Quotulatiousness

September 19, 2013

Easterbrook – The NFL should be called the “Nonprofit Football League”

Filed under: Business, Football, Government — Tags: , , , , — Nicholas @ 09:40

In The Atlantic, an excerpt from Gregg Easterbrook’s new book The King of Sports: Football’s Impact on America, talks about the fantastic legal and financial advantages enjoyed by the National Football League:

In his office at 345 Park Avenue in Manhattan, NFL Commissioner Roger Goodell must smile when Texas exempts the Cowboys’ stadium from taxes, or the governor of Minnesota bows low to kiss the feet of the NFL. The National Football League is about two things: producing high-quality sports entertainment, which it does very well, and exploiting taxpayers, which it also does very well. Goodell should know — his pay, about $30 million in 2011, flows from an organization that does not pay corporate taxes.

That’s right — extremely profitable and one of the most subsidized organizations in American history, the NFL also enjoys tax-exempt status. On paper, it is the Nonprofit Football League.

This situation came into being in the 1960s, when Congress granted antitrust waivers to what were then the National Football League and the American Football League, allowing them to merge, conduct a common draft, and jointly auction television rights. The merger was good for the sport, stabilizing pro football while ensuring quality of competition. But Congress gave away the store to the NFL while getting almost nothing for the public in return.

The 1961 Sports Broadcasting Act was the first piece of gift-wrapped legislation, granting the leagues legal permission to conduct television-broadcast negotiations in a way that otherwise would have been price collusion. Then, in 1966, Congress enacted Public Law 89‑800, which broadened the limited antitrust exemptions of the 1961 law. Essentially, the 1966 statute said that if the two pro-football leagues of that era merged — they would complete such a merger four years later, forming the current NFL — the new entity could act as a monopoly regarding television rights. Apple or ExxonMobil can only dream of legal permission to function as a monopoly: the 1966 law was effectively a license for NFL owners to print money. Yet this sweetheart deal was offered to the NFL in exchange only for its promise not to schedule games on Friday nights or Saturdays in autumn, when many high schools and colleges play football.

Public Law 89-800 had no name — unlike, say, the catchy USA Patriot Act or the Patient Protection and Affordable Care Act. Congress presumably wanted the bill to be low-profile, given that its effect was to increase NFL owners’ wealth at the expense of average people.

While Public Law 89-800 was being negotiated with congressional leaders, NFL lobbyists tossed in the sort of obscure provision that is the essence of the lobbyist’s art. The phrase or professional football leagues was added to Section 501(c)6 of 26 U.S.C., the Internal Revenue Code. Previously, a sentence in Section 501(c)6 had granted not-for-profit status to “business leagues, chambers of commerce, real-estate boards, or boards of trade.” Since 1966, the code has read: “business leagues, chambers of commerce, real-estate boards, boards of trade, or professional football leagues.”

The insertion of professional football leagues into the definition of not-for-profit organizations was a transparent sellout of public interest. This decision has saved the NFL uncounted millions in tax obligations, which means that ordinary people must pay higher taxes, public spending must decline, or the national debt must increase to make up for the shortfall. Nonprofit status applies to the NFL’s headquarters, which administers the league and its all-important television contracts. Individual teams are for-profit and presumably pay income taxes — though because all except the Green Bay Packers are privately held and do not disclose their finances, it’s impossible to be sure.

September 17, 2013

A brief history of fifty years of American economic thought

Filed under: Economics, USA — Tags: , , , , , — Nicholas @ 07:07

Tyler Cowen wraps up the rise and fall of “right” and “left” economics in the US since the 1960s:

Throughout the 1970s and most of the 1980s, the so-called “right wing” was right about virtually everything on the economic front. Most of all communism, but also inflation, taxes, (most of) deregulation, labor unions, and much more, noting that a big chunk of the right wing blew it on race and some other social issues. The Friedmanite wing of the right nailed it on floating exchange rates.

Arguably the “rightness of the right” peaks around 1989, with the collapse of communism. After that, the right wing starts to lose its way.

Up through that time, market-oriented economists have more interesting research, more innovative journals, and much else to their credit, culminating in the persona and career of Milton Friedman.

I’ve never heard tales of Paul Samuelson’s MIT colleagues mocking him for his pronouncements on Soviet economic growth. I suspect they didn’t.

Starting in the early 1990s, the left wing is better equipped, more scholarly, and also more fun to read. (What exactly turned them around?) In the 1990s, the Quarterly Journal of Economics is suddenly more interesting and ultimately more influential than the Journal of Political Economy, even though the latter retained a higher academic ranking. The right loses track of what its issues ought to be. There is no real heir to the legacy of Milton Friedman.

August 13, 2013

It’s accurate to describe the Greek plight as a depression

Filed under: Economics, Europe, Greece — Tags: , , — Nicholas @ 10:44

Allister Heath says the catastrophic state of the Greek economy fully merits the descriptor “depression”:

Sorry, but the fact that Greece collapsed at an annual rate of 4.6 per cent in the second quarter, rather than a little bit faster, isn’t good news. It’s terrible, awful, horrible news. Greek output is down by 23 per cent since 2008 and unemployment is at around 28 per cent; no wonder, given the shrinking economy, that gross tax revenues are continuing to undershoot targets.

Hyperbolic economists sometime claim that the UK has undergone a depression, which is nonsense — but Greece’s woes cannot be described in any other way. Its depression has been catastrophic, one of the worst ever recorded for any country in the modern, industrialised era (apart from during or immediately after a war). Its dramatic collapse reminds us that stupid economic policies can destroy a nation; depressions have not been banished from modern civilisation.

It may be, of course, that the collapse is beginning to abate and that the economy may finally stabilise next year. I’ll believe it when I see it; unless Greece’s money supply starts growing again, and demand begins to increase, a recovery is impossible. But Greece is just a tiny part of the Eurozone, so achieving such an outcome is even harder than in a country like the UK, especially given that the Greek financial crisis hasn’t really gone away. There is no way that Athens will meet its bailout targets and its debt burden is utterly unsustainable.

July 6, 2013

Ireland’s oil and gas bonanza for the oil companies

Filed under: Europe, Government, Law — Tags: , , , , , — Nicholas @ 09:49

Ireland is thought to have substantial offshore reserves of oil and natural gas that are likely to be profitable with current technology, but due to a legislative change dating back to the 1980s, the Irish government may not get much benefit:

In a now legendary all-night sitting on September 29th, 2008 the Irish government agreed to guarantee all bank debts. O’Toole calls this the “most disastrous decision that was ever made by an Irish government”. At least two generations of taxpayers will pay off these debts. O’Toole makes an excellent job of charting the Irish path to disaster in his book Ship of Fools, in which he calls the accounts of Anglo Irish Bank the “most inventive work of Irish fiction since Ulysses”.

The oil off the Irish coast could be the way out of this misery. The oil could be the hope. If the former energy minister Ray Burke hadn’t rewritten the relevant laws as though the oil industry itself held the pen. And if Bertie Ahern hadn’t made an already bad deal for the Irish people even worse.

Burke was energy minister in 1987, when it was decided to change the provisions for oil and grass drilling licence allocation. Until then the state owned 50 per cent of all oil and gas found in Irish waters. In addition, companies had to pay royalties of between 8 and 16 per cent as well as 50 per cent tax. (1, see notes below)

The new rule gave companies 100 per cent of their find and abolished licence fees. In 1992 Bertie Ahern, then finance minister and later prime minister from 1998 to 2008, cut the tax for oil companies to 25 per cent — a provision that remains to this day. (2)

[. . .]

The reason this political inheritance is causing such animated discussion now is because of huge oil and gas reserves believed to surround the island. The company Providence estimates the volume of oil it discovered in the Barryroe field, south of Cork, at over 1.7 billion barrels, of which at least 270 million can be pumped. Further test drillings in Irish waters have been similarly promising.

At the moment a barrel of oil costs, depending on grade, between $90 and $100, meaning there could be oil worth many billions of euro in the Irish sea bed. (3) Even the oil companies concede that Ireland is surrounded by massive riches. But the Irish will probably gain none of this thanks to men like Ray Burke and Bertie Ahern.

July 3, 2013

Kathy Shaidle’s “Dispatch from Canada”

Filed under: Cancon, Economics, USA — Tags: , , , , , — Nicholas @ 09:21

Kathy will be writing a weekly column for our American friends, updating them with whatever’s up here in the Great White North. Given how little actually ever happens in Canada, it might be just a weather report or the latest style change for Justin Trudeau’s hair. However, to start it off, yesterday’s column attempted to correct a few common notions about Canada:

Because a lot of what you think you know about Canada is probably decades out of date.

As investment bigwig and journalist Theo Caldwell recently noted:

    But Canada is far from American stereotypes of socialism, centralization and obeisance, at least in relative terms. By almost any measure, Canada is a freer country than the U.S.A.

    Economically, the contrast is stark, for those who care to see. While folks reflexively state that Canadian taxes are higher than those of the United States, corporate and personal rates are lower up north.

How much lower are those corporate taxes? Canada ranks 6th lowest out of 185 nations. America came in at a shocking 69th place.

Believe it or not, Canada’s average household net worth is higher than America’s.

We also have lower unemployment, and our economy is holding steady, thanks in part to our ingenious refusal to give mortgages to welfare bums.

We have fewer divorces, fewer traffic fatalities, and way fewer tornadoes.

We’re skinnier, too. (Seriously: your restaurant portions are freakishly huge.)

But what about “the American Dream”?

According to one (Canadian) economist, “a son born to a poor father in the U.S. is twice as likely to remain poor throughout his life than if he had been born in Canada.”

[. . .]

We’ve got our flaws too, of course.

We literally have no abortion law, which means it’s easier to get one than a gun, even at the nine-month mark.

There’s no death penalty. And try getting an MRI, unless you’re a cat.

Our cops are increasingly corrupt, if not downright fascist. (Don’t be fooled by the propaganda about the noble, virtuous Mountie…)

We have this unelected Senate thing (long story) and a dorky constitution, especially compared to yours.

And don’t get me started on Quebec.

June 16, 2013

Latest installment of the corporate tax crusade

Filed under: Britain, Business — Tags: , — Nicholas @ 10:16

In Forbes, Tim Worstall explains why a company that has paid full corporate taxes on its income has no further legal or moral obligation to pay more:

Read that through again: they’re saying that the company has already paid full corporation tax on that money. And we don’t tax dividends going to people in foreign countries. Whatever the tax rate is there, we simply don’t tax them. Because of course that’s up to the country where the money goes to to tax: it’s not actually something that is taxable in the UK. For, obviously, they’ve already paid the full corporation tax due.

But it does actually get better. Those dividends, paid out of post tax (and do please note, post tax) profits wouldn’t be subject to further corporation tax in the UK either:

    The general rule is that dividends paid by a UK company to another UK company out of post-tax profits are exempt from further taxation.

That the recipient corporation is in the British Virgin Islands thus makes not one whit or iota of difference to the amount of corporation tax payable. So this is all really a rather strange complaint. Perhaps the newspaper has just got caught up in the frenzied atmosphere over the subject.

[. . .]

As to why this story is being blown up allow me to offer some speculation. There’s a group of people who are quite vociferous in their demands that the corporate tax system must be radically changed. Richard Murphy (who just for complete disclosure, used to write here at Forbes) is one of the leading lights of that group. Various members of the loose knit group have been behind all sorts of claims about Vodafone, Boots, Starbucks, Google, Apple and a number of other companies. The problem with the claims is that none of them have really stuck. There’s been absolutely no finding of illegality anywhere.

The claim has thus moved onto, well, OK, so it’s not illegal: all of these companies are indeed obeying the law. But we still don’t think they’re paying enough tax. Therefore the law must be changed simply because we think they should be paying more tax. Which is, when you think about it, a fairly extreme claim. Companies should pay more tax because a group of 20 or so people demand that they should be doing so?

June 14, 2013

QotD: Tax avoidance

Filed under: Business, Law, Quotations — Tags: , — Nicholas @ 09:08

The claim that tax avoidance is immoral is an attack on the very notion of private property. It is, as it were, to say that all money belongs to society collectively, and “we” have an intention as to how much you get to use yourself and how much goes to the state, and if you avoid tax you end up using more of society’s collective money than it intended for you to use. Tax avoidance then becomes a kind of theft. But if my property is fundamentally mine, a tax is an impost, a legal requirement for me to surrender some of my property. Provided I do that, I have behaved perfectly properly. If the overall consequence is that I do not pay what would be regarded as a fair tax contribution, either tax law should be modified, or I could be persuaded that I had a moral duty to make an additional free-will tax contribution.

Andrew Lilico, “Companies have a moral duty to pay no more tax than legally required”, The Telegraph, 2013-06-14

June 10, 2013

Happy Tax Freedom Day

Filed under: Cancon, Economics, Government, Liberty — Tags: , — Nicholas @ 12:29

Today is the day that Canadians start earning money for themselves, having worked the year up to this point to pay for our various levels of government:

Tax Freedom Day, the day Canadian families have made enough money to pay off the total tax bill levied by all levels of government, falls on Monday, June 10 this year, according to the Fraser Institute’s annual calculations.

Tax Freedom Day arrives two days later than 2012 when it fell on June 8.

“Canadians are waiting an extra two days to celebrate Tax Freedom Day partly because governments across the country continue to increase taxes in an effort to make up for their overspending and deficits,” said Charles Lammam, Fraser Institute associate director of tax and budget policy and co-author of Canadians Celebrate Tax Freedom Day on June 10, 2013.

“What’s worse, some governments are relying on the most damaging types of tax increases including higher tax rates on personal income and investment, which will ultimately discourage economic growth.”

Among the tax increases announced so far are hikes to BC’s corporate income tax and top personal tax rate as well as its Medical Services Plan premiums; a new top income tax bracket in Quebec; increases to Manitoba’s Provincial Sales Tax and financial corporate capital tax; increases to New Brunswick’s corporate income tax and all four personal income tax rates; increased taxes on small businesses in PEI; cancellation of a corporate tax decrease in Saskatchewan; and increased Employment Insurance premiums federally.

Tax Freedom Day also comes later this year because Canada’s progressive tax system imposes a higher tax burden on families as their incomes increase.

You can use the Fraser Institute’s Personal Tax Freedom Day calculator to find your own tax freedom day here.

May 27, 2013

Toronto’s mass transit planners go for the wallet

Filed under: Cancon, Government — Tags: , , , — Nicholas @ 09:19

680 News is reporting on the latest attempt by Metrolinx to fund their mass transit pipe dreams:

Metrolinx is asking drivers to pay more to fund transit expansion across the Greater Toronto and Hamilton Area (GTHA).

The transportation agency handed over its funding report to Queen’s Park on Monday.

The 25-year, $50-billion Big Move plan includes:

  • 1 per cent increase to HST (generating $1.3 billion/year)
  • 5-cent/litre gas tax (generating $330 million/year)
  • Parking space levy (generating $350 million/year)
  • 15 per cent development charge

Metrolinx CEO Bruce McCuaig said that will generate $2 billion annually for the transit expansion plan.

“Metrolinx is recommending that we have dedicated funds,” he said.

“We are also recommending that these funds be placed into a transportation trust fund to create certainty that The Big Move projects are delivered and to provide the accountability and transparency GTHA residents demand and deserve.”

Someone really should do a version of “The Monorail Song” from The Simpsons for the light rail fan club in Toronto.

QotD: Two lessons from Calvin Coolidge

Filed under: Government, History, Quotations, USA — Tags: , — Nicholas @ 00:01

I managed to talk for more than 15 minutes, but I could have boiled my remarks down to these two points.

  1. Small government is the best way to achieve competent and effective government. Coolidge and his team were able to monitor government and run it efficiently because the federal budget consumed only about 5 percent of GDP. But when the federal budget is 23 percent of GDP, by contrast, it’s much more difficult to keep tabs on what’s happening – particularly when the federal government operates more than 1,000 programs. Even well-intentioned bureaucrats and politicians are unlikely to do a good job, […]
  2. Higher tax rates don’t automatically lead to more tax revenue. Coolidge and his Treasury Secretary practiced something called “scientific taxation,” but it’s easier just to call it common sense. Since Amity’s book covered the data from the 1920s, I shared with the audience some amazing data from the 1980s showing that lower tax rates on the “rich” led to big revenue increases.

Dan Mitchell, “Two Lessons from Calvin Coolidge”, International Liberty, 2013-05-26

May 26, 2013

Putting the Gibson Guitar raids into context

Filed under: Bureaucracy, Law, Politics, USA — Tags: , , , , — Nicholas @ 11:06

Remember back in 2011 when the US government raided Gibson Guitars for alleged violations of Indian law? (Posts here, here, here, here, and here.) Now that we’re learning much more about the IRS witch hunt for Tea Party organizations, Investor’s Business Daily points out that the Gibson raids now make sense:

Grossly underreported at the time was the fact that Gibson’s chief executive, Henry Juszkiewicz, contributed to Republican politicians. Recent donations have included $2,000 to Rep. Marsha Blackburn, R-Tenn., and $1,500 to Sen. Lamar Alexander, R-Tenn.

By contrast, Chris Martin IV, the Martin & Co. CEO, is a long-time Democratic supporter, with $35,400 in contributions to Democratic candidates and the Democratic National Committee over the past couple of election cycles.

“We feel that Gibson was inappropriately targeted,” Juszkiewicz said at the time, adding the matter “could have been addressed with a simple contact (from) a caring human being representing the government. Instead, the government used violent and hostile means.”

That includes what Gibson described as “two hostile raids on its factories by agents carrying weapons and attired in SWAT gear where employees were forced out of the premises, production was shut down, goods were seized as contraband and threats were made that would have forced the business to close.”

Gibson, fearing a bankrupting legal battle, settled and agreed to pay a $300,000 penalty to the U.S. Government. It also agreed to make a “community service payment” of $50,000 to the National Fish and Wildlife Foundation — to be used on research projects or tree-conservation activities.

Update, 31 January 2014: Gibson releases a new guitar to celebrate the end of the case.

Great Gibson electric guitars have long been a means of fighting the establishment, so when the powers that be confiscated stocks of tonewoods from the Gibson factory in Nashville — only to return them once there was a resolution and the investigation ended — it was an event worth celebrating. Introducing the Government Series II Les Paul, a striking new guitar from Gibson USA for 2014 that suitably marks this infamous time in Gibson’s history.

From its solid mahogany body with modern weight relief for enhance resonance and playing comfort, to its carved maple top, the Government Series II Les Paul follows the tradition of the great Les Paul Standards—but also makes a superb statement with its unique appointments. A distinctive vintage-gloss Government Tan finish, complemented by black-chrome hardware and black plastics and trim, is topped by a pickguard that’s hot-stamped in gold with the Government Series graphic—a bald eagle hoisting a Gibson guitar neck. Each Government Series II Les Paul also includes a genuine piece of Gibson USA history in its solid rosewood fingerboard, which is made from wood returned to Gibson by the US government after the resolution.

[…]

The Government Series II Les Paul is crafted in the image of the original Les Paul Standard, with a carved maple top and solid mahogany back with modern weight relief for improved playing comfort and enhanced resonance. The glued-in mahogany neck features a comfortably rounded late-’50s profile, while the unbound fingerboard — with a Corian™ nut, 22 frets and traditional trapezoid inlays just like the very first Gibson Les Pauls — is made from solid rosewood returned to Gibson by the US government. And, the guitar looks superb with its unique Government Tan finish in vintage-gloss nitrocellulose lacquer.

May 25, 2013

Ireland’s corporate tax rate

Filed under: Business, Economics, Europe — Tags: , , — Nicholas @ 08:01

At the Adam Smith Institute, Tim Worstall explains why Ireland has — and should continue to have — a low rate of corporate tax:

Companies don’t pay corporation tax: it’s some combination of the shareholders and the workers who do. This is not a point in argument: the only argument is about what the portions are, not the fact that the burden falls upon these two groups. We also know what it is that influences which group: it’s how large the economy is in relation to the world economy and how open it is to capital movement. The smaller and more mobile, the more the workers get it in the neck.

The mechanism is simple enough. It’s pretty much straight from Adam Smith in fact. There’s an average rate of return to capital: a jurisdiction that taxes that return to capital will have a return lower than that global average. So, some domestic capital will flow out seeking the higher foreign returns, some foreign capital will not flow in for the lower domestic ones. There’s thus less capital employed in the economy. Adding capital to labour is what drives up the productivity of labour: the average wages in a country are determined by the average productivity in that economy. So, tax companies, get less capital employed, wages are lower than they otherwise would be. The workers are bearing part of the burden.

As I say, the smaller the economy and the more open it is then the more of that burden is upon the workers. And in a wonderful result back in 1980 Joe Stiglitz showed that the burden upon the workers can actually be more than 100%. That is, the workers lose more in wages than the government gets in tax.

Ireland’s a small economy, 3.5 million people or so and as it’s in the EU has about as close to perfect capital mobility as it is possible to get. Thus it ought to have a lower corporation tax rate than larger economies. And it does, so that’s just fine then. Attempts to push it up (as various EU types are currently muttering) would simply lower wages in that country.

May 21, 2013

Apple and the question of profit shifting

Filed under: Business, Government, USA — Tags: , , , — Nicholas @ 09:23

Tim Worstall explains why both Apple and the Senate Permanent Subcommittee on Investigations can both be correct on the question of profit shifting — because the term’s meaning isn’t consistent:

Apple divides itself, roughly speaking, into two segments. The Americas and everywhere else (not that unusual for a US company, actually). Apple’s point is that it makes profits in the US selling things to people in the US. All profits from doing this pay the full US corporate income tax minus the usual deductions and allowances that every company can take advantage of.

Apple also points out that it makes the majority of its profits selling things outside the US to people who are not Americans. The iPhones are made in China and sold in Europe, just as one example. These profits are made outside the US: and Apple does not bring them into the US. Thus such profits are not liable to US corporate taxation (it is more complex than this but that’s the gist of it).

However, the Senate doesn’t use that commonsense definition of the phrase:

The Subcommittee is agreeing that these are profits made in foreign countries. Profits made by buying something in China and selling it outside the US. These profits are then not repatriated to the US. This is then deemed to be profit shifting.

It’s worth noting what everyone does agree upon.

Apple makes large profits in the US. These pay full US corporate income tax.

Apple makes large profits outside the US. These are kept outside the US and do not pay US corporate income tax.

And so the question becomes, what is the definition of profit shifting? If we take Apple’s definition, that they do not move profits out of the US, then they’re not profit shifting. If we take the Subcommittee meaning then they are. For without the corporate structures that Apple has put in place then those foreign profits would be subject to the US corporate income tax (minus, of course, the foreign taxes already paid).

Update:

Update, the second: The Register‘s report on the Irish side of the “profit shifting” story:

Irish deputy PM: You want more tax from Apple? Your problem, not ours
Póg mo thóin, you crazy Yanks

May 4, 2013

Ron Paul on the so-called “Marketplace Fairness Act”

Filed under: Business, Economics, Government, USA — Tags: , , , , , , — Nicholas @ 09:28

As you probably guessed, he’s against it:

David French, Senior Vice President of the National Retail Federation, the major industry group lobbying for the so-called “Marketplace Fairness Act,” (more aptly named the “National Internet Tax Mandate”) recently commented that “…the law [governing Internet sales] today is a 20th-century interpretation of an 18th-century document…” Mr. French’s comments are typical of those wishing to expand government power beyond the limits established by the United States Constitution.

[. . .]

The National Internet Tax Mandate overturns the Supreme Court’s 1992 Quill v. North Dakota decision that states can only force businesses to collect sales tax if the business has a “physical presence” in the state. Quill represented a rare instance where the Supreme Court properly interpreted the Commerce Clause. Thanks to the Quill decision, the Internet has remained a tax-free zone, though some states require consumers to later pay taxes on products they purchased online. This freedom has helped turn the Internet into a thriving and dynamic sector of the economy, to the benefit of entrepreneurs and consumers.

Now that status is threatened by an alliance of big business and tax-hungry state governments seeking new powers to force out-of-state business to collect state sales taxes. Far from updating the Constitution to fit the needs of the 21st century, the National Internet Tax Mandate is a throwback to 18th century mercantilism.

The National Internet Tax Mandate will raise the costs of doing business over the Internet. Large, established Internet companies, such as Amazon, can absorb these costs, whereas their smaller competitors cannot. More importantly, the Mandate’s increased costs and regulations could prevent the creation and growth of the next Amazon.

This is why cash-rich Apple is borrowing money on the bond market

Filed under: Business, Economics, USA — Tags: , , — Nicholas @ 09:20

In one word, taxes:

What a crazy world. Apple, a company with $145 billion of cash, is issuing some $17 billion of debt to buy back its own shares. Why doesn’t it just use its cash to do the same thing? First, because a lot of that cash is overseas, and bringing it back to America would incur a tax charge. Second, because interest rates are low and debt interest is tax-deductible, making this look a great arbitrage.

But think of it from the point of view of the hard-working American taxpayer. Apple’s money will still sit overseas and not be invested at home to create jobs. Apple’s tax bill will fall, as it offsets the interest payments against its profits. The buy-back will probably push up the share price in the short term, boosting the value of executive options; profits from those options will probably be taxed at the long-term capital gains tax rate of 15%, lower than the rate many workers pay. Organising a bond issue, rather than using a company’s own cash, incurs costs in the form of fees to bankers on Wall Street; the same bankers taxpayers helped support five years ago.

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