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The Times Takes Another Bite Out of Apple

BEGIN TRANSCRIPT

RUSH: On Saturday there was a long, long story in the New York Times about Apple and its taxes and how Apple is avoiding paying taxes and how mean that is to the country. Now, let me set this up. I know many of you are not fans of Apple because you consider them to be a bunch of left-wingers and so forth. And I know that many of you get a little disturbed when I talk about my Apple stuff, that I like it, and I share it with you. I'm big on sharing my passions. But this is a teachable moment. It is a teachable moment about media. It's a teachable moment about taxes. And it's a teachable moment about young people who make up many of the bloggers on a lot of the tech sites that write about Apple and the other high-tech companies and gizmos and products and so forth.

I'll just give you a little tease. After reading the story, one -- and maybe it was more -- but one young -- I'm sure young -- blogger on a tech site expressed sadness and disappointment over the lack of patriotism shown by Apple in doing what it could to avoid paying taxes. Apple did nothing illegal. There's no law that they broke. This is the key point. There's another thing in this story. The New York Times used a really fringe think tank called the Greenlining Institute as their source for financial data. And what this group did, they compared Apple's taxes paid in a year previous to the year's income they were using to compare. I think it's an omission of ignorance. I don't think it was done purposely.

For example, when you file your taxes for April 15th, you're paying your taxes on your income of the previous year. So what these guys did in this story is report Apple's income last fiscal year, and then they used the taxes they paid in the year prior. Well, Apple's profits have been growing like crazy, so the percentage of taxes paid by Apple is, according to the erroneous way in which they reported, is much lower than what was actually paid, probably. But I'll get into all this. It's a long story. I'm not gonna read the whole story to you, I don't have to. But I will read you some of the highlights because it's a teachable moment. It's a teachable moment about capitalism. It's a teachable moment about economic growth, corporate growth, competition, employment. It's a teachable moment about taxes. And it's also a teachable moment about what is very predictable, and that is how the youth, young people, these bloggers have been conditioned to look at this.

And the New York Times is now targeting Apple. I remember when the first iPad hit, Steve Jobs (in every print ad that featured the iPad) had the New York Times on the display. When they were demonstrating the Web browser of the iPad, the website they always used was the New York Times. There was a symbiotic relationship. Steve Jobs had said publicly that it was his goal to teach the New York Times how to thrive in the digital arena, outside of the "dead tree," actual publication arena. But something's happened. Apple's gotten too big; it's gotten too successful. Something happened, and now the New York Times is out for them. This is the third or fourth hit piece on Apple.

There's a great example. I'll give you a great anecdote. A couple three months, maybe, before he passed away, Steve Jobs goes to the Cupertino City Council in Cupertino, California, where they are attempting to get permission (Apple is) to build a giant new headquarters. According to the artist's renderings, it looks like a giant circular spaceship with solar panels all over the top of the thing and a giant courtyard in the middle. They've got all the environmental stuff as part of the presentation. It's supposed to be state-of-the-art, and it's huge. It is huge. And Jobs himself goes to the city council to get permission to present the plans, to talk it up.

And of course Apple wants some favorable tax treatment as they're doing this. And one of the anecdotes in the story is, a city councilwoman in Cupertino says (paraphrased), "Well, Mr. Jobs, if we do this, what can you give back? Perhaps you could offer free Wi-Fi for all of Cupertino." And Jobs' response was, "You know, I guess I'm a little stupid or old-fashioned. The way I thought this worked was, we pay our taxes and you do that. Now, if that's not the way it works, we don't have to build our headquarters in Cupertino; we can just move." And, of course, the city councilwoman withdrew her idea.

She's no longer on the city council, according to the story, and Apple is moving ahead with their plans. But what's missing from this story? I'll just tell you: It's all about how... And Apple's not the only one that's cited for not paying its "fair share," although they're not breaking any law. There's a whole bunch of things you can do if you're a digital company. For example, they run all of their domestic sales through Reno, an office in Reno 'cause there's no state corporate tax in Reno. And they're not selling anything tangible. So when you go to iTunes and download a song, it gets recorded as sold in Nevada, even though there's only five employees there. The rest of them are in Cupertino, California.

Well, The Times is all upset that they're not reporting the sale in California, where they are. And Apple says, "Well, we've got a financial subsidiary." It's a kind of Apple. I forget the name of it right now. But they named this company that they own, a subsidy. It's just a collection agency, which is where all the revenue goes 'cause there's no corporate tax in Reno, or in Nevada. And Nevada is happy to have 'em. They do this in Luxembourg in Europe. They run everything through Luxembourg and Ireland and so forth to avoid high taxes in the European Union. And The Times finds this just unacceptable. It's outrageous. If they sold cars or something tangible, they wouldn't be able to do this.

But digital? When you buy a song, you're not touching anything. It's a download. And if Apple wants to say the sale gets recorded in Nevada, that's where it gets recorded. So The Times is just beside itself, and the people who write the story make it clear that Apple is not being patriotic. Apple is not paying its fair share even though it's not breaking the law. It goes on to describe the education deficits in California and the state budget deficits in California and the federal budget deficit and how Apple's not paying its fair share. There's a guy runs a community college near Cupertino, and this guy's quotes are amazing.

I'm not gonna try to remember them. I want to read them directly to you so I'll find them after the break and perhaps get into the story. But this guy is just unbelievable. No, I take it back! He's totally believable, given that he's a product of the news media his whole life. But he's just beside himself. His school's budget deficit is Apple's fault. The California state budget deficit is Apple's fault. Not one word in this story -- and I know it's a story on corporate taxation. I understand fully. But, folks, it's a hit piece, and there's not one word in this story about how any of these taxing authorities spend money irresponsibly.

There's not one word! Why is California running a huge budget deficit? Why is their education system in debt? It's not Apple's fault. It's the people that run the state government's fault, from the governor on down to the legislature, the assembly. That's not touched on in this story. It's an attack on successful capitalist companies who are not breaking the law and who are paying as little as they can, just like Warren Buffett.

But, you see, Warren Buffett gets away with it because while he's owing a billion dollars in back taxes and fighting it in private, publicly he's out talking about how he doesn't pay enough in taxes and it's unfair that the secretary pays a higher rate than he does. So he inoculates himself from any of this kind of criticism. The New York Times will never write a story about Buffett like the one that they've written here about Apple, and they include Microsoft in it and Cisco and some of the others.

BREAK TRANSCRIPT

RUSH: Amherst. It's sound bite number 21. This is at Hampshire College during the inauguration of his buddy, Jonathan Lash, to be the new president at Hampshire College. Here's more from Algore.

ALGORE: What the scientists tell us would take place if we did not is too awful to contemplate. We know that we have to, but to know is not enough. We need to tune out some of what they're telling us. Corporations are not people. Money is not speech.

STUDENTS: (wild applause)

ALGORE: We can afford to educate our young people.

STUDENTS: (wild applause)

ALGORE: We can afford to get quality health care. We can afford to clean up the environment. We can afford to seize our own destiny.

RUSH: This is particularly disturbing, because these young skulls full of mush, are cheering Algore when he said two things: "Corporations are not people" and "money is not speech." Well, of course corporations are people. What is a corporation if it isn't people? Now, let me attempt... By the way, Algore... Again, for those of you new here. Algore and his liberal ilk do not understand the basic laws of economics. Algore's no different than Obama on economics. And you see what a mess the Democrats have made customers. How can Algore understand the basic laws of physics, basic laws of science, if he is essentially illiterate on matters of economics? These people are not wizards of smart. They do not have all the answers. They are wrong all the time.

Corporations are people. Let me talk about Apple again. Oh! And since I'm gonna talk about Apple, let me read to you the quotes of this community college guy. This in the New York Times piece on Apple Saturday. I talked about it in the previous hour where they get crucified by the New York Times (chuckles) for not paying their fair share in taxes. And it is a hit piece, and it's filled with errors, commingling years of income versus taxes paid. They calculate taxes paid on incorrect years of income to come up with a lower percentage taxes paid. But Apple broke no law. They are totally within the bounds of the IRS tax code in everything they do tax wise. And so are all these other companies that are cited as doing the same things that Apple does.

One of the things, for example, that Apple does, domestic sales -- not all -- but the domestic sales of digital stuff like software downloads from their app stores or songs and TV shows and movies from the iTunes store. Those sales get recorded in Nevada. They've got a subsidiary set up in Nevada, and all the sales are recorded there. Apple has an office in Nevada. There's no corporate tax in Nevada. They pay no corporate tax on the sale of digital products. And the New York Times is outraged. They're livid over this. Because Apple's not in Nevada; Apple's in California. California ought to be getting a tax revenue, because California's in deep trouble. Education is underfunded, and the state budget is underfunded.

At no point in this story -- and I know it's a story on taxes and corporations, but still, there's not one reference to the irresponsible spending of governments here. Why is the state of California in trouble? It's not because Apple's doing anything. It's not Apple's fault. If the state were run like Apple is, everything would be hunky-dory. Apple's not the guilty party. Microsoft isn't the guilty party. Cisco's not the guilty party. The guilty party are the state's Democrats and whoever else. Republicans, too, if they're engaged in this wild, irresponsible borrowing and spending. And the same thing at educational institutions. You don't spend what you don't have. And then when you do, and you rack up a big deficit, you blame it on yourself if you have any moral fiber. You don't go blaming it on corporations that are doing their share.

Why does Apple, why do corporations want to spend as little on taxes as possible? I'll tell you why. They want to be competitive with all the other corporations that are doing the same thing. They want to maximize shareholder value. They want to keep the price of their products low as they can so they can sell them. Everything a successful corporation does is oriented to two things: the stockholders and the customers. That's who their bosses are. This New York Times piece and all the critics in it think the purpose of a corporation is to provide health care for the employees, free Wi-Fi for the community where the corporation is, and unlimited money for governments to spend irresponsibly. That's what they think the purpose of a corporation is. And it's not.

The purpose of a corporation is not to have jobs in the community. It's not to have health care for people. That's not why they exist. There isn't one person that started a business because he thought his community needed jobs or because he thought people in his town needed health care. That's not why people start businesses. Corporations are people. People work there. Stockholders own shares of stock. Who is it that's paying these taxes? It's people. Apple's employees pay taxes. Apple pays withholding taxes. It's absurd. I use that word a lot. It's absurd to believe, as the New York Times wants, to think that corporations don't pay their fair share.

No law has been broken. It would be a different tune if they had evidence Apple was breaking the law. But they don't. So some of these little young bloggers in the Apple network all talk about how they're disappointed in Apple's lack of patriotism. See how it works? Patriotism equals paying taxes, more than you should. That's patriotism. Apple's not being a very good citizen. But this idea that corporations aren't people. I'll use Apple again as a means of explaining this. And I know, I know full well, I get e-mails from people telling me they're sick and tired of me talking about Apple. Well, deal with it. The same people, "Stop talking about golf. Stick to the issues." Well, this is the issues.

All Apple did is what Obama did. The Obamas paid as little taxes as they could. Warren Buffett's fighting a billion dollars owed in back taxes, privately. He doesn't want you to know that. In public, Buffett's running around saying he doesn't pay enough in taxes, so you love Buffett. But let's say you have an iPhone or an iPad, and you buy an app. Corporations aren't people. So you click on the app store, and there's an app and you want to buy, so you download it. Who put it there? How did it end up there? Some cyborg? Some giant robot? Who wrote the app? Who ran it by Apple for approval? Who at Apple approved it to put it in the app store? Then when you buy it, somebody is in Nevada recording the sale.

On your desktop Mac, all of a sudden there's a notice that there's a software update. You ever thought, okay, where was it decided that today is the day they're gonna release the software update? Who wrote the software? Who determined it was ready to go? How many months, whatever was involved in testing, who did this? It's people. How much does the CEO know of all these intimate, intricate details, and how much does he delegate? Who knows? But it's people. All of this stuff is people. Corporations are people. They can't be anything else.

What is a corporation? Some building where inside a bunch of evil chicanery is going on? Is that what it is? It's just a giant building, and inside nobody's allowed, and all this stuff happens where customers' lives are at stake. The CEO plots the death of the customer in the case he's a drug CEO, or Big Oil's in there plotting how to screw the consumer at the pump, kill the planet at the same time. But who is doing this? Do you realize how absurd it is to say corporations aren't people? That's all they are.

I want to read you this quote from the junior college guy, De Anza College, community college near Apple in Cupertino. Don't go away.

BREAK TRANSCRIPT

RUSH: A lot of people are writing me: "Rush, what does the New York Times pay in taxes?" I don't know, but I'll guarantee you that they've got a battery of tax lawyers that are taking advantage of every depreciation opportunity they can and writing off every loss they can. I guarantee you the New York Times is not paying a penny more than they think they have to, just like the Obamas aren't.

But here comes a hit piece on Apple. "A mile and a half from Apple’s Cupertino headquarters is De Anza College, a community college." Steve Wozniak attended. "Because of California’s state budget crisis, De Anza has cut more than a thousand courses and 8 percent of its faculty since 2008." It's not Apple's fault, but the story wants you to think it is. "Now, De Anza faces a budget gap so large that it is confronting a 'death spiral,' the school’s president, Brian Murphy, wrote to the faculty in January. Apple, of course, is not responsible for the state’s financial shortfall, which has numerous causes. But the company’s tax policies are seen by officials like Mr. Murphy as symptomatic of why the crisis exists."

So Apple's not to blame, but let's go get this community college guy and let him explain why Apple is to blame. "'I just don’t understand it,' [Brian Murphy] said in an interview. 'I’ll bet every person at Apple has a connection to De Anza. Their kids swim in our pool. Their cousins take classes here. They drive past it every day, for Pete’s sake. But then they do everything they can to pay as few taxes as possible.'" The sense of entitlement here is breathtaking. This guy that runs this community college thinks he's entitled to Apple paying more taxes than they have to 'cause his school's running a deficit.

And then there's this. "Still, some, including De Anza College’s president, Mr. Murphy, say the philanthropy and job creation do not offset Apple’s and other companies’ decisions to circumvent taxes. ... 'When it comes time for all 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. But I’m not complaining,' he added. 'We can’t afford to upset these guys. We need every dollar we can get.'"

I kid you not. "They're philosophically anti-tax, and Apple's decimating..."

No. The state legislature is, Mr. Murphy.

BREAK TRANSCRIPT

RUSH: I want to read this. I had to go too quickly. I read it too fast, and I, as such, botched some of the words. This Murphy guy, I'm missing one page of it. But I don't need it. This is from the Saturday New York Times piece on Apple. Not breaking any law, but not paying their fair share of taxes. "A mile and a half from Apple’s Cupertino headquarters is De Anza College..." They have no business being in the story. They have absolutely nothing to do with Apple paying taxes, not a thing, in the real world. There is no connection whatsoever. But that doesn't matter. The Times found the guy, he's willing to say what The Times wouldn't say, and they establish a connection 'cause so many people have gone to this school.

"A mile and a half from Apple’s Cupertino headquarters is De Anza College, a community college that Steve Wozniak, one of Apple’s founders, attended from 1969 to 1974." How many years ago is that? Wozniak is out there touting Android these days. No. He's touting the Windows phone. His favorite phone is still the iPhone, but the Windows phone's about to take over, he says. Not even at Apple anymore.

"Because of California’s state budget crisis, De Anza has cut more than a thousand courses and 8 percent of its faculty since 2008." Fine. What's that got to do with the story on taxes paid by Apple? "Now, De Anza faces a budget gap so large that it is confronting a 'death spiral,' the school’s president, Brian Murphy, wrote to the faculty in January. Apple, of course, is not responsible for the state’s financial shortfall, which has numerous causes." Thank you, New York Times. I should add that Apple's not responsible for whatever's wrong at De Anza College, either. But that's not gonna stop the New York Times trying to make readers think it is.

"But the company’s tax policies are seen by officials..." Officials? He's a president of a community college. This story could be about a widget maker. It doesn't matter to me that it's Apple. I didn't write the story. I'm not the one that's got the problem here, but it's a teachable moment. "But the company’s tax policies are seen by officials like Mr. Murphy as symptomatic of why the crisis exists." Yeah, Apple's success is why this junior college is cutting classes. Now, that makes a whole lot of sense, doesn't it? "'I just don’t understand it,' [Brian Murphy] said in an interview. 'I’ll bet every person at Apple has a connection to De Anza.'" I will bet you that not every person does. There's some 47,000 people at Apple. What, is the connection seeing it out the window when they drive to work?

"Their kids swim in our pool. Their cousins take classes here." I'll bet there's some widows and orphans at Apple, too. "They drive past it every day, for Pete’s sake," he says. So? This is ridiculous. "Their kids swim in our pool. Their cousins take classes here. They drive past it every day, for Pete’s sake." It's a quote. "Still, some, including De Anza College’s president, Mr. Murphy, say the philanthropy and job creation do not offset Apple’s and other companies’ decisions to circumvent taxes." So there's nothing Apple can do. It can be philanthropic, it can hire many people, it can make much money, create great products at affordable prices for people, and that's still not enough for people like the guy that runs the community college. Because all of that doesn't offset Apple's decision to circumvent taxes.

This guy at this community college is sitting there, he's an Obama voter, there's no question. Obama voters are made up of people who don't care that they're unemployed 'cause they're gonna be taken care of, and they like higher taxes because they know that's how they're gonna be supported, and that's this guy. To him, higher taxes mean better days for his school. "'When it comes time for all 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. But I’m not complaining,' he added. 'We can’t afford to upset these guys. We need every dollar we can get.'" This is Jekyll and Hyde.

Throughout all of this article, Apple's mean, rotten, not paying their fair share, cutting classes, losing students, but I don't want to make 'em mad. I'm not complaining. I need every dollar from them I can get. I'm assuming The Times quoted the guy accurately. I fully expect Mr. Murphy to say he was misquoted in this. I would, if it were me. (laughing) I would say I was misquoted. So I fully expect him at some point to say so. Philosophically anti-tax, decimating... Mr. Murphy, what's decimating your state is the Democrat Party. What's decimating your state is liberalism, socialism, Marxism. What is decimating your state is irresponsible spending in Sacramento. That's what's decimating your state. Apple is not your problem, just like I'm not your problem, although I'm sure after today you think I am. And I might be.

END TRANSCRIPT

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