A lot of people ask me about my expensive cars and jewellery. It’s true, I have a lot of bling for a marketing professor. But it could not be more simple: I do three quarters of my work..." /> Mark Ritson: Apple can’t claim it is socially responsible while keeping billions abroad to avoid tax | ElSurveillance

Marketing & Advertising Mark Ritson: Apple can’t claim it is socially responsible while keeping billions abroad to avoid tax

Mark Ritson: Apple can’t claim it is socially responsible while keeping billions abroad to avoid tax
 
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A lot of people ask me about my expensive cars and jewellery. It’s true, I have a lot of bling for a marketing professor. But it could not be more simple: I do three quarters of my work overseas and rather than bring it home and pay stupid taxes on it, I just stash it in international bank accounts and only pay income tax on the tiny fraction of my work that I do in the UK.


I do that because I think that paying ‎‎£11,000 a year in taxes on my £44,000 salary is not fair. I disagree with paying that much money so I don’t. Instead, I am comfortable paying £1,000 a year and keeping most of my savings overseas. But don’t get me wrong, I believe in taxes in theory. In fact, I am pissed off with the way this government has been underinvesting tax revenues in hospitals and schools.


What I have just described is indefensible, hypocritical and – let me make this clear to the tax authorities – patently not true. But it’s very close to Apple’s current approach to tax and one which CEO Tim Cook appears to be entirely comfortable with. The arrogance and hypocrisy of the Apple boss were there for everyone to see in a rare interview with the Washington Post last week.


READ MORE: Mark Ritson: Should marketers really aspire to be like Google and Apple?


On the one hand Cook wants to be seen as a quintessentially purpose-driven CEO who feels an “incredible responsibility” to “the communities and the countries that the company operates in”. He is so concerned, in fact, that Cook openly calls on the US government to invest more in “infrastructure and roads and bridges and airports”. Lovely.


But on the other, this is a CEO that has expertly used various entirely legal, entirely disgusting tax minimisation tactics to ensure that much of Apple’s corporate income remains offshore and therefore unexposed to federal and state taxes that, according to Cook’s estimate, could total 40%. A report by Citizens for Tax Justice last year suggested Apple held around ‎£140bn overseas. It is refusing to return that money to the US and pay the £45bn in corporate tax that the report claims would then be owed on it until the US government revisits the tax legislation and lowers the rate. To put it in context, that amount would educate around five million American kids next year.


There is a lot at stake here. With the US elections fast approaching, a new government is imminent and it is entirely likely that the corporate tax rate will drop and Apple will be able to negotiate a settlement in which billions of dollars in tax payments can instead be retained by the organisation.


In the interview Cook could not be more arrogantly transparent: “We’ve said at 40%, we’re not going to bring it back until there’s a fair rate. There’s no debate about it. Is that legal to do or not legal to do? It is legal to do. It is the current tax law. It’s not a matter of being patriotic or not patriotic. It doesn’t go that the more you pay, the more patriotic you are.”


All true, Mr Cook. Apple is behaving neither illegally nor unpatriotically. But no-one thought that in the first place. What we are increasingly thinking is Apple is behaving immorally, hypocritically, arrogantly and ultimately in a manner that makes many feel differently about Apple the brand.


Apple is by no means alone in its attempts to legally minimise its tax responsibilities. Despite what all the naïve morons that espouse CSR and brand purpose keep telling you, there are very few brands that don’t actively and massively avoid tax liabilities to a disgraceful degree. What makes Apple notable in this uniformly disgusting context is the manner in which Cook has continued to portray himself as a different kind of CEO, who takes his societal responsibilities very seriously.


Google’s approach to tax minimisation is no less disappointing than Apple’s, but to its credit at no point does Google or its holding company Alphabet pretend that it’s about anything other than the business of search. In contrast, Apple wants to have its billion-dollar tax cake while eating it at a brand purpose party using CSR cutlery.


Tell that to the Mayor of Cupertino, Barry Chang. His town of 60,000 people is also the site for Apple’s new £4bn headquarters. Chang is adamant that his small community and its overburdened infrastructure cannot support such a huge endeavour without massive investment in the city’s crumbling resources. Apple paid just over £7m in local taxes in Cupertino in 2012-13, almost exactly the same amount they paid Tim Cook for his services in 2014.


Ultimately, my point with this column is not to accuse Apple of doing anything illegal. Indeed, from a purely financial point of view they are playing a very clever game with a multibillion-dollar pay-out. But their actions will come at a cost to brand equity.


When Steve Jobs introduced Apple’s new HQ in 2011 he referred to it as Apple Campus 2. Five years on the campus is almost complete and Apple is a very different kind of brand. These days most people, including many Apple employees, refer to the building as the Death Star.


That’s my point.