I read articles and listen to politicians rant against big business (depending upon party affiliation) and how its needs to pay its fair share of taxes. "Fair share of taxes" always seems to be the catch phrase. Big Oil business is always a good target. Our President created a Justice Department financial task force to rein in the oil market and put an end to oil speculation about a year ago. Maybe there is some truth the this battle. After all, there may be something to be said about the "subsidy that is specific to their industry and that they don't need," said David DiMartino, a Democratic strategist in Washington D.C. Exxon Mobil (NYSE:XOM) has been mentioned in political circles numerous times as an enemy.
Whether it is needed or not is another whole question. There are arguments for and arguments against that can wait for another article. But presently, the whole idea of Apple (NASDAQ:AAPL) becoming the next "invent-a-villain" looms in the air. Is it because Apple is so successful that it has become a target?
One thing that is being talked about is how the company-legally mind you-avoids paying more than $2 billion in taxes by setting up business units in low tax states. Apple pays about 9.8% in taxes according to the N.Y. Times. Will it become the next political target because of its success?
Protest over Apple paying less taxes is not a new theme. In the summer of 2011, the company was targeted by a group called US Uncut. It is a grassroots movement taking direct action against corporate tax cheats and unnecessary and unfair public service cuts across the U.S. The group targeted Apple claiming it does not pay its fair share of taxes and now they claim Apple wants another tax break.
Apple's support of a broader effort that would allow corporations to pay a low tax rate on profits they take home from overseas tax havens. This is what US Uncut protests against. This would save Apple $4 billion, and overall would save corporations $80 billion in taxes that otherwise might have gone to the federal government. But would it have gone to the government? Would Apple even bring the money home?
U.S. tax policies penalize the repatriation of so-called foreign source income. Profits that are earned by foreign subsidiaries of U.S. corporations are not being hoarded. It is being kept offshore by our tax structure. Since repatriating these profits meant incurring taxes of up to 35 percent, most overseas profits ultimately remain offshore.
Sometimes the subtle start of mentioning corporations in a sentence that associates them with being anti-American for not paying its fair share of taxes is predestined for a broader arm twisting strategy. Let's hope Apple is not the next big Political Target.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.