Just in time for your happy hour: Pat and Mike tumble through the Tumblr/Yahoo deal, talk about Mr. Cook going to Washington and debate whether New York Times columnist Joe Nocera was right when he called Cook a liar.

You won’t want to miss their video recap of the week’s business news from Silicon Valley. Really. You won’t. Probably

“I think it’s important to make clear the admiration we have for Apple, the incredible changes Apple has caused in our lives. However… Apple is one of the biggest tax avoiders in America.”

— Sen. John McCain, R-Ariz., during a Senate subcommittee hearing Tuesday morning about shifting profit offshore, where Apple CEO Tim Cook was scheduled to testify after the politicians had their say. For his part, Sen. Rand Paul, R-Ky., said he was “offended” that the “great American success story” that is Apple was “dragged” to the hearing. The Merc’s Troy Wolverton wrote that one report released Monday “suggests that Apple has paid virtually no taxes on the $102 billion in overseas cash it held at the end of March.” Follow the Mercury News’ live blog here.

Photo of John McCain from Getty Images

A report published by the Sunday Times sheds light on the tone of British lawmakers’ grilling of Google over taxes last week: A former Google executive has turned whistleblower, showing the newspaper evidence he says proves that “what Google is doing is immoral.”

Lawmakers last week accused the Silicon Valley company of  doing “evil” to “avoid paying [its] fair share of tax to the common good.” Google Vice President Matt Brittin reportedly told Parliament in November that Google promoted products in Britain but sales took place in Ireland, where corporate tax rates are lower. But the whistleblower, Barney Jones, has also talked to lawmakers and shown the Sunday Times contracts and invoices of deals being closed in Britain, and says he has more than 100,000 supporting emails and documents. According to the Times, Google had $18 billion in revenue in Britain from 2006 to 2011 but paid only about $10 million in taxes there.

The Times report came on the eve of Google Chairman Eric Schmidt’s Monday meeting with British Prime Minister David Cameron, who has talked tough about tax abuses. Other American companies such as Amazon.com, whose U.K. subsidiary reportedly paid $3.2 million in taxes on $4.2 billion in sales in 2012, are also facing scrutiny over their tax practices in Britain. The tax tiff in the U.K. also comes amid talk in the United States about offshoring taxes. Tax avoidance knows no borders — although companies are oh-so-conscious about borders.

Also over the weekend, Schmidt said Google supports talking about international tax reform. “Corporate taxation is rightly a hot topic,” Schmidt wrote in the Guardian. “And as a company that has always aspired to do the right thing, we understand why Google is at the centre of that debate.” He offered three main points he said he hoped “most people can agree upon”: that taxes be based on a company’s profit, not revenue; that politicians set the rules; and that international tax laws need to be reformed.

Photo of Google Vice President Matt Brittin after his testimony last week. (Neil Hall/Reuters)

Apple CEO Tim Cook is scheduled to testify Tuesday morning at a Senate hearing about offshore taxes. He will propose a “dramatic simplification” of tax laws to help bring more corporate profit back to the United States, according to the Washington Post. Apple CFO Peter Oppenheimer and Phillip Bullock, head of the company’s tax operations, are on the witness list to join Cook on his first appearance before Congress.

“If you look at it today, to repatriate cash to the U.S., you need to pay 35 percent of that cash. And that is a very high number,” Cook told the Post. “We are not proposing that it be zero. I know many of our peers believe that. But I don’t view that. But I think it has to be reasonable.”

By the way, although Apple has more than $100 billion in cash, it recently decided to borrow money to give back to its shareholders in a tax-saving move. (See Apple’s Dilemma: So Much Money, So Much Of It Overseas.) The New York Times reported last year that Apple legally shifts about 70 percent of its profit overseas. The NYT also said the Cupertino company established a subsidiary called Braeburn Capital — in Nevada, where there is no state corporate income taxes and no capital gains tax — to invest its cash. Like other companies that have set up subsidiaries in that state, Braeburn also allows Apple to bypass taxes in other states.

Photo of Tim Cook by Gary Reyes/Mercury News archives

“I buy my lunch with after-tax dollars. And I have to pay taxes to support free meals for those Google employees.”

— Martin J. McMahon, Jr., tax-law professor at the University of Florida, says free food at work — a sacred Silicon Valley tech company perk — should be treated as taxable income, saying we all pay the price for the gourmet goodness that employees at places such as Google, Facebook, Yahoo, Twitter and Zynga get to indulge in. Does the taxman care? Experts say it depends on whether companies serve up the free food as a convenience or as compensation. One tax attorney told the Wall Street Journal he has seen Silicon Valley tech companies settle with the IRS after an audit, include the value of the free food in employees’ future paycheck stubs, then pay the workers extra to cover their bigger tax bills. And if free food were to be taxed? The WSJ estimates that Google workers who chow down on a couple of free meals a day could be on the hook for an extra $4,000 to $5,000 a year.

Photo by Rick E.Martin/Mercury News archives

The taxman cometh. Will he finally collect? (And no, that’s not a reminder for those of us who have to file our income taxes. But you’re welcome.)

We’re talking about the reintroduction this week of the Marketplace Fairness Act, federal legislation that would allow states to collect sales taxes from online retailers. The bill, which reports say address the differences that held back previous and related versions, would force even online retailers that don’t have a physical presence in the states in which they do business to collect sales taxes there. The bill comes after Amazon finally agreed to collect sales taxes in California and a handful of other states after long resisting calls to do so. It exempts businesses with annual sales under $1 million.

Usually anti-tax Republicans who have voiced support for the effort say it’s a matter of states’ rights and fairness, according to the Wall Street Journal. States have said they miss out on $23 billion a year in uncollected online sales taxes, according to one measure. The bill has the bipartisan support of 53 senators, Politico reports. Other supporters include Amazon, which has in the past voiced support for a federal online sales tax solution, big-box retailers and retail associations.

“You don’t need affirmative action for the Internet anymore,” Scott Durchslag, a Best Buy senior vice president, told Politico. In the early days of e-commerce, retailers such as Amazon were commonly known to have lower prices than brick-and-mortar stores partly because they did not have to charge sales taxes in many states where they had no physical presence.

Opponents of the bill include eBay, which has long opposed such efforts because it says its sellers would be affected. (See Tech and policy: Collecting sales taxes online…)

Some small online retailers also are against the bill, although others say the effort would allow them to compete against their much bigger competitors. “While store owners collect and remit state and local sales taxes their digital competitors are off the hook — and benefiting because of it,” said David French, the National Retail Federation’s senior vice president for government relations, according to Reuters.

I’ve really been trying to stay out of this whole California vs. Texas brawl. (Or trying to keep my powder dry, as Texas Gubna Rick Perry might say.)

But this is plain wacko (which, isn’t that a city in Texas? Or is that just the Texas state motto?).

You’ve  heard, right? Rick Perry is coming to Silicon Valley (and some other parts of the state) to try to get some California businesses to move to Texas, because, as the Loon Star State governor says in his Come-to-Texas radio ad: “Building a business is tough, but I hear building a business in California is next to impossible.”

I was saying the exact same thing the other day over at Apple (Cupertino, Calif.). Or was it Google (Mountain View, Calif.)? No. Maybe it was Facebook (Menlo Park, Calif.). Or Oracle (Redwood Shores, Calif.) or Adobe (San Jose, California) or Hewlett Packard (Palo Alto, Calif.) or Cisco (San Jose, Calif.).

There are so many I just can’t remember.

OK, it’s true: Texas has lower tax rates than California. Texas is also the kind of state that leads the nation. Like in the percentage of residents without health insurance and in the number of prisoners they execute.

And if you like (really, really like) football, carrying loaded weapons around in public and the kind of land-locked heat that will have you screaming for mercy in an Austin minute, then really, you can’t beat Texas.

Anyway, this isn’t my first rodeo. (We do so have rodeos in California.) This come-to-Texas-to-do-business thing is as old as the hills. The charismatic and now nationally-prominent Juilan Castro, mayor of San Antonio, came to raid Silicon Valley a couple of years ago. Of course, that’s not how he put it.

He was  here to thank valley companies that had outposts in San Antonio, he told me at the time.

“We also believe it’s a great moment for San Antonio both to more thoroughly introduce ourselves to Silicon Valley and also to learn from Silicon Valley CEOs, ” the Stanford and Harvard educated Castro said then.

And this whole notion of what a lousy place California is to do business has been getting a lot of buzz recently — especially since Phil Mickelson hinted that he might move out of the state to avoid its income taxes.

When will we stop pushing these job creators into the arms of Florida and Nevada? Oh wait. He’s a golfer. Well, I guess he hires a caddie.

Anyway, the New York Times was back on the “fleeing California” story today, except that they didn’t actually find anyone who said he or she is fleeing California because of taxes. (OK, they quoted a professor who once lived in California and now lives in Nevada. He said fleeing millionaires aren’t going to broadcast their escape because people might think lesser of them for making the move.)

Anyway, I thought that Cristobal Young, an assistant professor at Stanford, had a better point. He’s done research that shows that tax rates don’t affect where millionaires choose to live, the Times said.

“Mr. Young said he suspected that few, if any, millionaires would leave or stay away because of the tax increase,” the Times story said. “More likely, he said, they would find ways of reducing their tax burden, with loopholes or income avoidance, or simply reduce their work.”

Me? I’m thinking any millionaire who can’t figure out how to avoid taxes really has no business being a millionaire.

Besides, it’s not at all clear that tax rates make much of a difference when businesses decide where to locate.

Oh and another thing: Do any of these phantom millionaires leaving the state realize that moving to Texas is great except for one thing?

You end up living in Texas.

(Photo: Associated Press)

“They have a distinct value, poorly reflected in economic science or official statistics.”

— from a report commissioned by French President François Hollande, referring to the mounds of personal user data collected by big American companies such as Google, Facebook and Amazon.com. Google pays almost no taxes in France despite making about $2 billion annually from ad revenue there, according to the New York Times. The 200-page report says the personal information the Internet companies collect from their users leads to ad revenue, so France is proposing that the companies get taxed for it. It is among other recent efforts in Europe by telecoms, the media and the government to get their share of the success of high-profile American tech companies that do business there. (See Tech targets: American companies abroad…)

It’s our first trip of the year to the corner of tech and policy:

• An inquiry into the accounting and tax practices of Apple and other tech companies is wrapping up, according to the New York Times. The Senate Permanent Subcommittee on Investigations has reportedly been looking into companies’ avoidance of domestic taxes for more than a year. Apple — which is said to have pioneered the practice of routing profits through subsidiaries in Europe and then to the Caribbean — is a big focus, and the committee also is said to be looking at Google, Hewlett-Packard and Microsoft, among others. (Google was found to be employing similar techniques a couple of years ago. See Double Irish and Dutch Sandwich might sound delicious, but they’re taxing. Just ask Google.) Tech companies are among the least taxed in the nation.

• A proposed bill in Arizona would make online impersonation a crime, but its author insists House Bill 2004 wouldn’t affect parody sites. (Think of the danger to fake Twitter accounts!) “The bill has a high standard. It’s the impersonation without the individual’s consent and with the intent to harm, defraud, intimidate and threaten,” said Rep. Michelle Ugenti, a Republican, according to USA Today. Other states have similar laws; California’s SB 1411, written by Sen. Joe Simitian, D-Palo Alto, went into effect last year. However, California’s law treats online impersonation with intent to harm as a misdemeanor. The Arizona bill would make it a felony. “The problem with this, and other online impersonation bills, is the potential that they could be used to go after parody or social commentary activities,” Kurt Opsahl of the Electronic Frontier Foundation told the Arizona Republic.

• Finally, among the boatload of new laws that went into effect this week are ones that prohibit employers from asking for employees’ or job applicants’ social-networking passwords. The news comes after reports last year that some employers were asking workers for Facebook passwords and other non-publicly available personal information. (See Quoted: on Facebook profiling by the workplace — and the law and Talking social: Facebook warns employers seeking user passwords…) California and Illinois reportedly joined four other states — Michigan, New Jersey, Maryland and Delaware — that already have such bans; there is no federal law in place.

Update: This post originally misidentified the state agency for which Allen Prohofsky works. He is with the state Franchise Tax board. — Oct. 16, 2012, 5:55 pm.

With the November election staring us in the face, we’re bound to hear a lot more arguments about taxes and whether they are killing California businesses. There are at least two major statewide tax measures — props 30 and 38 — on the ballot and local governments are sticking their hands out, too.

Anti-tax crusader Jon Coupal and business backer John Kabateck weighed in on the Mercury News‘ op-ed page this week with a piece that said that the state’s nice weather and sandy beaches can’t “keep individuals and businesses from fleeing the Golden State in droves in search of low-tax business-friendly states.

The piece implies that Gov. Jerry Brown’s Prop 30 would make matters worse by raising some taxes. The article doesn’t exactly say that and I’m guessing that’s because the prediction is hard to support. Instead, Coupal and Kabateck cite a Manhattan Institute study that shows California residents are moving to other states. Residents? I thought this was about businesses.

The truth is there is evidence that businesses don’t put a lot of weight on taxes when they are deciding whether to remain in the state. I know it sounds counter-intuitive, but a study that the California Public Policy Institute has been revisiting for years indicates that only 1.7 percent of the jobs lost in California between 1999 and 2006 were lost because businesses moved out of the state.

Jed Kolko, the report’s author, concludes:

“Few businesses move into or out of California. From 1992 through 2006, about 16,000 jobs annually moved into California and about 25,000 jobs annually moved out of California. The annual net employment change in California due to relocation—a loss of about 9,000 jobs—represents only 0.05 percent of California’s 18 million jobs. Most employment gains and losses are the result of other factors.”

Most job gains and losses in the state come about because of businesses starting up or shutting down, the report says. Here is Sacramento Bee columnist Dan Walters take on the report. Walters points out that Kolko concluded that California is actually better than average when it comes to losing jobs to other states. He ends with an important point: That there is no way to know if California’s tax rates are causing businesses to start up elsewhere rather than in California.

And consider the argument put forth by UC-Berkeley economist Enrico Moretti in his fascinating new book “The Geography of Jobs.” Moretti says both people and companies are drawn to innovation clusters (such as Silicon Valley) that have a concentration of smart people doing ingenious work.

Companies are even willing to pay higher wages and salaries for the benefit of a brilliant workforce. Moretti  begins to illustrate his point by comparing two California communities — Menlo Park and Visalia — through the eyes of David Breedlove, an engineer who moved from Menlo Park to the quieter Visalia in 1969. Moretti writes:

“Today the two places could not be more different, but not in the way David Breedlove envisioned. The Silicon Valley region has grown into the most important innovation hub in the world. Jobs abound, and the average salary of its residents is the second highest in America. Its crime rate is low, its school districts are among the best in the state, and the air quality is excellent. Fully half of its residents have a college degree, and many have a PhD, making it the fifth best educated urban area in the nation. Menlo Park keeps attracting small and large high-tech employers, including most recently the new Facebook headquarters.

By contrast, Visalia has the second lowest percentage of college-educated workers in the country, almost no residents with a postgraduate degree, and one of the lowest average salaries in America. It is the only major city in the Central Valley that does not have a four-year college. Its crime rate is high, and its schools, structurally unable to cope with the vast number of non-English-speaking students, are among the worst in California. Visalia also consistently ranks among American cities with the worst pollution, especially in the summer, when the heat, traffic, and fumes from farm machines create the third highest level of ozone in the nation.”

Even John Engler, president of the Business Round Table, writing on the op-ed page of the very anti-tax, very pro-business Wall Street Journal seemed to say that tax policies are not a big driver of businesses location decisions. He wrote:

“While the tax code provides a deduction for all business expenses, including plant-closing costs, severance pay and worker retraining, the simple fact is that businesses don’t make relocation decisions on the basis of a tax deduction.”

It would be a shame if California is missing out on new businesses, the jobs they bring and the taxes they pay, but it’s also good to remember that current tax rates provide the money the state needs to function. And part of what the state does, through roads and other transportation systems, through education, through all sorts of enforcement activities and on and on, is allow businesses to prosper.

A few months ago, I talked to a state economist about this issue. He said in general he believed the issue of taxes is overstated when it comes to businesses deciding where to locate.

Allen Prohofsky, of the California Franchise Tax Board statistical research bureau, said he’s reviewed a number of surveys asking businesses how they decide where to locate:

“The top two answers are almost invariably, ‘Where are my customers? Or where are my suppliers? What’s the quality of the workforce? What’s the quality of the infrastructure?’ Usually you’ll find that state tax issues come up seventh or eighth when they make these decisions.”

As for companies leaving the state, because of taxes, think about it for a minute. Who pays taxes, Prohofsky asks?  And answers:

“By definition, you only pay income tax if you have income. If you’re already profitable, there is a big incentive to keep doing what you’re doing where you’re already doing it.”

I’m not going to argue that high taxes don’t keep some companies away or cause some to move (as the California Public Policy Institute’s work show). I just think it’s important to consider the issue as part of a balancing act. The state must balance its tax rates with its responsibilities — educating its citizens, protecting its people from disease, helping those who are unable to help themselves, providing the infrastructure business needs to thrive etc.

In their Mercury News essay, Coupal and Kabatech wrote:

“But an honest discussion of business flight is perhaps what voters need to fully understand the damage Proposition 30 will inflict on California’s economic future.”

I submit this as part of that honest discussion, a part that allows that the damage the proposition will inflect might not be as grave as its opponents believe — or want you to believe.