“Apple Inc. paid little to no corporate income tax to any national government on tens of billions of dollars in overseas income over the past four years, Senate investigators found, a revelation that fuels the debate over whether the U.S. tax code needs an overhaul,” Danny Yadron, Kate Linebaugh and Jessica E. Lessin report for The Wall Street Journal.
“The disclosure follows a lengthy examination of the technology giant’s tax practices by the U.S. Senate’s Permanent Subcommittee on Investigations, which is expected to air its findings at a hearing on Tuesday,” Yadron, Linebaugh and Lessin report. “Apple Chief Executive Tim Cook is preparing to testify at the hearing, and is expected to propose changes to a tax code that provides American companies strong incentives to keep overseas earnings bottled up at foreign subsidiaries.”
Yadron, Linebaugh and Lessin report, “Apple used technicalities in Irish and American tax law to pay little or no corporate taxes on at least $74 billion over the past four years, according to the Senate panel’s findings. The investigation found no evidence that Apple did anything illegal.”
MacDailyNews Take: “The investigation found no evidence that Apple did anything illegal.”
Yadron, Linebaugh and Lessin report, “Aides to the subcommittee said they have never seen a company use a subsidiary that didn’t owe corporate income taxes to any country.”
MacDailyNews Take: Innovation is an Apple hallmark. “The investigation found no evidence that Apple did anything illegal.”
Yadron, Linebaugh and Lessin report, “Apple didn’t dispute that entities it set up didn’t pay corporate taxes but denied they were designed to avoid taxes. The company said it pays local taxes on overseas earnings and U.S. taxes on investment income generated at its Irish subsidiaries. The company pointed to the ‘extraordinary’ amount of corporate income taxes it pays — $6 billion in 2012 — and said its U.S. effective federal cash tax rate was 30.5% last year, not much below the 35% statutory rate. ‘What they often leave out is the second part of the story, that Apple is one of the largest tax avoiders,’ said Sen. John McCain (R., Ariz.), who described Apple as the ‘most egregious offender’ among U.S. corporations trying to avoid tax bills. Mr. McCain is the ranking Republican on the subcommittee headed by Michigan Democrat Carl Levin.”
MacDailyNews Take: If you don’t like it, change the stupid laws, numbnuts. Excuse us, Senator Numbnuts.
Yadron, Linebaugh and Lessin report, “General Electric Co., by comparison, had a 14.4% consolidated effective income-tax rate and paid $3.2 billion in cash income taxes globally last year. The company said its consolidated rate reflected lower tax rates on foreign earnings and tax credits for investments that created jobs.”
MacDailyNews Take: Uh, wait a ‘sec. Didn’t Senator Alzheimer just say that Apple was the “most egregious offender” in U.S. tax avoidance for paying a “U.S. effective federal cash tax rate” of 30.5%, but General Electric paid just a 14.4% “consolidated effective income-tax rate?” And, what is the difference between a “U.S. effective federal cash tax rate” and a “consolidated effective income-tax rate,” WSJ? Seems like an apples to oranges comparison or you would have used the same language for both, right? So, while Apple was paying a “U.S. effective federal cash tax rate” of 30.5%, what “U.S. effective federal cash tax rate” did GE pay, exactly? Here’s the answer: Nobody outside of GE and the IRS seems to know.
Yadron, Linebaugh and Lessin report, “Mr. Cook will urge Congress on Tuesday to modify the current tax system, which Apple said penalizes companies for bringing foreign earnings back to the U.S. ‘Apple welcomes an objective examination of the U.S. corporate tax system, which has not kept pace with the advent of the digital age and the rapidly changing global economy,’ the company said in testimony released Monday.”
Read more in the full article here.
MacDailyNews Take: Read the full article and one fact becomes eminently clear: Apple CFO Peter Oppenheimer is a genius who’s worth every penny he’s paid and then some.
While we kid Senator McCain above, he is a U.S. hero. We hope he acts like one and leads a way to fix a broken system that’s guarded zealously by special interests, instead of grandstanding by attempting to trample on a company that is operating lawfully and represents the absolute peak of American ingenuity.
While you’re at it, Senator, how about fixing the U.S. personal income tax system, too?
In closing: “The investigation found no evidence that Apple did anything illegal.”
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