By Graham K. Rogers

For some time now, Wall Street, investment analysts, socially aware organisations and many others have had their eyes on the cash hoard that Apple has accrued by selling good products to a demanding market and by avoiding unnecessary taxes where this has been possible.

Apple is not the only company that avoids paying taxes, and the USA is not the only country that this happens in. It would be irresponsible of any organisation, especially one with shareholders, to make payouts unnecessarily. This is not new by any means and I had at the back of my mind a famous case in the UK that I read about in the 1980s concerning a famous high-street butcher, Dewhurst.

According to a 1999 history of the Vestey family by Stuart Millar and Alex Brummer, those founders "had developed an obsession with taxation which they feared would be the ruin of their business" and even wrote to the Prime Minister of the time "demanding that they be exempt from income tax" which did not go down too well in some circles. In 1978, it is reported, "the Dewhurst chain paid £10 tax on a profit of more than £2.3m." This is small beer by current standards, but the principles are the same.

All companies will make efforts to avoid as much tax liability as possible and recent news has focussed not only on Apple but Google and others, with Eric Schmidt upsetting a number of people (or politicians really) with the statements he made on the ways Google appears to avoid paying taxes in the UK (Barry Neild, The Guardian)

It is not that Google or Apple do not pay taxes. They make full use of the laws that the legislators (who seem to be the ones nost upset on both sides of the Atlantic) have crafted. Chris Umiastowski on iMore points out that of every $40 collected in taxes, $1 comes from Apple: a feat that not many companies could match.

Apple's statement that has already been submitted and was released several hours before the committee meeting, outlines the many ways in which they do contribute to the USA. Also released before the proceedings is the case that the Senate Permanent sub-committee on Investigations has prepared.

Many will not read past the opening abstract which seems to have decided on Apple's guilt before the committee has met, but an examination of the committee's own findings reveals that Apple does use the tools that the legislators have provided - and thus acts within the law - while the law makers have themselves recognised the loopholes on several occasions in the past yet every time the law is set to be changed, there is some form of backing down, or other regulations are written which circumvent the original intent.

Copies of both documents are online on the Market Watch site. A copy of the Apple document (PDF) is also available on the Apple site.

It seems part of the fantastical world that the lawmakers live in that produces a finding of guilt before all the evidence is presented and an admission of that guilt, with recommendations for punishment, from the defendent, in this case, Apple. Of particular interest in that Senate document is that the very tools they claim they want to tax Apple's overseas earnings, such as Sub-part F, were created during the Kennedy presidency and subsequently diluted, worked round, by laws and regulations that contradicted what was done. One has to ask why this was so?

This is not really about taxation or overseas earnings, it is about the chicken in the barrel that Apple has become. Ever since the overseas cash reserve neared $100 billion, the calls for Apple to spend it, bring it home (with 35% tax), invest it in factories the corporation did not own (although that was done), or give it away somehow, have hardly stopped.

Even today, we are reminded of the ways Apple is seen as a way for others to get rich quick with an announcement that a whistleblower law firm wants anyone with knowledge of illegal acts to contact them (out of the good of their hearts?), "I am sure I join virtually every American who believes that companies have the right to be successful, but also have the duty to work within the laws and framework of our country's tax code in doing so" (MacDaily News).

Indeed, the Senate should close the loopholes that exist, but to blame Apple for using them, as Senator McCain did, is a weak way of shifting the blame for legislative incompetence to a healthy and creative company. McCain suggested that it is unacceptable for companies like Apple to shift their responsibilities, but the strategies, rather than being "pernicious" are totally within the law as it exists today. McCain is right, America's tax system is broken.

There were sane and serious opening comments from Rand Paul who was annoyed that the committee was using a hearing to bully one of America's companies. He said that he thought the committee should apologise to Apple, adding that this committee will admit that Apple has not broken any laws. In fact, he said, Congress should be on trial. The chairman was not amused and there were angry comments in reply to Mr Paul.

The Sub-committee should be wary of the saying, "Be careful what you wish for" as such changes in legislation they are suggesting to claw back Apple's overseas earnings will apply to other corporations that also have substantial investments and responsibilities overseas: companies like IBM, Proctor & Gamble, Goodyear, as well as a host of other corporations, large and small, that try to operate in the sometimes difficult situations that exist overseas.

More on this as the statements and evidence are given.

Graham K. Rogers teaches at the Faculty of Engineering, Mahidol University in Thailand where he is also Assistant Dean. He wrote in the Bangkok Post, Database supplement on IT subjects. For the last seven years of Database he wrote a column on Apple and Macs.