I am of two minds about Tim Cook's public declaration that he is gay. On the one hand, good for him if he thinks that it emboldens other people to not be afraid of their sexual preference being known publicly. On the other hand, if the message is that, you, too can come out but only once you are the CEO of one of the most powerful corporations in the world--and you can do all that while fleecing the U.S. government of billions of dollars in revenue...well, it's a moment to pause and consider.
As The New York Times puts it:
Announcements like Mr. Cook’s send a message to gay businesspeople that they too can become a chief executive.
Fair enough.
But, what kind of ETHICS are people like Cook sending to these potential future executives? What kind of view about the responsibility corporations have to maintaining a semblance of a functioning society do Cook's actions in other parts of his role as CEO tell us about those ethics?
On the facts, the answer about Apple, and Cook, is: you can go ahead and stash billions of dollars of taxable profits overseas, far from the reach of the U.S. Treasury--that would be the entity that helps finance services for all people, gay and straight--and, thereby, you cripple the country because it has less money for roads, schools, food safety and a whole host of other services.
The facts, courtesy of Citizens for Tax Justice today:
The media may be abuzz with Apple CEO Tim Cook’s essay in BusinessWeek yesterday, but they also should be paying attention to the company’s Securities and Exchange Commission filing this week. In its annual 10-K report, Apple reveals that, despite congressional hearings on its offshore tax dodging, the company continues to divert profits to tax havens.
The 10-K reports that Apple increased its offshore profits by $16 billion last year, which brings its total hoard to $137 billion. The company also discloses that it would pay a U.S. tax rate of 33 percent if it repatriates those earnings, down only slightly from prior years. Because the US tax would be reduced by any foreign tax the company has already paid, that means the company has paid almost no tax on the foreign income despite having substantial sales in countries where the corporate tax rate is in the mid-20s.
And:
How does Apple do that? By shifting profits, through the use of tax haven subsidiaries, to countries that have little or no corporate income tax. Apple Operations International (AOI), the subsidiary which heads up the foreign group, was incorporated in Ireland but the company claims it is not resident in Ireland for tax purposes. In fact, the company claims that AOI isn’t “tax resident” anywhere in the world, so AOI files no corporate tax returns and pays no corporate tax. Apple has also negotiated a super-low tax rate for other subsidiaries in Ireland of only 2 percent—an arrangement that is under investigation by the European Commission as illegal state aid.
And the money closer:
CEO Cook’s very personal essay expresses his wish that he can be an inspiring example to people with similar struggles. We only wish Apple aspired to be an example of a good corporate citizen—one who contributed to the common welfare by paying its share of tax.
So, he'll get lots of free publicity for his personal essay.
But, that should not turn him into a Teflon-CEO, where he deflects very serious criticisms about a darker side Apple plays in undercutting society.