When The New York Times did a big piece last weekend on Apple’s tax strategy, the voice of the public sector was De Anza College President Brian Murphy, whose campus is a stone’s throw from Apple.
Murphy saw Apple’s tax policies — which could loosely be defined as keeping the bill low and lower — as symptomatic of the unfolding crisis in funding public education.
“I just don’t understand it,” he said. “I’ll bet every person at Apple has a connection with De Anza. Their kids swim in our pool. Their cousins take classes here. They drive past it every day for Pete’s sake.
“But then they do everything they can to pay as few taxes as possible,” he told the Times.
Murphy knew he would likely get a big reaction. He was suggesting that the policies of Silicon Valley’s pre-eminent success weren’t so sacred.
When I reached him, the silver-haired, 67-year-old president said his mail was mixed, with a few random messages from Florida and Texas suggesting that his head was in the wrong place. But he was hardly ready to back down.
“The real question is what kind of tax policy should the state have?” said Murphy, who recently sent a memo to the faculty saying De Anza was facing a potential death spiral. “It’s not about Apple as a unique corporation.”
Lower taxes
The Times wrote that Apple’s accountants had used legal — but innovative — techniques to move money through Nevada and Ireland, where taxes are lower than in California. The newspaper said the moves kept Apple’s corporate tax rate to single digits.
The De Anza president acknowledges that Apple employees pay substantial taxes when they exercise stock options. And he understands that companies have a fiduciary duty to shareholders.
“The question is, what is the tax system through which they pay for the public services they use?” he said. “And what is the larger benefit that comes from a well-educated people?”
A California native and physician’s son who headed the San Francisco Urban Institute before he took the De Anza job in 2004, Murphy has urged his students to become more involved in politics. In that sense, he was the perfect voice of outrage for the Times.
Me? I understand that Apple operates on the profit motive. I have covered government too long to suppose that community colleges haven’t wasted money. Like many public entities, they are adapting to a new and painful world.
Long-term view
But one thing I’m reminded of after talking with Murphy is that companies like Apple have both short- and long-term interests. The short-term interest might lie in lowering taxes. The long-term interests lie in avoiding a country in which public education is crumbling.
(And since I know you’ll ask: Don’t you, Mr. Herhold, take full deductions on your taxes? I do. But I don’t have an army of accountants or lobbyists to find a way to cut my bill.)
“It’s not as though you have a neutral tax system,” said Murphy. “What actually happens is that they (the companies) have so much power and influence that they help create the tax system that benefits them.”
Bully for them. We can cheer that Apple has garnered so much profit putting out good products that please so many people. But you have to thank Murphy for raising the hard question: What happens to the public while we celebrate?
Contact Scott Herhold at sherhold@mercurynews.com.
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