The Spectacle Blog

NY Times Misfires Targeting Apple and High-Tech Sector

By on 4.30.12 | 3:25PM

It's no coincidence that the least taxed and least regulated sector of the American economy, high-tech, is also the most dynamic and successful. Think Apple, Google, smart phones, e-book readers, and electronic tablets. The economic benefits of American high-tech innovation are significant. High-tech has dramatically lowered transaction costs, while effecting a big increase in workplace productivity.

So it's not surprising that our progressive elite and other denizens of big government have high-tech in their crosshairs. They're concerned, you see, that Apple and other high-tech companies don't pay their "fair share" of taxes.

Why, high-tech is even (brace yourself) "'sidestepping' billions of dollars in taxes by setting up subsidiary companies in tax-free or low-tax states and countries."

Of course, companies have always sought to minimize their tax burden; but instantaneous communications and digital technology mean that capital today is more mobile than ever. Consequently, companies -- and especially high-tech companies such as Apple -- are increasingly able to move their money and operations overseas and across state lines: to places where the confiscatory arm of the state is less onerous and less burdensome.

The result has been a technological boon, which has benefited people the world over. There has, however, been one big loser in all this, and that is the bureaucratic state, which can't seem to gets it hands on elusive high-tech money.

So it is that the pied piper of liberalism, the New York Times, has published a long and lengthy lament of the government's failure to confiscate high-tech wealth.

The Times editorializes against high-tech under the rubric of "objective journalism." This means simply that it quotes the right people to give voice to its prejudices -- people such as De Anza College President Brian Murphy.

"When it comes time for all [of] these companies – Google and Apple and Facebook and the rest -- to pay their fair share, there's a knee-jerk resistance, Mr. Murphy said. "They're philosophically anti-tax, and it's decimating the state [of California].

"But I'm not complaining," he added. "We can't afford to upset these guys. We need every dollar we can get."

In other words, America's high-tech sector is responsible for California's fiscal crisis and economic decline, because high-tech companies don't pay enough in taxes. And, worse yet, high-tech companies are holding the state of California hostage to their own selfish economic interests.

That well encapsulates the liberal worldview: The problem is never that the state spends too much and over regulates; it is that entrepreneurs such as Steve Jobs, and innovative companies such as Apple, are insufficiently patriotic.

Of course, this isn't true. The truth is that Apple, Google, Facebook and other high-tech companies generate untold billions of dollars in economic activity. And these billions of dollars certainly are taxable and taxed, even if the companies themselves use legal means to avoid taxes so as to grow and prosper.

But California's liberal big-government policies are driving the entrepreneurial class away in droves, thus precipitating the state's fiscal train wreck.

"In recent years," report economists Michael J. Boskin and John F. Cogan, "the number of upper-income earners in California has radically shrunk -- by a third between 2007 and 2009 alone."

"Apparently, they note, "wealthy Californians are either fleeing to nearby no-income-tax states or have become less well-off after years of economic downturn, higher taxes, and overregulation of business."

Many Silicon Valley CEOs," add Boskin and Cogan, "say they won't expand in California because of high taxes and burdensome regulation."

The result: "Just 1 percent of California taxpayers are already providing 45 percent of the state's income tax revenue," writes Victor David Hanson. "And such income taxes now fund half the budget."

In short, contra the Times, taxing and regulating high-tech isn't the answer; taxing and regulating high-tech is the problem. And it's a problem created by the politicians' inability and unwillingness to limit spending and to rein in an out-of-control state budget.

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