Full disclosure. I’m typing this blog on a Mac. Within reach is my IPhone. So, this is not some sort of stealth pro-PC campaign. But, enough already — Apple is perhaps one of the biggest corporate tax dodgers in history. And it’s OUR money that Apple is salting away in tax havens around the world — money that isn’t going to the Treasury to fund schools, roads, health care and you name it. I’m right there at the point of throwing all my Apple products away — or at least pledging never to set foot in another Apple store again. What about you?
This is just simply outrageous. While the story is being carried on the home page of The New York Times website,I’d rather first give credit to Citizens for Tax Justice, which is a consistent investigator of these facts:
An analysis of Apple Inc.’s financial reports makes clear that Apple has paid almost no income taxes to any country on its $102 billion in offshore cash holdings. That means that this cash hoard reflects profits that were shifted, on paper, out of countries where the profits were actually earned into foreign tax havens.
How We Know Apple’s Offshore Cash is Largely in Tax Havens
Under current law, corporations can indefinitely defer paying U.S. income taxes on their offshore profits. Multinational corporations with offshore profits sometimes disclose in their financial reports the amount of tax they would pay if there were no “deferral” and their offshore profits were taxable in the United States. But this potential tax rarely amounts to the full 35 percent U.S. corporate tax rate, since these companies typically have already paid some foreign income taxes on these foreign profits when they were earned. Companies are allowed a “foreign tax credit” against their U.S. tax when and if the profits are subject to U.S. tax. So a company that has already paid (for example) a 25 percent tax rate on its unrepatriated offshore income would only pay the difference between that amount and the U.S. corporate tax rate of 35 percent (in this example, 10 percent) when that income is repatriated to the U.S.
The data in Apple’s latest annual report show that the company would pay almost the full 35 percent U.S. tax rate on its offshore income if repatriated. That means that virtually no tax has been paid on those profits to any government.
At the end of March 2013, Apple’s foreign subsidiaries had accumulated $102.3 billion in cash, cash equivalents and marketable securities. Based on more complete information provided in Apple’s latest full annual report, without “deferral” Apple would owe $35 billion in U.S. income taxes on this cash hoard. [emphasis added]
Here is what we know from Apple’s 2012 annual report:
At the end of fiscal year 2012, Apple had $82.6 billion in cash and cash equivalents parked offshore.
Of this $82.6 billion, $40.4 billion was “permanently reinvested” foreign income that the company declared it had no plans to ever allow the United States to tax. Without “deferral,” however, Apple said that it would owe a U.S. tax bill of $13.8 billion on this $40.4 billion stash. That works out to a 34.2 percent U.S. tax rate
The remainder of Apple’s offshore cash at the end of its last fiscal year was $42.2 billion. Apple did not treat this amount as “permanently reinvested” offshore. Therefore, it reported a potential future U.S. tax liability of $14.7 billion, which means a 34.9 percent U.S. tax rate.
So all together, without deferral, Apple would have paid $28.5 billion in U.S. taxes on its $82.6 billion in offshore cash. This means the company’s U.S. tax rate would have been 34.5 percent, barely under the maximum U.S. corporate tax rate.
The reply
apparently, from Apple’s CEO Timothy Cook, will be:
Mr. Cook is expected to emphasize that Apple is most likely “the largest corporate income tax payer in the U.S., having paid nearly $6 billion in taxes to the U.S. Treasury” in the last fiscal year. “Apple does not use tax gimmicks,” Mr. Cook is expected to testify.
Bullshit.
Now, let’s be clear: there is no evidence that Apply has broken the law. And, correctly, we should point the fingers at the idiotic members of Congress, of both parties, who vote for tax breaks and gimmicks that rob the people — partly to curry favor with campaign contributors and also just because some of the morons in Congress just can’t help but bow down to the almighty “free market” and give business tax breaks they don’t need or deserve.
But, that doesn’t mean WE have to play the same game.
Why should Apple get our money if it decides, of its own corporate will, to, then, rob us out of the other pocket — meaning, assist in the draining of resources from the country? Even though I have long argued that the debt and deficit crisis is a scam, $35 billion is a lot of money that could be used for other things.
So, it’s something to consider — an Apple boycott until the company decides to stop playing games and robbing the country of its wealth.
5:04 PM PT: I just have to observe: it's amazing how much this site has become more centrist and almost conservative when it comes to buying into the idea that it's perfectly "logical" for corporations to stash money overseas...Wow...by the same reasoning, people will say how perfectly logical it is to cut Social Security, Medicare and how perfectly logical it is for CEOs to be paid tens of millions of dollars because it's legal.