MSM Again: I Expect This of Granny Herald, Not NBR.

Look at these two headlines from Friday and Saturday:

NBR:

Apple’s NZ unit pays 0.4% tax on 2012 sales of $500m

From New Zealand Herald, and to give NBR their dues, this a lot more duplicitous by dropping the reference to sales as a denominator:

Apple's NZ unit coughs up 0.4% tax

Both pieces by Kristen Paterson; this is how Kristen starts the Herald piece:

Apple's New Zealand division made sales of $571 million last year but paid only 0.4 per cent of that in tax.

Labour's Revenue spokesman David Cunliffe said that's akin to paying nothing at all, and letting a corporation get off "scott free" is something New Zealand taxpayers shouldn't have to stomach.

Shock horror, call in the IRD Storm Troopers, this global company is not paying its fair share of tax in New Zealand. And don’t worry about how the innovation of firms such as this have increased our quality of living far more than the voracious, bottomless stomachs of out-of-control government, David.

It’s a hackneyed story by now; I’ve covered it before:

Amazon is Our Hero, Not the Villain in the Piece.

 Labour’s David Clark Declares War on the Consumer.

However, this time I’m not pointing out differences of philosophy in the reporting: as I implied in reference to the Herald’s headline, there’s something much more slippery happening here.

The 0.4% tax rate Kirsten refers to is tax liability accrued in the financial statements as a percentage of total sales.

Huh? Of sales?

Businesses, be they sole traders, partnerships, special partnerships, LTC’s, QC’s, companies, trusts don’t pay tax on sales; they pay tax on net profit; that's sales, less expenses incurred to make those sales.

To prove the point I’m shining the light of freedom on in this post, I will employ a simple example. Kirsten wants the IRD, presumably – I can't think what the agenda is otherwise - to crush Apple, the big bad foreign corp only paying 0.4% tax on sales; but let’s look at a home grown firm, the current market darling, Xero.

Over 2012 Xero reported sales of $19.3 million, however, hold onto your seats, while paying zero (note the z) tax. That’s 0.00% tax on $19.3 million turnover. What a shocker.

Also, off Fletcher Building’s last financial statements, the similar head line is, shock, horror: ‘NZ’s Fletcher Building Coughs Up Only 0.37% tax – Less than Apple’. In fact let’s rewrite Kirsten’s opening paragraph:

New Zealand firm Fletcher Building made sales of $8.9 billion last year but paid only 0.37 per cent of that in tax.

Does this mean the directors of Fletcher Building and Rod Drury from Xero should now be frog marched for their compulsory interrogation in IRD’s room 101? When you get that letter, there’s no saying no, you know - it’s not the free society. Should IRD be demanding all these directors’ personal bank statements from their banks, unknown to them, then sending in the storm troopers to dismantle their companies?

No, it doesn’t mean this. Because returning just to the former, all this means is Xero, after expenses which were greater than its sales, because its aggressively trying to grow its customer base, generated a loss, and it's only bottom line taxable profit (or tax loss) that is of relevance for calculating tax liability.

So returning to Apple NZ’s 0.4% tax rate as a percentage of sales, what does that tell the reader?

Nothing. It’s an entirely pointless, out of context figure, generated into the headline only for its sensationalist value in appealing to the typical Kiwi’s Luddite xenophobic anti-capitalist prejudice. Chris Keall on the NBR thread points out, rightly, that when you burrow down into the piece there are figures which would seem to highlight inconsistencies with Apple’s tax liability, although in response to that there is, apart from my philosophical defence of Apple in the links above, another commenter who makes the equally valid point that it may well be appropriate Apple uses transfer pricing to take profits back to where it earns its intellectual property, leaving a small profit in NZ representing its sales here of merely low margin product. But all that is beside the point, which is the spurious use of a headline figure designed to play on the prejudice of New Zealand's beef-witted. And while I would have expected Herald to pick up the piece and run with that by-line, I’m disappointed in NBR: I don’t pay my online sub for shoddiness and beat ups against innovative businesses like this, leave that to the rest of the media in New Zealand; in a drought of intelligent press, you were the single oasis of sense, and dare I say it, morality. Some of us are over the emoting, advocacy journalism of the sort that utilises such a sham for a headline.

Related Fourth Estate Posts:

Role of a Free Press: TV 3’s 3rd Degree and Syria.

The Connecticut Shooting

Feeling Our Way to the Police State

Teaser Post: The Mind/Heart Dichotomy – Feeling Our Way to the Police State, Without Thinking: Our Fourth Estate.

It appears that each successive generation has to re-learn the wisdom of previous generations by painful experience. I was reminded of this when reviewing a movie made on the Iron Lady, combined with discussions on the Internet over the last two weeks with three men from the mainstream media, and a dreadful piece published in the Dominion three weeks ago by Massey tax lecturer,  Deborah Russell, that has been sublimating angrily at the back of my mind.

Many years ago I earned my undergraduate degree in accounting studies, and honours in accountancy, from Massey University. However, if Deborah Russell had been lecturing, I might have walked out on principle and joined the navy, for in 2014 the war on freedom goes up a notch, and as a free man, I don't particularly want to be ‘in country’, given freedom has already been irretrievably lost, and I have little stomach to watch the victors sacking what's left of our liberty, while taking their spoils through the tax system … but I get ahead of myself. I apologise for being about to commit the sin of a long post, but I’m bringing lots of strands of recent thinking together here, so I can clear my head and move onto other topics. (Einstein said the brain is like a sponge: once it's full, to get a new idea in, you have to first squeeze out an old one, so I’m squeezing the pips of my mind).

As stated, my further step toward this (coming) post was in a Twitter debate with two middle aged men who work in the mainstream media (MSM), where one of them angrily threw at me the accusation that ‘libertarians don't like people’, which closed the argument for them. Unknown to me, for all this time, I was, apparently, a stereotypical ‘people hater’, and beyond contempt. I sat up from my corn flakes on that one, a globule of dirty brown organic soy milk pulp trembling on my lip – I’ve grown into this issue with lactose, unfortunately - and sat there wondering what type of simple minds could conceive such offensive nonsense, and stunned, frankly, that these two men purport to be from that once noble fourth estate that is charged with delivering news content to the masses. And then I remembered the most memorable scene from The Iron Lady, as commented on in my review, as well as recalling my deconstruction of the philosopher, Hume, that malevolent man who believed morality could not be derived from reason, in this review of Jenny Erdal’s novel, The Missing Shade of Blue, and it clicked: these men from the MSM weren't thinking, and they're probably incapable of it. They were feeling. They spend their lives and careers feeling, not thinking about issues. Thus in place of philosophy, economic theory, politics, they basically just have emotions about things, and then emote on them.

And then a third MSM man - are you getting worried about your news content yet? - accused me of being wrong in another argument because of my statement moral relativism is evil, and thus I think in absolutes, and he felt that won the argument for him, by default. I was on my coffee by this stage and getting a bit giddy on it all: these MSM men were going to drive me to hard liquor, usurious excise taxes and all, by lunchtime. This third man had lobbed that one at me as an insult, without realising I believe it to be far from a failing, but a strength in myself. And then he said something amazing: that there was no such thing as an absolute, and thus there was never anything more than a bounded liberty.

The penny finally dropped.

I replied to him, quoting Orwell’s mantras of the police state: war is peace, freedom is slavery, and then joined the dots for him to the twenty first century where liberty, now, is bounded, sadly.

Curious, I asked him who set the boundaries, and could some people doing so perhaps be more equal than others, just like in George Orwell’s novel, Animal Farm? For example, the tyranny of the majority who make my vote irrelevant. But really I’d lost interest as I'd figured it out. In debates with the first two gentlemen, I constantly had to type ad hominem in the hope of them coming back with an argument. They accused me of the same in return – it’s the Internet, remember, - and not, I swear, because I deserved it, I was arguing my case, as ever: perhaps they’d just learned to spell ad hominem, finally, and looked its meaning up in the dictionary.

And so, as I’m about to tortuously expound, I’ve re-learned why our social democracies were always going to end with individuals living in the jail of state, liberty bounded, yet again. Christopher Hitchens laconic dad, Eric, a commander in the Royal Navy who sadly died a bookkeeper after the British post-war government sold out the very men who had kept that country free on pain of their lives, once told his young son that his 'socialism was built on sand', and Hitch, indeed, did grow out of it, as I’ve spent much time hoping more of us would, though don't seem to. But it would be more apt to say it is worse than that, far more vicious, in fact, for socialism is built on feeling – on feeling about the human condition, not thinking about it philosophically. Which turns me nicely back to Deborah Russell, another feeler, not thinker, but rather scarier than these last three lads for being a tax lecturer who has recently - she was earnest to point out in her piece - quote, joined the labour party. Can free men already feel that movement deep in their gut? It’s not stomach ache, it’s moral nausea, or perhaps as the nurses would call it, moral distress.

And for those of you who are seduced by the politics of feeling, rather than thinking,because we’re all ‘nice, caring’ people, right, at least we need to be seen to be caring: I can also print here how the next piece I post will end – think of this as my interim warning …

For those who would cradle our lives in the arms of the caring state, remember from the atrocities of the twentieth century, there is nothing more vicious than affairs of the heart gone wrong, where emotions have trounced the civilised head of reason, and don't think that modern day Europe, Asia and the Pacific, can’t get back to that in a heartbeat. Be wary of politicians who wear their hearts on their sleeves, for they will likely be advocating policies that create and then cement in dependence,  poverty, and a destructive, xenophobic nationalism, not the free and prosperous society born of the refulgent mind that refuses to be dimmed.

This is important, watch for the mother-load post coming next week, 'The Bride of Gramsci', in which I really do solve life, the Universe, and everything concerned with our destruction under the modern, caring, welfare states we've voted in; and being a thinking man, I’m even going to give it to you for nothing, out of the goodness of my heart ….

Taxing Language: A Question for the Politicians - Fair: What Do You Mean?

Liberty and freedom are two proud words that have been executed from the political lexicon: they were frog marched and stood before a wall of blank minds, then forcibly blindfolded, and shot, with the whimpering staccato of ‘equality’ and ‘fairness’ resounding over and over. And not only did this atrocity go unreported by journalists in the mainstream media, they were in the firing squad.

Statists of all hues have taken to the word ‘fairness’ with the glee Chris The Fist Trotter has to the use of state violence, in order to make the theft that is compulsory taxation seem a little, well, fairer.

The slanderous union economist, for example, Bill (unfortunately named) Rosenberg, not letting facts get in the way of persecuting a minority, yet again, interrupted his Chardon-day, yesterday, to emote:

“... How many of the rich list pay a fair tax?”

And if Messrs Dunne and English had a blog label cloud pinned to their foreheads, ‘fairness’ would be in a huge font, over-clouding everything else. Just Google ‘fairness’, ‘tax’, and either of their names and you’ll get pages of quotes.

And so my point. I have a simple question for these three men: what does fairness, in relation to taxation, mean? Plus what is a fair amount of tax, please? How do you derive it, both in terms of the amount taken, and morally? Explain it to me, because I truly don’t understand. There is nothing in any of our taxing acts to give any guidance on this, and yet going on your constant utterances, taxpayers are, daily, being crucified on it.

In the first instance I want a generic principle, clear enough to write into tax law, which shouldn’t be too hard, given you write so much law in the fortress of legislation. And secondly, or rather, ‘but’ secondly, to test this law, for once, before foisting it on us, please interpret it, here, in relation to the below three scenarios.

Taxpayer 1:

Single man, twenty three years old, lower order contract milker putting in seventy hour weeks, earned $186,000 last year. He’s doing it hard, on himself, because with cow prices reaching $2,500 his ability to be able to buy his first herd, and so be in a financial position to propose to his girlfriend, and start a family, is looking more and more remote.

Taxpayer 2:

Family, three children at state school, both parents working to bring in a total of $60,000 per annum, only, to the household. They can’t afford a house in the current market, and with the rental squeeze due to government making it unattractive to be a private landlord, they’re having to pay $750 a week rent for a sub-standard house in Auckland, after which, when they pay for the essentials they have no pay left: indeed, all their credit cards are maxed out.

Taxpayer 3:

Family, two children, dad’s a banker, earning $200,000 per annum, mum stays home to look after their new baby, plus their first child has genetic disease meaning he’ll never be able to look after himself, so mum has taken on that job, for life. The couple have paid over half a million dollars over the last two years traveling around the world to see specialists, for operations, and so forth, and have had to re-mortgage their Fendalton home, twice, to the maximum amount possible. Husband is having to put huge hours in to make it all work financially, and with so much stress and little time together, the marriage is floundering.

So, for the statists, surely this should be easy: please write in the comments the interpretation of the tax fairness law you write for us, in relation to these individuals?

Finding it hard? Well, assuming intelligence on your behalf, you should find this impossible. And that’s even before I move to my position on tax which is not to use the word fair, but unjust. I wonder if we should ring Her Majesty for some input, given, in a story as stunning as it was alarming, the UK’s IR, Her Majesty’s Revenue and Customs, expect school children not only to be able to define what is a fair amount of tax, but, taking their state to its Orwellian conclusion, expect them to dob in adults who don’t play fair on a playground where the biggest bully is the state itself. Politicians should at least admit there is nothing 'fair' about tax in any of the above instances, or period: tax is an arbitrary imposition of the state, enforced with the full draconian powers of the police state. That's the truth. Let's at least acknowledge the implied violence and immoral act on which our society is based, because from that, we may ultimately find a kinder way to live our lives, which would be a society that constitutionally protects the smallest of its minorities: the individual, and particularly from what is now the biggest abuser of an individual's right to be left alone - the state.

There Is An Inter-generational Theft: It Shows In The Tax System, And Government Debt.

Apparently to keep, or develop, a blog readership, there must be new content, which is not easy for someone working full time, so I may as well use the comments I make on other blogs where they are relevant to the themes here. More importantly, this blog is the central repository of the brain of Mark Hubbard, so when the men in the little black vans (either the ones with pies and Playboys in the briefcases, or the ones in the bottom postscript with the panoply of police-state laws on their side) come for me, then you’ll be able to refer to this, for this is what I believed.

The Cactus has an interesting post up (as always), making an argument, via housing, that the generational theft oft talked about in the MSM is a nonsense. I agree with her regarding housing, but not otherwise, though, would also disagree with the MSM argument that this is something new: it’s not, indeed, that’s the problem, as it’s been happening since the inception of the Welfare State, working through the tax system. The two comments I put up on The Cactus’s thread state my position well enough – the below is the amalgam of them:

I do think there is a generational theft, indirectly, though have never thought of it in relation to housing: you are pretty well right as far as that is concerned - and farm succession, for that matter. However, as in my Trotter blog of two days ago, especially the postscript quotation of Mauldin, regarding the chickens coming home to roost finally from 70 years of accumulating unsustainable government debt chasing an economic illusion (the welfare state), and we are the generation to witness the collapse of western economies because of this; plus the update of Mankiw who showed since 2009 the middle class in the US are net tax takers, not payers, in a manner similar to the middle class welfare we have here through tax transfers such as Working for Families; I focus this issue solely on taxation: that is, to support the baby boomers, on top of and due to the Keynesian train wreck that is crunching up all economies, progressive taxes/rates over the next twenty years are going to have to rise, and rise dramatically. Taxation is theft, and that theft is set to rise to the levels seen under Muldoon, and the 90p in the pound under Healey, and when Cunliffe has my wallet from 2014, he'll use the baby boomers as the excuse to empty it at an ever increasing rate to build a state I have no agreement with.

Which is to say, to make my point succinctly; the welfare state has been, since inception under Micky Savage, founded on an inter-generational theft through the tax system, as the increasing government dollar spend has always outstripped current taxation: proof? Governments have always had to borrow to meet present unfunded commitments. If our welfare states had been affordable, not reliant on the deeper tax slavery of the next generation, and the next, then there would be no government debt. And we are the generation where the debt racked up is bankrupting entire western nations.

I will be paying more tax than my parents did, as well as financially supporting them. That's the 'theft'. I don't mind supporting my parents, but I sure as hell do the taxation that is making the whole problem of the welfare state worse, and paying for which I've lost my freedom to do with my money as I please, and my freedom per se.

Postscript: while on the topic of inter-generational theft, regarding the enforcers of it, I noticed a three column IRD situations vacant in the Press yesterday, looking to hire another Schutzstaffel of auditors (yes, plural): as if the current recession – and there is one outside of the rural sector - wasn’t bad enough, government wants to make your life in the Gulag of Forced Altruism behind the IRon Drape harder, scarier, and just plain more miserable. And public sector job losses? Apparently not where enforcing the Ponzi scheme of Big Brother’s welfare state is concerned. At the hands of Messrs Dunne and English, it’s getting uglier out here for free men and women; in fact, downright vicious, as we all sit on our hands, trying to be invisible, yet are jackbooted further from the civilised, voluntary society.

Worthy of note, was that according to page real estate, the ad was by far the biggest advertisement in the whole situations vacant, which is apt, considering the bigger that department gets, the fewer vacancies there will be in a private sector that is the most persecuted scapegoat in our society now. We need, desperately, a Western Spring: but don’t look to me for it - look at the whites of my eyes, I’m terrified, hell, I just put Schutzstaffel and IRD together in the same sentence, and I think my old mum thought I was bright: pfui.