Memo to The New York Times: The Tax Shaming Has Gotten Old

Last weekend, the New York Times ran an exposé on Apple and its "sidestepping" of taxes. Since it's been a week-ish, I think things have quieted down enough so we can take this discussion in a new direction. Specifically, how the Times' tax coverage, of late, has been the equivalent of ten pounds of monkey shit stuffed into a teenage boy's tube sock.

Why do I feel this way? I'll tell you why. Because it amounts to tax shaming. Tax shaming of an order so self-righteous that it has me convinced that the Times brass have finally accepted the fact that their relevancy, from a commercial standpoint, is kaput and they can now only wag the finger at the corporate haves because they still have the biggest megaphone.

When it comes to taxes, the Times appears to have taken the position that if you're a wealthy person or corporation, whatever you are paying in taxes to the federal government is not enough, regardless of whether you are in compliance with the law. The two most prominent examples of the Times' tax shaming is the aforementioned Apple article and last year's exposé on General Electric

If corporations were actually people as Mitt Romney claims, these two guilt trips would have caused both Apple and G.E. to cut the checks right away, sobbing with remorse. Luckily for their shareholders, they're just faceless companies who have no trouble avoiding taxes in every legal way possible. But to get an idea of what I'm talking about, take a look at this excerpt from the Times article on Apple:

[W]ith a handful of employees in a small office here in Reno, Apple has done something central to its corporate strategy: it has avoided millions of dollars in taxes in California and 20 other states. Apple’s headquarters are in Cupertino, Calif. By putting an office in Reno, just 200 miles away, to collect and invest the company’s profits, Apple sidesteps state income taxes on some of those gains. California’s corporate tax rate is 8.84 percent. Nevada’s? Zero. Setting up an office in Reno is just one of many legal methods Apple uses to reduce its worldwide tax bill by billions of dollars each year. As it has in Nevada, Apple has created subsidiaries in low-tax places like Ireland, the Netherlands, Luxembourg and the British Virgin Islands — some little more than a letterbox or an anonymous office — that help cut the taxes it pays around the world. Almost every major corporation tries to minimize its taxes, of course. For Apple, the savings are especially alluring because the company’s profits are so high.
And now the G.E. article:
[C]ritics say the use of so many shelters amounts to corporate welfare, allowing G.E. not just to avoid taxes on profitable overseas lending but also to amass tax credits and write-offs that can be used to reduce taxes on billions of dollars of profit from domestic manufacturing. They say that the assertive tax avoidance of multinationals like G.E. not only shortchanges the Treasury, but also harms the economy by discouraging investment and hiring in the United States.
The key words here being "avoid" and "legal." Anyone who has studied taxes knows that there is a huge substantive difference between "avoiding" taxes (what Apple and G.E. are doing) and "evading" taxes (what they are not – as far as we know – doing). The theme of "this is some shifty business butit'stotallylegal" is repeated so often that you can't help but wonder what the underlying message the reporters and editors are trying to convey here. Oh, wait, we know exactly what they're trying to convey – with great corporate success, comes great responsibility. Responsibility that, apparently, includes paying more in taxes than what an entity is legally obligated to pay. Yeah, Apple is having a decent run right now and G.E. has had a license to print money for YEARS, so naturally there are going to be haters. But the Times is the hatingest hater of all (takes one to know one, amiright?) and they're so damn good at it because they hire the best researchers, reporters, and editors in the world to split every last hair. Plus, that genteel prose they use is fucking hypnotic, so of course when many people read it the response is, "Well, gosh. That doesn't seem right, now does it?" Most people fully trust the NYT's reporting and in this case, it is the reporting of Charles Duhigg and David Kocieniewski.
 
I'm mostly familiar with Duhigg over his dust up with Kashmir Hill* over an excerpt from his book that the Times published on corporate big brotherism that Kash just happened to repackage much, much better. That said, he's an accomplished journalist, but I agree that he comes off as a "patronizing clown." I'm more familiar with Kocieniewski's work because he's spent the last year writing articles about corporations and the wealthy avoiding taxes. He won a Pulitzer for his trouble. That's nice and all, but everyone that knows better recognizes that the Pulitzers are simply journalists giving each other handies, and Kocieniewski got his this year. But maybe this is neither her nor there. The point is that the Times has made it clear that the narrative in their pages, as it relates to taxes, will be thus: "You rich. You pay more taxes."
 
This is bullshit. Maybe this is a newsflash for some, but U.S. tax law is extraordinarily complex. I mean, have you heard about G.E.'s tax return? The conversation would be far more productive if the focus was not on the companies, but rather the byzantine nature of the tax system and what can be done to change that. Believe me, some are trying (including the Times' own Bruce Bartlett), but the NYT drives the mainstream conversation and if they believe that exposing companies who are creating strategies around the tax code will ultimately prove to be the catalyst for reform, they're clueless. This reporting does nothing but stir people up because they freak out over the big numbers and misinterpret the language. A perfect example being the very careful usage of the word "benefit" in the G.E. article that is often misunderstood to mean "refund." 
 
Corporations are legally obligated to maximize the value of their stock for their shareholders. In order to do this they must – not simply give it the ol' college try – minimize the company's tax obligation. This involves hiring people – accountants and lawyers mostly – who know the tax law inside-out and upside-down. They will find every loophole, take every sidestep, and explore every strategy under the sun to do so. And it is done in good-ish faith (lines are meant to be crossed, aren't they?) and, most of the time, in full compliance with the law. So we humbly ask, oh, paper of record, what is the alternative? Should the likes of Apple and General Electric fire their armies of tax experts and throw tax compliance to the wind? Should they simply trust the IRS to give them a fair shake on their audits? Should they take up Warren Buffett's torch for corporations? 
 
No. Hell, no. Some people have called out the Times for this article – including Times readers – but this goes beyond the Apple story. Tax shaming is a systemic narrative inside the Times that is being advanced for God knows what reason. Surely, someone over there has taken half a nanosecond to recognize that Congressional dipshittery is what's really responsible for all the complexities in the tax code and thus, the "sidestepping" and "avoiding" by the likes of Apple and G.E.
 
The Times likely sees this reporting as a public service, you know, keeping people informed about corporations taking advantage of the system for their own greedy motives. But instead it's really just a disingenuous, haughty demand for corporate responsibility cleverly disguised as "explanatory journalism."
 
*Full Disclosure: Kash is an editor emeritus for Above the Law, Going Concern's old sister site. She and I gossiped about law firms a couple of times. I think she's a nice person and a good blogger.

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