Apple paid $6 billion in U.S. federal income taxes, 1/40th of all corporate income taxes collected by U.S. government in 2012

“Congressional investigators are wrapping up an inquiry into the accounting practices of Apple and other technology companies that allocate revenue and intellectual property offshore to lower the taxes they pay in the United States,” Charles Duhigg and David Kocieniewski report for The New York Times. “The Senate Permanent Subcommittee on Investigations inquiry now drawing to a close began more than a year ago and involves at least a half dozen technology companies, according to people with firsthand knowledge of it, who declined to be identified.”

“Those people said the subcommittee had subpoenaed or otherwise asked the companies to explain methods they used to avoid domestic taxes,” Duhigg and Kocieniewski report. “They said Apple had become a focus of the inquiry and was cooperating with the subcommittee, which is expected to issue wide-ranging recommendations that are likely to play a significant role in Congressional tax code negotiations. Tech companies are able to easily shift ‘intellectual property, and the profit that goes along with it, to tax havens,’ said a former Treasury Department economist, Martin A. Sullivan. ‘Apple went out of its way to try and ensure that its tax savings didn’t attract too much public attention, because tax avoidance of that magnitude — even though it’s legal and permissible — isn’t in keeping with the image of a socially progressive company.'”

MacDailyNews Take: Apple “went out of its way” to legally fulfill their fiduciary duty to their millions upon millions of shareholders worldwide. If you don’t like the laws, change them. How about lawmakers ignore special interests, lobbyists, and campaign contributions and do what’s right for a change? (We know: Ridiculous pipe dream.)

Don’t blame people for following the laws as scribbled, crossed-out and re-scribbled by a decades-long parade of chuckleheads; run through with loopholes into loopholes on top of loopholes.

The problem isn’t Apple Inc. The problem is the tax code.

Duhigg and Kocieniewski report, “In its statement, Apple said it paid ‘an enormous amount of taxes’ to local, state and federal governments. ‘In fiscal 2012 we paid $6 billion in federal corporate income taxes, which is 1 out of every 40 dollars in corporate income taxes collected by the U.S. government,’ it said.”

Read more in the full article here.

MacDailyNews Take: In 2012, Apple paid $6 billion in U.S. federal income taxes, 1/40th of all corporate income taxes collected by the U.S. government.

The New York Times: How Apple sidesteps billions in global taxes – The New York Times, April 28, 2012

[Thanks to MacDailyNews readers too numerous to mention individually for the heads up.]

Related articles:
Google, Apple, eBay shouldn’t pay taxes – people should pay taxes – November 25, 2012
So how much did Apple really pay in taxes? – November 1, 2012
Apple’s showdown with the U.S. government over taxes on offshore cash – July 13, 2012
Apple‘s $74 billion tops list of U.S. tech companies’ overseas cash – July 9, 2012
Apple’s dividend move puts spotlight on foreign cash holdings, repatriation tax reform – March 20, 2012
Apple: Good start; and what about the overseas cash? – March 19, 2012
Apple’s foreign cash hoard piles up: $54 billion and rapidly growing – January 11, 2012
Senator John McCain eyes Apple’s $54 billion overseas cash pile – November 3, 2011
Google joins Apple in push for U.S. repatriation tax holiday – October 3, 2011
Apple lobbies Obama for tax holiday, wants to bring overseas bounty home – August 24, 2011
U.S Senate Democrat Schumer allies with Apple, other multinationals on repatriation tax talks – June 21, 2011
U.S. companies push for tax break on foreign cash – June 20, 2011
Apple, Oracle, Duke Energy, others organize lobbying blitz for tax holiday – February 17, 2011

25 Comments

  1. If politicians really wanted to put the government’s finances back on a semi-sound footing, they would implement a flat tax next week.

    Today there are at least 40 governments with flat tax-type systems. Higher growth, stable revenue/GDP ratio, rising government revenue are proven, common, and repeatable.

    For low/no income citizens, tax credits would negate the tax on their necessities. They would therefore not be subject to regressive taxation.

    A real agent for “Hope And Change” would have accomplished this already.

    Until a real change agent arrives, the U.S.A. will continue to pile up debt, wage class warfare, raise taxes on “the rich” that do not cover 15 minutes worth of profligate U.S. spending and actually hurt the middle and lower classes much more.

    The U.S. does not have a revenue problem. The U.S. has a spending problem.

    Read more about countries that have implemented a flat tax system: Forbes, 11/17/12

    1. The U.S. does not have a revenue problem. The U.S. has a spending problem.
      No, the US has a “lack of critical thinking” problem which you so artfully demonstrate with your constant demagoguery.

        1. F2T2,
          You miss his point. Simple solutions sound great but rarely work well. A flat tax sounds great but food and housing and energy are not priced flat…. You pay a minimum to have electricity, and get food, and gas, etc. So the burden of payment actually falls on the poor who cannot afford to pay it.

          Not going into more detail, but the point is that simple sounding solutions usually support the wrong people and do not take into account how the current system actually works.

          Just a thought. .

          en

          1. Hello,

            Thank you for your considerate reply. Did you miss the following?

            “For low/no income citizens, tax credits would negate the tax on their necessities. They would therefore not be subject to regressive taxation.”

            The Forbes link I provided shows PROOF that the flat tax works in a 10-country study. It would work spectacularly in the U.S., but there are too many special interests, too many accountants and tax preparers, and too many who will kill to protect their particular loopholes, to get it passed.

            In this case, simple works. We already know that utterly complex does not.

            With a flat tax, huge, wasteful tax preparation costs would evaporate. Imagine if all of that capital was put to use to DO SOMETHING MEANINGFUL as opposed to wasted on filling out forms and trying to minimize taxes?

            With a flat tax, everyone would pay their taxes. Those who cannot afford the tax will get tax credits to offset them.

            A flat tax would help everyone in the country except for tax preparers, accountants, etc. Perhaps they could be retrained to figure out how best to apply and grow the country’s vast newfound surpluses?

            1. Addendum:

              The cost of preparing and filing all business and personal tax returns is estimated to be $100 to $150 billion each year. According to a 2005 report from the U.S. Government Accountability Office, the efficiency cost of the tax system — the output that is lost over and above the tax itself — is between $240 billion and $600 billion per year. For tax return preparation, Americans spent an amount equal to roughly 20% of the amount collected in taxes.

              As of August 2012, there are more tax preparers (1.2 million) than there are law enforcement officers (765 thousand) and firefighters (310,400) combined.

              More: George Washington University

            2. First of all, the tax doesn’t have to be “flat” to make this work. I could see having a graduated tax scale with the first $25K in earnings being tax free. From $25K to $100K tax at 10%. From $100K to $250K, tax at 15%. Above $250K tax at 20%. This is just an example – the exact percentage and earnings ranges would have to be calculated to achieve the necessary level of revenue. The key to this approach is the elimination of tax credits and write offs across the board. This will simplify tax preparation and eliminate the use of the tax code for social engineering efforts. Note that tax code simplification would also cost jobs. Few workers would need the services of H&R Block with a simple flat or graduated tax system (or VAT), for example.

              Frankly, I rather prefer the value-added tax (VAT) approach. Taxing consumption encourages saving. To make this work fairly for lower income folks, some items would need to be exempt from VAT, such as food.

              Naturally, it is critical to control spending. We would not be spending so much now if we adhered to a balanced budget philosophy except in special cases. Why? Because we would have to tax ourselves to actually pay for the services that we want. That is why I have repeatedly decried the tax cut and spend approach of the 2000s. The pain was deferred, making it seem like everything was free. It is only in the past few years that the concern over the national debt has grown. News flash…it has been a growing problem for over a decade. It is important to emphasize that tax rate cuts only increase tax revenue over the long term when the current tax rates are above the optimum point that maximizes revenue in balance with growth. Thus, not all tax cuts are good, especially when they are enacted in a time of deficits and rising spending. In addition, even in a situation in which a tax cut would eventually enhance revenue, it takes time for the effects of the tax cut to work its way through the economy.

              In my opinion, businesses and citizens are looking for reasonable and stable tax rates. Stability is one of the keys, especially for long term business planning. We need to quit jerking everyone around and streamline and simplify things. But the solution has to cover our spending in order to be successful. And, if that level of taxation a hurts, then perhaps it will provide the needed incentive to reduce spending.

      1. could not agree more about your comment on lack of critical thinking, but your assertion is not consistent with that concept. the lack of critical thinking is because of:
        1) low IQ-couldn’t do it if they wanted, and prime targets for ideological brainwashing (both left and right),
        2) too busy-working 2 jobs, balancing credit card debt, paying college tuition, insurance premiums, because not poor enough for welfare,
        3) too lazy
        4) too pretty (sorry-a joke)
        5) others but don’t want to pile on

        the point is really not that there is a lack of critical thinking, bit that the tax code and the politicization of social behavior has become overwhelmingly complicated and impossible to deal without a tax lawyer. you could start another list that would include dairy and grain subsidies. i consider taxes and expenditures together where most people separate them (critical thinking coming at you). that is the beginning of understanding the cause and effects and the problem.

        the concept of flat tax is to not simplify, bit eliminate all the layers of cause and effect and make the implications of government spending simple to understand and therefore create a more informed voter. we clearly do not have that today. what most people don’t realize is in a flat tax structure, the rich pay more of a % of their income than they do today.

        in it’s purest form, a flat tax is a solution. i have zero confidence that we could do it without lobbyists piling on exceptions for their clients making it impure and looking like what we have today. this is a part of the cause and effect of the current framework. too complex for a politician to understand without a lobbyist’s spoon feeding. so a flat tax would not only make an informed voter, but an informed government-what a concept!… and lobbyists would have to go find honest work.

    2. A tax reform that does much of that has before Congress for the past 6 years. Harry Reid and Nancy Pelosi have used Senate and Congressional rules to keep it from coming to the floor for vote. It’s called the Fair Tax Bill.

      Not only would it stimulate real growth in the US, it also eliminates tax advantages that our trade “partners” use against us.

  2. “former Treasury Department economist, Martin A. Sullivan. ‘Apple went out of its way to try and ensure that its tax savings didn’t attract too much public attention, because tax avoidance of that magnitude — even though it’s legal and permissible — isn’t in keeping with the image of a socially progressive company.’””

    That’s why he’s a “former” economist at Treasury. He was the guy the NYTs based their original tax attack on Apple a few months back. His theory is that since Apple designs its products here in the US, they should allocate more of their taxable sales to the US. He doesn’t like that Apple pays 70% of its taxes outside the US where they have 70% of its sales. He has some weird notion that it should be the opposite. I wonder if Apple followed his nutty theory, whether the foreign tax authorities would agree?

    1. Who says they’re boasting? Perhaps they’re lamenting?

      In this present crisis, government is not the solution to our problem; government is the problem. From time to time we’ve been tempted to believe that society has become too complex to be managed by self-rule, that government by an elite group is superior to government for, by, and of the people. Well, if no one among us is capable of governing himself, then who among us has the capacity to govern someone else? All of us together, in and out of government, must bear the burden. The solutions we seek must be equitable, with no one group singled out to pay a higher price…

      We are a nation that has a government — not the other way around. And this makes us special among the nations of the Earth. Our government has no power except that granted it by the people. It is time to check and reverse the growth of government, which shows signs of having grown beyond the consent of the governed.

      It is my intention to curb the size and influence of the Federal establishment and to demand recognition of the distinction between the powers granted to the Federal Government and those reserved to the States or to the people. All of us need to be reminded that the Federal Government did not create the States; the States created the Federal Government.

      Now, so there will be no misunderstanding, it’s not my intention to do away with government. It is rather to make it work — work with us, not over us; to stand by our side, not ride on our back. Government can and must provide opportunity, not smother it; foster productivity, not stifle it.Ronald Reagan, Inaugural Address, January 20, 1981

        1. In this present crisis, government is not the solution to our problem; government is the problem. From time to time we’ve been tempted to believe that society has become too complex to be managed by self-rule, that government by an elite group is superior to government for, by, and of the people. Well, if no one among us is capable of governing himself, then who among us has the capacity to govern someone else? All of us together, in and out of government, must bear the burden. The solutions we seek must be equitable, with no one group singled out to pay a higher price…

          We are a nation that has a government — not the other way around. And this makes us special among the nations of the Earth. Our government has no power except that granted it by the people. It is time to check and reverse the growth of government, which shows signs of having grown beyond the consent of the governed.

          It is my intention to curb the size and influence of the Federal establishment and to demand recognition of the distinction between the powers granted to the Federal Government and those reserved to the States or to the people. All of us need to be reminded that the Federal Government did not create the States; the States created the Federal Government.

          Now, so there will be no misunderstanding, it’s not my intention to do away with government. It is rather to make it work — work with us, not over us; to stand by our side, not ride on our back. Government can and must provide opportunity, not smother it; foster productivity, not stifle it.Ronald Reagan, Inaugural Address, January 20, 1981

          1. We saw it the first time when F posted it, anonymous Common Sense. It is actually quite a fine speech – clear, straightforward, and reasonable. I agree wholeheartedly with it. Reagan is not the only person to support this line of thought, nor is his party the only one to support common sense. If more people could accept the fact that citizens of both political parties have more in common than we do differences, then we might just get something done.

      1. Nine things Republicans don’t want you to know about Reagan:
        1. Reagan was a serial tax raiser. As governor of California, Reagan “signed into law the largest tax increase in the history of any state up till then.” Meanwhile, state spending nearly doubled. As president, Reagan “raised taxes in seven of his eight years in office,” including four times in just two years. As former GOP Senator Alan Simpson, who called Reagan “a dear friend,” told NPR, “Ronald Reagan raised taxes 11 times in his administration — I was there.”
        2. Reagan nearly tripled the federal budget deficit. During the Reagan years, the debt increased to nearly $3 trillion, “roughly three times as much as the first 80 years of the century had done altogether.”
        3. Unemployment soared after Reagan’s 1981 tax cuts. Unemployment jumped to 10.8 percent after Reagan enacted his much-touted tax cut, and it took years for the rate to get back down to its previous level. Meanwhile, income inequality exploded.
        4. Reagan grew the size of the federal government tremendously. Reagan promised “to move boldly, decisively, and quickly to control the runaway growth of federal spending,” but federal spending “ballooned” under Reagan.
        5. Reagan did little to fight a woman’s right to choose.
        6. Reagan gave amnesty to 3 million undocumented immigrants.
        7. Reagan illegally funneled weapons to Iran.
        8. Reagan helped create the Taliban and Osama Bin Laden.
        9. Reagan vetoed a comprehensive anti-Apartheid act.

  3. ““lack of critical thinking” problem which you so artfully demonstrate with your constant demagoguery.”

    Don’t characterize as demagoguery anything you disagree with, which is exactly what YOU are doing.

    While I am on the subject, Reagan made a deal with the Democrats that he would support a raise in taxes if it was followed by a cut of spending of $3 for every $1 of tax raise. He made that deal with his so-called friend Tip O’Neill. The Democrats reneged, to no ones surprise. Reagan said it was the worst mistake he ever made. I am an independent, not a Republican, but I support them in their so-called obstructionism. You can’t make a deal with someone who doesn’t play be the rules and then even brags about it.

    1. You only give half the story about Reagan. As noted above:
      1. Reagan was a serial tax raiser. As governor of California, Reagan signed into law the largest tax increase in the history of any state up till then. Meanwhile, state spending nearly doubled. As president, Reagan “raised taxes in seven of his eight years in office,” including four times in just two years. As former GOP Senator Alan Simpson, who called Reagan “a dear friend,” told NPR, “Ronald Reagan raised taxes 11 times in his administration.”
      2. Reagan nearly tripled the federal budget deficit. During the Reagan years, the debt increased to nearly $3 trillion, “roughly three times as much as the first 80 years of the century had done altogether.”
      3. Unemployment soared after Reagan’s 1981 tax cuts. Unemployment jumped to 10.8 percent after Reagan enacted his much-touted tax cut, and it took years for the rate to get back down to its previous level. Meanwhile, income inequality exploded.
      4. Reagan grew the size of the federal government tremendously. Reagan promised “to move boldly, decisively, and quickly to control the runaway growth of federal spending,” but federal spending ballooned under Reagan.

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