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Should Tax Questions Surrounding Apple Impact Its Reputation?



Apple TargetWe talk a lot about reputation here at Marketing Pilgrim. After all, our founder, Andy Beal has quite a reputation himself in the fast growing field of reputation management, monitoring and online listening.

With that in mind we often see stories a little bit differently than some. Today’s case in point is the tax avoidance story that is currently surrounding Apple. The company is already getting dinged here and there with some reputation matters, like cnet’s “Customers Not As Happy With iPhone As The Were Last Year” (which carries an alarmist headline and not much else to be concerned about but it’s the headline that people actually read so ….) and the Apple Maps concerns of last year. Also, there are concerns about the direction and general health of the company in the post Steve Jobs era which sometimes directly indicts current CEO Tim Cooke.

But back to the tax issues. Apple Insider reports

U.S. Sen. Carl Levin (D-Mich.) took particular issue with Apple Operations International, an Ireland-based entity owned by Apple that he said has paid no taxes. The issue comes from a loophole in U.S. tax law that Levin believes should be closed.

“Apple is exploiting an absurdity, one that we have not seen other corporations use,” the senator said. “And the absurdity need not continue.”

The senator is not alone in his assessment either.

Joining him in criticizing Apple was U.S. Sen. John McCain (R-Ariz.), who said the company has avoided paying taxes on some $44 billion in income in the last 4 years alone.

“It’s unacceptable that corporations like Apple are able to exploit tax loopholes to avoid paying billions in taxes,” McCain said.

That makes for fantastic headlines and reading even the truth of the matter may actually have been more accurately described by none other than Rand Paul.

Taking a dissenting opinion on the subcommittee was U.S. Sen. Rand Paul (R-Ken.), who criticized his colleagues for “bullying, badgering and berating” a great American success story. He said that Apple has broken no laws, and is simply following the rules of an outdated U.S. tax code.

Paul characterized Tuesday’s hearing as a waste of time, both for the politicians involved and for Apple executives who were in attendance to testify. He also suggested that other members of the subcommittee do all they can to lower their individual tax rates as well.

Rather than criticizing Apple, Paul said the subcommittee should apologize to the company, and compliment them for their job creation.

So while the headlines scream about the negative Apple actually may have done nothing illegal. Some might call it unethical but it is likely not illegal (please remember that I am not a lawyer and I DID NOT stay at a Holiday Inn Express last night either).

But this is the Internet we are talking about here so the truth may have less to do with the reputation concerns that might come against Apple in this one. Why? Because it’s a chance to vilify a big winner and a chance for some politicians to look like they are taking out a corporate bully.

So this begs the question, “Will this kind of story hurt Apple’s reputation and if yes, how much?”

Any thoughts on this are obviously speculation but it is an interesting phenomenon to consider. Even if Apple has done nothing wrong legally will they now be held up as the company that skipped on paying taxes on $44 billion (yup, with a “b”) while the rest of the US tries to put food on the table in a persistently weak economy? The answer is very possibly yes and they will need to get out in front of this one because the last thing you need in this environment is to be held up as one of the lead dogs in a presumed tax dodge ploy.

Of course, they are not alone as Google has come under similar scrutiny and are not even close to being the only company doing what they are doing.

That said, we have a strange way of taking companies to the top only to wind up resenting them to the point of wanting to see them suffer. It’s like a completely dysfunctional national pastime in America.

So what do you think? Will this kind of press tarnish Apple’s reputation? Should it even be an issue? Let’s hear your thoughts in the comments.

  • http://www.facebook.com/cynthia.boris Cynthia Boris

    I think the majority of Americans are used to the fact that big corporations have lawyers and accountants who can find loopholes in the tax law. It’s probably true that they SHOULD pay more tax but legally don’t have to. If it’s the difference between them staying in biz or folding, I’d rather they stay in business. Sounds like the IRS needs to figure out how to close the loop holes.

  • http://www.trackur.com/ Andy Beal

    Let he who has not taken advantage of a tax loophole/deduction/credit cast the first stone. The problem is the loopholes, not those that take advantage of them. And it needs fixing from top to bottom–it’s not just rich corporations that are abusing them.