Congress’ obsession on publicity with no legislative progress

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Published: 22 May 2013

The US Senate grilled Apple’s CEO Tim Cook over Apple’s practices of reallocating profits in other countries in order to avoid paying the full corporate tax rate in the US.

The current tax environment for multinational corporations is the following: multinational corporations are taxed on their total global earnings in the US, while in other countries those corporations are taxed only on profits that are earned within the respective country’s border. This incentivizes corporations to put all of their foreign profits to other countries and not repatriate them back to the US, because those profits are taxed at a high rate once they come back to the US. (Hook and Yadron; Wall Street Journal)

This hearing is a waste of time. If Senators feel that Apple unfairly is taking advantage of the tax code system, then the problem points to Congress itself for not reforming the tax code. It’s obvious that there is a tax code problem within the country, so what’s the point of having this hearing? To shame Apple?

Senators can make moral judgments on whether Apple’s tax avoidance practices are right or not, but the fact remains that Apple did not do anything illegal under the current system. Congress, not a multinational corporations like Apple, have the power to change the current tax code to close the loopholes and make everything simpler. But so far, it’s all a show and no legislative progress.

Tim Cooks meeting with the Senators highlight a broader trend in Congress. Congress loves to highlight issues in these hearings, because our representatives get free publicity over the news networks. But there is a lack of legislative progress on those same issues that need to be fixed by Congress. It reveals Congress’ obsession on being on television and a lack of leadership to fix problem by legislation.

Less Schools and More iPads

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Published: 26 March 2013

The city of Chicago reported that 54 public schools will be shutdown in order to cut costs and reallocate resources that is best for all Chicago's students. This means that students who are currently attending those schools will be forced to attend a different school next year.

The debate whether closing these public schools will benefit the students' academics is still ongoing, although the debate itself probably will not have any impact on whether those 54 schools will ultimately close. It seems the plan of shutting down these schools are final.

While reading the story, a paragraph in the New York Times caught my attention: "The district says that with the money it saves from closing schools, it will invest in air-conditioning for all classrooms; libraries; expanded math, science and fine arts curriculums; iPads for all students in grades 3-8 and programs for advanced students."

I hope the "iPads for all students in grades 3-8" caught your attention.

Why does the city of Chicago needs to provide iPads for all students in grades 3-8? This is a complete waste of money. The only possible reason for providing iPads to students is to allow the school district to use technology to facilitate children's education. That in it of itself is not an unreasonable argument. But my question is this: why iPads?

There are cheaper ways to use technology to facilitate children's education. One way is to provide computer labs and have extended hours. Students without a computer will be able to utilize the technology to enhance their learning without having the district to pay a few hundred dollars for an iPad per student.

If the city officials are serious with the iPad proposal, then why stop there? I propose that the city of Chicago replace all school buses with a personal student taxi service. Each student gets his own taxi to travel between the school and his house. Such a service is a benefit for the student, because it prevents students from needlessly walk through dangerous neighborhoods. Just like the iPad proposal, this student taxi service might be seen as a waste for some, but shutting down 54 public schools will generate money for the district. Why not spend it mindlessly more?

EU to Cyprus: We don't care

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Published: 21 March 2013

The European Union attempted to force Cyprus to tax bank depositors as a precondition for the small country to receive financial aid from the Union. While most of American main street media paid no attention to the crisis, many financial news services looked at the situation carefully as people in Cyprus went to the ATMs to withdraw money before the supposed bank deposit tax passed in Cyprus' parliament.

If the first paragraph did not make this clear, let me simplify the situation. A transnational institution is forcing Cyprus to take a percentage of all bank deposited money (i.e. savings and checking accounts) to be used as a fee for the European Union to give financial aid to a financially instable Cyprus.

Thanks to the EU's proposal, a bank run was triggered, which further threatened to destabilize Cyprus' situation. Virtually all people of Cyprus' is against the proposal. Actually, they probably feel betrayed by the EU's false promises on actually helping the lagging Euro-zone member.

The parliament of Cyprus defeated the proposal as the finance minister of Cyprus pleaded with the European Union to give a more reasonable condition for financial aid. Unfortunately, it's not likely that the European Union would provide a more sympathetic tone as Germany's Angela Merkel is facing an election this year. German domestic politics is preventing the EU from giving a more humane and reasonable financial aid deal to Cyprus. Reuters reports that Berlin has instructed its finance minister not to yield on taxing the bank depositors.

It's not surprising to think that the European Union leaders did not expect such a negative reaction from Cyprus, so I am truly convinced that the European Union was never serious in providing meaningful aid to Cyprus in the first place. The fact that the German government is unwilling to give aid unless the bank deposit tax is in place means that no real option was given to Cyprus. It is simply the European Union telling Cyprus to fend for itself.

I am hopefully predicting that another country outside the European Union would bail out Cyprus. I am also quite certain that more people will question the European Union's ability to fix the Euro-zone's crisis.