Apple & The Paradise Papers: The real story (Part I)

False narratives and true agents of change

Not sure whether or not it was your intent, but there’s an accusatory connotation to words like “hid,” “shady,” “rip money direct from the public purse,” and even Senator Sanders’ “avoid paying their fair share of taxes.” That connotation changes the narrative from one of public interest to criminal indictment.

Your title asks “What’s wrong with that?” and your answer — as best as any reader can infer — is that ‘it’s illegal’ and ‘it deprives deserving Americans of much-needed resources.’ Neither is true.

Your argument, explicitly, is ‘$252B is a lot of money that can do a lot of good domestically.’ Yes it is, but it’s also misleading. The true tax revenue is at most $88.2B net at the full 35% US corporate tax rate — and likely half that given a more realistic, effective tax rate. That’s still a big number, to be sure, but the point is that your grossing-up to a $252B number is either misunderstanding, laziness, or maximizing the wow-factor. Regardless of intent, it has the same incendiary effect as clickbait, fake news, and misinformation.

Next, it’s not illegal, and the US doesn’t have a right to tax it. Tax avoidance is not the same thing as tax evasion. The former is perfectly legal; the latter illegal. (Apple purportedly employs the former strategy, to be clear.) But, not only does the average person not understand that important distinction, but you don’t disclaim it! Sure, yours is a sin of omission, which is an excusable, occupational hazard for a journalist. But, my concern is this separate, potential sin of commission: By painstakingly humanizing your narrative with the faces of victims — regular Americans who need that money — you’re inexplicably rallying public opinion against Apple.

Now, your work — and the broader Paradise Papers — are valuable for a number of reasons, including…

  1. Public consciousness of tax loopholes and arbitrages that require policymakers’ attention;
  2. Hypocrisy of public servants, public figures, and public corporations who accrue goodwill from actively marketing themselves as selfless patriots, when they’re really profiteering off of false altruism (perception vs reality)

If there’s a story here, those are the narratives. If you’re swaying public sentiment, those are your causes. Yes, the American public purse (and Americans by extension) is a victim. But, crucially, no, Apple is not the villain — at least not a criminal guilty of the crimes for which you’ve framed it.

There are so many constructive directions you can take the story from there. For example, there’s the inequality/wealth gap angle (e.g. the complex tax code asymmetrically benefits the wealthy because they can afford tax advice and consulting). There’s also the misincentives of corporatocracy/fiduciary obligation angle (since it can afford tax advice and consulting, Apple’s legally obligated to offshore this money to maximize returns for its shareholders… unless customers vote with their feet to change the opportunity costs of forgoing patriotism’s goodwill). Then there’s the public disservice angle (at the expense of their constituents, policymakers themselves were among the biggest beneficiaries of these loopholes, forsaking their sworn duty to represent their countrymen’s welfare because it served their personal dispositions).

You could stick to the facts and make this the agent of change it is — exposing the system’s structural weaknesses. But, I fear that applying it the way you have — which can be misconstrued as tortured rationalizations and false narratives — could have the opposite effect.

We’ve seen this pitfall before with the Election 2016 “revelations” from Trump’s leaked tax returns, which were framed as some sort of culpable tax illegality. In reality, all we learned from Trump’s taxes was: He had far less reported income in that one tax year than you’d expect from the best billionaire; he had far bigger failures than you’d expect from the best operator; he had far greater privilege than the average American — for whom he was the best champion. Trump Taxes were a missed opportunity to goad a prideful, hyperbolic candidate into releasing all of his returns. Instead, they were framed as a “gotcha” smoking gun. That let Trump, the fact-free candidate, turn that smoking gun on Hillary and the “liberal-biased” media. It was a high-profile case that spun the wrong narrative — a false narrative — and therefore gave Trump and his base the nourishment it needed to ossify against the “establishment” boogeyman.

It’s possible that I’ve misunderstood something here, so please correct me if I’m wrong. If I have this right, however, you should retract this story and post a separate clarification. 🙏

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