the House could pass amnesty/path to citizenship.

Could those votes be found? I don’t know, but I wouldn’t bet against it.

The key, I think, is the extent to which conservatives raise their voices against amnesty/path to citizenship. We can’t count on the Republican establishment; we can’t count on Fox News; and we certainly can’t count on the business community. Moreover, the financial mismatch between pro-amnesty and anti-amnesty Republicans is shocking.

I believe that only a massive outpouring of conservative opposition, such as we witnessed in 2007, will stop the amnesty express this time. Without such an outpouring, I think it’s more likely than not that the House leadership will permit a vote on amnesty/path to citizenship, and more likely than not that such a measure will pass the House.

I understand the fixation on Obama administration scandals. But I also understand that 20 years from now, nearly everyone will have forgotten them. By contrast, 20 years from now Schumer-Rubio, if enacted, will be having a massive impact on America.

Posted on by Scott Johnson in Liberals, Media, Obama Administration Scandals

In search of an honest liberal journalist

Having lived through the Watergate scandal and the impeachment of President Nixon, I recall that one conservative journalist stood out from the pack. As the Washington columnist for National Review, George Will regularly exposed the Nixon administration’s lines of defense as the lies that they were. He distinguished himself both for his merciless analytical rigor and his skills as an anatomist.

Will was in the infancy of his now long and distinguished journalistic career. He had joined National Review in 1972, just in time take a front row seat from the beginning of the scandal. By 1973 he was devoting every one of his biweekly NR Washington columns to a dissection of the administration’s evolving “hangouts,” limited, modified or otherwise.

Readers of National Review did not take kindly to Will’s treachery, as they saw it. In one of his books (I think, but which one?), William Buckley writes about the torrent of criticism that Will’s work aroused among National Review’s subscribers. It can’t have been a pleasant experience, either for Buckley the editor or Will the columnist. Yet Buckley stood behind him and Will went from strength to strength, beginning his syndicated column and, within a few years, winning a Pulitzer Prize for commentary.

George Will’s intellect made him one of a kind in the profession, but is there a liberal columnist who can serve Will’s role in the current crisis of the Obama administration? Asking the question suggests that events support a parallel between Nixon and Obama, and I don’t exactly mean to do that. Something, however, is rotten in the Obama administration. The problem is that the political rot overlaps with leftist goals. I doubt that a liberal critic can rise to the challenge presented by Obama and his, if not the journalist’s, friends.

I’ve had the thought that Kirsten Powers might be the liberal counterpart to the conservative George Will of 1973. Powers would have it easier than Will did. In mid-career, she is already a star, and calling out the Obama administration might even serve to enhance her career.

I have the feeling she will let me down before long, but in the meantime, here is to Kirsten Powers and “How hope and change gave way to spying on the press.” Ms. Powers, you might even want to follow up with a look at the administration’s incredibly destructive national security leaks — leaks regarding the Stuxnet virus and the Seal Team 6 raid that killed bin Laden, to take two examples offered by Victor Davis Hanson — in the service of its transient political goals.

UPDATE: As I think about it, I am almost certain that I was recalling Jeffrey Hart’s account of Will’s tenure at NR in his terrific personal history of the magazine, The Making of the American Conservative Mind. I will have to return to this subject when I have my copy of Professor Hart’s book in hand.

Posted on May 20, 2013 by John Hinderaker in Taxes

Senate Committee Poised to Beat Up On Apple

Steve wrote this morning about a hearing being held this week by the Senate Permanent Subcommittee on Investigations, in which Apple’s CEO, Tim Cook, will testify tomorrow. The subcommittee apparently is trying to highlight supposed tax avoidance on the part of American companies, as the Associated Press reports:

Apple Inc. employs a group of affiliate companies located outside the United States to avoid paying billions of dollars in U.S. income taxes, a Senate investigation has found.

The world’s most valuable company is holding overseas some $102 billion of its $145 billion in cash, and an Irish subsidiary that earned $22 billion in 2011 paid only $10 million in taxes, according to the report issued Monday by the Senate Permanent Subcommittee on Investigations. … The company’s tactics raise questions about loopholes in the U.S. tax code, lawmakers say.

So this is all about raising taxes. It is true that Apple is keeping approximately $100 billion overseas, rather than bringing the money to the U.S. Apple currently has about two-thirds of its sales and earns around two-thirds of its income outside the U.S., so it shouldn’t be a surprise that a lot of its money is located in foreign countries. If Apple brought that money to the U.S., it would have to pay our ruinous 35% corporate income tax on it, so it makes much more sense to invest the money somewhere else. It is my understanding that we are the only country in the world that imposes a full corporate income tax on money earned overseas, if a company is foolish enough to bring its foreign profits back home.

Apple put out a statement in advance of Tim Cook’s testimony, which you can read here. If our senators weren’t shameless, it would shame them:

Apple pays an extraordinary amount in US taxes. Apple is likely the largest corporate income tax payer in the US, having paid nearly $6 billion in taxes to the US Treasury in FY2012. These payments account for $1 in every $40 in corporate income tax the US Treasury collected last year. The Company’s FY2012 total US federal cash effective tax rate was approximately 30.5%.1 The Company expects to pay over $7 billion in taxes to the US Treasury in its current fiscal year. In accordance with US law, Apple pays US corporate income taxes on the profits earned from its sales in the US and on the investment income of its Controlled Foreign Corporations (“CFCs”), including the investment earnings of its Irish subsidiary, Apple Operations International (“AOI”).

Apple explains, probably more politely than I would have in their place, why it doesn’t make sense to repatriate $100 billion in foreign profits to the U.S.:

As a result of its international success, Apple has accumulated significant amounts of cash outside the US. As described in greater detail below, Apple carefully manages this foreign, post-tax income to support its foreign operations through a corporate structure that protects and promotes the interests of its shareholders. Current US corporate income tax law severely discourages the use of these funds in the US by imposing a 35% tax on repatriation.

Apple’s statement is worth reading in its entirety. It addresses in detail questions that have been asked about Apple Operations International and its Irish subsidiaries. But Apple, appropriately, didn’t make a final point that I would add: I don’t want Apple to pay corporate income taxes, certainly no more than is absolutely necessary. Apple is a far better and more efficient institution than the U.S. government. Apple’s money will do far more good for humanity if Apple spends it, than if the government spends it. To the extent that the government taxes Apple’s profits, it mostly wastes the money on regulatory agencies that depress economic growth, a Department of Justice that has run amok, moronic entitlement programs, and so on. Far better if Apple keeps its money and invests it in R&D and other operations, both here and abroad.

So let’s hope Tim Cook stands up to the bullies when he testifies tomorrow.

Posted on by John Hinderaker in Immigration

Conservatives Unite Against Immigration Bill

A group of conservatives that includes Paul and me have signed a letter opposing the Gang of Eight’s immigration bill. I didn’t contribute to drafting the letter, but I was proud to sign it because it sets out the key arguments against the proposal in a powerful and easily understandable way. The group is called the Coalition Against S. 744, and the letter is titled “The Wrong Way to Reform Immigration:
An open letter on the Senate immigration bill.” Here it is:

We write to express our serious concerns regarding the Gang of Eight’s immigration bill, S. 744. We oppose this bill and urge you to vote against it when it comes to the Senate floor. No matter how well-intentioned, the Schumer-Rubio bill suffers from fundamental design flaws that make it unsalvageable. Many of us support various parts of the legislation, but the overall package is so unsatisfactory that the Senate would do better to start over from scratch.

We have a variety of concerns; some of us share only one, others share all. Among these concerns are that the bill:

* Is bloated and unwieldy along the lines of Obamacare or Dodd-Frank;
* Cedes excessive control over immigration law to an administration that has repeatedly proven itself to be untrustworthy, even duplicitous;
* Legalizes millions of illegal immigrants before securing the borders, thus ensuring future illegal immigration;
* Rewards law breakers and punishes law enforcement, undermining the rule of law;
* Hurts American job-seekers, especially those with less education;
* Threatens to bankrupt our already strained entitlement system;
* Expands government by creating new bureaucracies, authorizing new spending, and calling for endless regulations;
* Contains dangerous loopholes that threaten national security;
* Is shot through with earmarks for politically connected interest groups;
* Overwhelms our immigration bureaucracy, guaranteeing widespread fraud.

Reforming our immigration system is an important priority. But S.744 is such a defective measure that it would do more harm than good.

We urge you to vote against it and against any cloture vote to bring up the bill. Only then can a constructive, measured debate take place on how to improve America’s immigration policy.

The bill is signed by a number of “national conservative leaders,” a group that includes many of our friends:

Barbara Anderson, Citizens for Limited Taxation
Gary Bauer, Campaign for Working Families
Rev. C.L. Bryant, One Nation Back to God
Howie Carr, New England Talk Radio Host
Ann Corcoran, Refugee Resettlement Watch
Monica Crowley, Ph.D., Nationally Syndicated Radio Host
Glynn Custred, Professor Emeritus CSU East Bay
Jim Eagan, Sumner United for Responsible Government (Tennessee)
Elaine Donnelly, Founder and President, Center for Military Readiness
John Eastman, former Dean Chapman University Law School
Ken Eldred, CEO, Living Stones Foundation
Erick Erickson, Editor of RedState
Maria Espinoza, Houston Eagle Forum, The Remembrance Project
T. Willard Fair, President & CEO, Urban League of Greater Miami, Inc.
John Fonte, Hudson Institute
David Frum, Frum Forum
Brigitte Gabriel, President and Founder, Act for America
Frank Gaffney, President Center for Security Policy
Victor Davis Hanson, Hoover Institution, Stanford University
Donna Hearne, Constitutional Coalition, St. Louis, Missouri
Roger Hedgecock, Nationally Syndicated Radio Host
John Hinderaker, Powerline.com
David Horowitz, David Horowitz Freedom Center
Laura Ingraham, Nationally Syndicated Radio Host
Mickey Kaus, Columnist, Daily Caller, author The End of Equality
Roger Kimball, Encounter Books and The New Criterion
Cliff Kincaid, President, America’s Survival
Mark Krikorian, Center for Immigration Studies
Stanley Kurtz, Senior Fellow, Ethics and Public Policy Center
Kelly Monroe Kullberg, Christians for a Sustainable Economy
Lars Larson, Radio Host, Compass Media Networks
Mark Levin, Author and Radio Host
David Limbaugh, Lawyer and Author
Herb London, President, London Center for Policy Research
Dr. Gina Loudon, Nationally Syndicated Radio Talk Show host and Author
Rich Lowry, Editor, National Review
Michelle Malkin, author of Invasion and syndicated columnist
Ed Martin, Chairman, Missouri Republican Party
Jenny Beth Martin, Co-Founder and National Coordinator, Tea Party Patriots
Ken Masugi, Senior Fellow, The Claremont Institute
Andy McCarthy, Executive Director, Philadelphia Freedom Center
Eric Metaxas, Author and Speaker
Paul Mirengoff, Powerline.com
Frank L. Morris, Sr., Ph. D.
Mike Needham, CEO, Heritage Action
C. Preston Noell, President Tradition, Family, Property, Inc.
Peter K. Núñez, Former U. S Attorney, Southern District of California; Former Assistant Secretary for Enforcement, Department of the Treasury
Rev. Rick Scarborough, President, Vision America Action
John O’Sullivan, Editor-at-Large, National Review
Daniel Pipes, President, Middle East Forum
Judson Phillips, Founder Tea Party Nation
Andy Ramirez, Law Enforcement Advocate and Journalist
Sandy Rios, Vice-President, Family PAC Federal and Morning Host for AFR Talk
Phyllis Schlafly, President and Founder, Eagle Forum
Dimitri K. Simes, President & CEO, Center for the National Interest
Smart Girl Politics Action
Carol Swain, Professor of Political Science and of Law, Vanderbilt University
Tea Party Nation
Peter Thomas, The Conservative Caucus
Virginia Thomas, Liberty Consulting
Brad Thor, #1 New York Times Bestselling Author
Phil Valentine, Nationally Syndicated Conservative Radio Host
Richard Viguerie
Former Congressman Allen West
Tom West, Professor, Hillsdale College
Tim Wildmon, President of the American Family Association and American Family Radio

It is also signed by an even longer list of “activist leaders.” I think this effort is one of many signs that conservative opinion has hardened in opposition to the Gang of Eight’s proposal, in part due to the great work Jeff Sessions has done during the Senate Judiciary Committee’s hearings on the bill.