Anatomy of Avoidance: How the Journal deprived readers of the Apple tax dodge story

May 27th, 2013 · No Comments · journalism, tax policy, Uncategorized

By Arthur Alpert

Some 20 years ago, I was afraid of new technology, stuck in manual typewriter mode, when my partners and I decided to create a senior monthly, Prime Time. Desktop publishing meant I had to use a Mac, the SE30. Friends said it was “idiot-proof” and so it proved. With a hand up from Kinko’s (free lessons!), I became a fan and several computer generations later, I write, joyfully, on an advanced iMac.

That’s why I read almost everything written about the company. And it’s why I can tell you with some regret, but no fear of contradiction, that the Albuquerque Journal just mangled, distorted and misreported a story about Apple.

The paper did it in a manner that jibes perfectly with what I take to be its mission – publishing a plutocratic political broadsheet camouflaged as a daily newspaper.

You see, Apple has invented innovative tax avoidance strategies as novel as some company products. That’s what Senate investigators and Senators of both parties agree on, professional journalists reported last week.

Not so the Albuquerque Journal, which exerted itself to deny it.

First, the Journal pretended there was no Senate investigators’ report.

It ignored Cecilia Kang’s Washington Post story May 20:

“Apple avoids taxes with complex web of offshore entities, Senate inquiry finds”.

“Apple used a ‘complex web’ of offshore entities, with no employees or physical offices, that allowed it to pay little or no taxes on tens of billions it earned overseas, according to a Senate investigation unveiled Monday.”

Later the same day, the Post published an analysis by Neil Irwin headlined “How to make $30 billion and pay no corporate income tax, the Apple way”.

The Journal didn’t use Irwin’s copy, either.

And the N.Y. Times’ top story May 21 ran under this rubric:

Apple’s Web of Tax Shelters Saved It Billions, Panel Finds”.

Here’s how reporters Nelson D. Schwartz and Charles Duhigg began:

“WASHINGTON – Even as Apple became the nation’s most profitable technology company, it avoided billions in taxes in the United States and around the world through a web of subsidiaries so complex it spanned continents and went beyond anything most experts had ever seen, Congressional investigators disclosed on Monday.”

You see the pattern. Professional journalists told readers what the Senate investigators found and, unbelievably, the Albuquerque Journal ran nothing.

Journal editors did, however, print a story devoid of the news that Congress’s investigators caught Apple avoiding billions in taxes:

Apple CEO Tim Cook to propose tax overhaul

This was a Washington Post “advancer” that Ms. Kang wrote May 16, almost a week before release of the Senate report:

“Apple chief executive Tim Cook plans to propose a “dramatic simplification” of corporate tax laws when he testifies for the first time before Congress next week, just as lawmakers are considering an overhaul of the tax code.”

To hide the piece’s decrepitude, Journal artists tweaked it, changing “next” week to “this” week, for example.

But because Kang wrote before the Senate investigators’ report was released, she couldn’t cite it, could she?

What a “news decision!” Amazing! Made my head spin. But we must not falter if we’re going to tail Journal editors on their strange, ideological itinerary.

After the report came hearings, covered by the Washington Post and N.Y. Times and, I dare say, almost all professional news organizations.

In bipartisan fashion, Senators professed great admiration for Apple’s technology and business success, but deplored the company’s tax avoidance strategies, including parking profits in Ireland.

Among the critics was the well-known leftist, John McCain of Arizona, who said Apple paid less than $10 million in taxes on $22 billion in earnings in Ireland, a tax rate of less than 1.20th of 1%.

McCain complained that what Apple did not pay left domestic companies, unable to hide profits overseas, and ordinary taxpayers, whose income of salaries and investments automatically is reported to the IRS, holding the bag. That’s according to Floyd Norris in the Friday, May 23 N.Y. Times.

“The general American public should not have to make up the balance as corporations avoid paying billions in U.S. taxes,” McCain said.

Well, there’s no room in the Journal for that kind of inflammatory idea-mongering.

No, the editors would not abide that. So, to deprive readers of the story, they not only ignored Kang’s Washington Post coverage of the report and hearings, but rejected accounts from the usual alternate sources, including AP and McClatchy.

They decided, instead, to print a Bloomberg story (Wednesday, May 22) under the rubric “Apple’s CEO resolute on taxes”.

Though he gave CEO Cook the protagonist role, reporter Todd Shields did a thorough job thereafter of reporting what happened and he tied events to broader issues in the remainder of his account.

The key word in my last sentence is “thereafter.” The Journal, you see, gave its readers just the first eight paragraphs of Shields’ 30-graph account. (Note: The Journal version of Shields’ Bloomberg story is not online.)

Space is always tight, you know.

This time, Journal readers learned there were hearings, hurrah, but not the secret of the Senate’s investigation. And not what Sen. McCain said or even how Sen. Rand Paul defended Apple.

The Journal edit also deprived readers of discussions of corporate tax reform and the information that Apple is not the sole technology giant to “off-shore” profits profitably, though it may be the most resourceful in exploring how.

Thus did the Journal effectively spike a story that puts Apple in a poor light and raises serious questions about the U.S. tax system. It’s a job well-done, if the newspaper’s mission is to serve the interests of corporate America’s global companies.

No, it was excellent, for since the subject was corporate tax evasion, the editors may have deterred readers from doubting the patriotism of some big businesses.

Which reminds me of another piece of the Bloomberg account the editors cut:

“The panel’s report is designed to be a ‘case study’ of how a company is able to pay an effective tax rate much lower than the 35 percent U.S. corporate rate, according to staff members on the subcommittee.”

That U.S. corporations pay a lower effective tax rate is hardly a revelation, but it’s not the kind of information our daily newspaper harps upon.

Enough. At this point let’s review the so-called news decisions the editors had to make to publish two stories about Apple while withholding the news:

First, they rejected several stories blemished by including the news. Next, they picked Kang’s “advance,” written before the news. Then, they edited the Bloomberg account to leave out the essential news as well as several topics the news illuminated.

For a vociferous take on that news, here’s Joe Nocera, the business reporter-cum-opinion columnist, in the  May 23 N.Y. Times:

“[CEO Cook] added that Apple had never shifted any of its American profits to an offshore tax haven when, in fact, that is basically what it has done, routing tens of billions in pretax profits to a shell corporation in Ireland that exists solely to avoid taxes in the United States. He even said that the low taxes Apple pays overseas are on the profits of its overseas sales. Not to put too fine a point on it, but this was a flat-out lie.”

Do Nocera’s words hint at why the Journal worked so hard to mangle, distort and misreport the Apple tax avoidance story?

If you can think of another motivation, I’d be delighted to read it.

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