An Apple store in Ireland, the country where Apple sends a lot of its profits.
An Apple store in Ireland, the country where Apple sends a lot of its profits. Brendan Howard/shutterstock.com

What did we learn about Apple in 60 Minutes' "Inside Apple" episode, which ran this Sunday and featured an interview with the corporation's CEO Tim Cook? That Apple really does not want to pay its taxes or participate in any meaningful way in the American labor market.

Apple avoids US taxes by basing subsidiaries in Ireland, a country that happens to have a very low corporate tax rate. The US, Cook explains to his interviewer Charlie Rose, has a tax code that's not appropriate for the age of computer technology. Ireland, which only demands 12 percent from the profits of its corporations, is up with the times.

But the reason why Ireland's tax rate is so low is because it did not pay for any of the very expensive and risky research and development that made Apple's beloved products possible. For Ireland, that 12 percent is money for nothing.

As the economist Mariana Mazzucato points out in her book Entrepreneurial State, US taxpayers did foot the bill for almost every component in the iPhone. A country as small as Ireland could never afford the kind of pre-market R&D that consistently leads to innovations like the touchscreen. But if another country has done all of the work, has paid all of the expenses, it's very happy to take even a tiny cut of the rewards. (I have made my notes and clippings of Entrepreneurial State public over here.)

On top of all this, Apple also refuses to manufacture it products in US. Why? Cook claims because the labor force is too unskilled. It's not about the cost of labor but its quality. From Tim Cook's mouth:

Yeah, let me— let me— let me clear, China put an enormous focus on manufacturing. In what we would call, you and I would call vocational kind of skills. The U.S., over time, began to stop having as many vocational kind of skills. I mean, you can take every tool and die maker in the United States and probably put them in a room that we're currently sitting in. In China, you would have to have multiple football fields.
Even if you believe this nonsense, you still have the problem of Apple's tax avoidance, which results in a massive loss of revue for Apple's prime investor, the US taxpayer. How can Americans properly fund their schools if Apple and other corporations that benefit from its R&D are not paying taxes here?

A possible solution to this vicious cycle? If Apple wants to pay Irish taxes then it should manufacture its products from innovations generated by Irish universities and state-funded research programs. Patents from US-funded innovations should only go to companies that pay US taxes.

The two important parts of the 60 minutes interview. One:

Charlie Rose: But you also have more money overseas, probably, than any other—

Tim Cook: We do.

Charlie Rose: —American company?

Tim Cook: Because as I said before, two-thirds of our business is over there.

Charlie Rose: Yeah, but why don't bring that home, is the question?

Tim Cook: I'd love to bring it home.

Charlie Rose: Why don't you?

Tim Cook: Because it would cost me 40 percent to bring it home. And I don't think that's a reasonable thing to do. This is a tax code, Charlie, that was made for the industrial age, not the digital age. It's backwards. It's awful for America. It should have been fixed many years ago. It's past time to get it done.

Charlie Rose: But here's what they concluded. Apple is engaged in a sophisticated scheme to pay little or no corporate taxes on $74 billion in revenues held overseas.

Tim Cook: That is total political crap. There is no truth behind it. Apple pays every tax dollar we owe.

Tim Cook insists that China's vast and cheap labor force is not the primary reason for manufacturing there.

Two:

Charlie Rose: So if it's not wages, what is it?

Tim Cook: It's skill.

Charlie Rose: Skill?

Tim Cook: It's skill. It's that Chi—

Charlie Rose: They have more skills than American workers? They have more skills than—

Tim Cook: Now— now, hold on.

Charlie Rose: —German workers?

Tim Cook: Yeah, let me— let me— let me clear, China put an enormous focus on manufacturing. In what we would call, you and I would call vocational kind of skills. The U.S., over time, began to stop having as many vocational kind of skills. I mean, you can take every tool and die maker in the United States and probably put them in a room that we're currently sitting in. In China, you would have to have multiple football fields.