Josh Harkinson

Josh Harkinson

Reporter

Born in Texas and based in San Francisco, Josh covers tech, labor, drug policy, and the environment. PGP public key.

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4 Ways Apple CEO Tim Cook Spins Tax Avoidance

| Tue May 21, 2013 9:56 AM EDT

"I've never seen anything like this and we don't know anybody who has ever seen anything like this," Sen. Carl Levin (D-Mich.) said yesterday of Apple's baroque tax avoidance strategies. But Apple CEO Tim Cook, who will testify before the Senate Subcommittee on Investigations today, is  aggressively spinning what Levin called "gimmickry" as patriotic, commonsensical, and no big deal. Here are the most remarkable talking points from his pre-released Senate testimony:

1. Apple's taxes are straightforward.
Spin: "Apple does not use tax gimmicks."
Reality: Yet somehow, according to an analysis by Citizens for Tax Justice, Apple has paid almost no income taxes to any country on its $102 billion in offshore holdings. Between 2009 and 2012, Apple avoided paying US taxes on some $74 billion in income, an amount equal to the entire budget of Florida.

2. Paying American salaries through a subsidiary based in Ireland saves American jobs.
Spin:
Apple and its Irish subsidiaries are engaged in a "cost sharing agreement" whereby the subsidiaries "partially fund R&D costs incurred by Apple Inc." The agreements "play an important role in encouraging companies like Apple to keep R&D efforts in the US."
Reality: This is how Apple brings back money from overseas without having to pay federal taxes on it.

3. Apple is awesome because it runs huge data centers right here in the United States.
Spin: "In 2010, Apple built one of the country's largest data centers in North Carolina, and it is in the process of constructing two additional data centers in Oregon and Nevada."
Reality: Apple only agreed to build the North Carolina data center after getting a $46 million state tax break, its local property taxes halved, and  local taxes on its assets slashed by 85 percent—all for creating 50 jobs. To build its data center in deficit-plagued Nevada, it extracted an $88 million state tax break, the largest in state history. And Apple chose to build a data center in Prineville, Oregon, because Oregon has no sales tax and Prineville is in a "rural enterprise zone" that offers a 15-year property tax exemption.

4. "Apple supports comprehensive corporate tax reform."
Spin: "Apple recognizes that these and other improvements in the US corporate tax system may increase the company's taxes."
Reality: Cook wants to reduce the tax that corporations pay when they repatriate profits, which could save Apple a lot of money considering that 61 percent of its profits are earned overseas. But lowering the repatriation tax probably wouldn't benefit most Americans. After Congress enacted a one-time repatriation holiday in 2004, a study by the National Bureau of Economic Research found that 92 percent of the repatriated cash was used to pay for dividends, share buybacks, or executive bonuses.

After Girl Expelled From High School and Charged Over Lesbian Relationship, Anonymous Goes on the Offensive

| Mon May 20, 2013 4:14 PM EDT
Kaitlyn Hunt

When Florida high school student Kaitlyn Hunt was a senior in high school, she began dating a 15-year-old teammate on her school's girls' basketball team.* Kaitlyn's parents say the parents of the 15-year-old never complained to them about the (consensual) relationship. But halfway through the school year, the younger girl's parents had her arrested. She was charged with a felony—"lewd and lascivious battery of a child 12-16 years old." The girl's parents also succeeded in getting her expelled from school by appealing to the school board after the school and a judge refused to grant their request, according to Kaitlyn's mother, Kelly Hunt Smith.

"That is absolutely ludicrous," Smith wrote on Facebook last Friday in a widely shared plea for help. "We need justice in this situation, not to feed into these parents' hates and insanity."

Enter Anonymous, the global hacker collective, which recently has raised eyebrows by pursuing justice for rape victims. In this case, some of the same Anonymous members are rallying behind a girl they feel has been wrongly accused of sexual misconduct. On Saturday, they launched the twitter hashtag #OPJustice4Kaitlyn, and a press release that begins: "Greetings, Bigots."

"The truth is, Kaitlyn Hunt is a bright young girl who was involved in a consensual, same-sex relationship while both she and her partner were minors," reads the release.* "She has a big future ahead of her and there are people, thousands of people in fact, that have no intention of allowing you to ruin it with your rotten selective enforcement."

Poverty Flees to the Suburbs

| Mon May 20, 2013 11:38 AM EDT

Poor residents in cities and suburbs, 1970 - 2010 (millions)

Brookings Institution analysis and ACS data

Suburbs such as Highland Park (Detroit), Carol Stream (Chicago), and Forest Park (Atlanta) once stood for escape from the hard times of the inner city. Now their deceptively bucolic names conceal a national epidemic of suburban poverty. According to a report released today by the Brookings Institution, the suburban poor now far outnumber the rural and urban poor: Their ranks grew by 64 percent during the aughts to 16.4 million—a rate of increase more than twice that seen in America's cities.

What's going on here? Well, for one, Ward and June Cleaver's house wasn't exactly built to last. And as retiring baby boomers downsize and young millennials flock to hip inner cities, not that many people want to live in a half-century-old suburban tract home—except people with no other options.

Could Federal Seizure Be the Beginning of the End for Bitcoin?

| Tue May 14, 2013 8:03 PM EDT

In what may be the first move toward a federal shutdown of the wildly popular online currency known as Bitcoin, the Department of Homeland Security today issued an order that has restricted the transfer of funds in and out of Mt. Gox, the Bitcoin exchange that handles some 60 percent of the transactions.

A creation of bank-fearing techies, Bitcoins are now worth more than $1 billion, and consumer interest has been skyrocketing. For more background, read our Bitcoin explainer.

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