Bloomberg News’ awful reporting on Apple’s U.S. corporate taxes

“There really does seem to be a great deal of misunderstanding going on over the story about Apple’s taxes,” Tim Worstall writes for Forbes. “As an example, the number of people seeming to claim that Apple moved profits out of the US is very large. Especially when we consider that the one thing Apple didn’t do was move profits out of the US: it simply didn’t bring foreign profits into the US. This is not the same thing for the obvious reason that leaving a country and entering a country are different things.”

Worstall writes, “Then there’s what Bloomberg has said today: ‘Here’s another way to take advantage of transparency’s positive effects: Require companies to disclose what they actually pay in federal income taxes. As the Senate Permanent Subcommittee on Investigations reported last week, Apple’s 2011 annual report states that its tax liability on $34.2 billion in revenue came to $8.2 billion, for an effective tax rate of 24.2 percent. That calculation, however, includes U.S., state and foreign taxes. In fact, Apple paid only $2.5 billion in federal income taxes, for a 20.1 percent effective rate.'”

“This is all really rather odd,” Worstall writes, “For a start, of course the company is going to state its total tax liability. That’s what it has to do: state its total tax liability.”

Much more in the full article here.

MacDailyNews Take: Misunderstanding or disinformation?

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11 Comments

  1. Its funny how Apple needs to be the single focus of the recent taxation concerns–how about Facebook, Amazon, IBM, and Google whom also have large cash holdings in Ireland and abide to the same set of rules as Apple does.

  2. Apple is probably far from the worst of the bunch however I do question since the software royalties are in Ireland and Apple sales here have to pay software royalties even to itself .does the Ireland entity gets payments from the US sales of Apple products due to the fact that the software and design rights are held in Ireland? The. Does the us entity write royalty payments off as an expense?

    1. I think you mis-understand. I believe that the deal with the overseas companies is so that both can sell hardware and software with rights to do so. Joint rights. Then the profit is kept in the general area where its earned. Overseas for europe, china, etc and in the USA for usa and brazil and a few smaller sales places.

      Its pretty much what Tim Cook said and not what the two senators tried to cook up to make Apple look bad.

      Just a thought.

  3. Where was all the public outrage about GE NOT PAYING ANY TAXES????? Granted, Apple ONLY paid $6 Billion, so I can see the outrage… Congress, the meeting place of the totally dysfunctional…
    The Senate is the biggest embracement ever… And to think I spent 33 years in the USAF to support and defend the constitution and within a couple of days the clowns on the hill (not to be confused with the fool on the hill) bully and cajole one of the only bright spots in our depressing economy….

    1. The meme that GE did not pay taxes is FALSE !!! They paid US Federal and State taxes in 2010, the year the US Senate candidate Elizabeth Warren in Massachusetts made that totally false ad against incumbent Sen. Scott Brown (R) in her successful bid to unseat him claimed that GE did not pay Fed taxes but donated to Brown, the source of that lie. Another source was an earlier article in the New York Times that also claimed GE received a $3.2 billion refund. . . also false. No less an organization than FactCheck.org of the Annenburg Foundation and ProPublica, neither rightwing organizations, published that GE paid approximately $1 billion in US income taxes in 2010 on worldwide income of $5.1 billion. . . hardly zero taxes. Just lies from people with a leftward leaning agenda.

    1. The “taxes” are the problem? Do you mean the tax laws, the tax rates, or simply the fact that U.S. businesses are expected to pay any taxes at all?

      Federal tax revenues are a necessary part of our society. We can debate where and how to collect those taxes, and in what amounts. In the end, however, the two most important factors are:

      (1) Federal spending needs to be better controlled
      (2) Federal revenues should roughly equal federal spending over the long term

      I am strongly in favor of addressing (2) as part of a tax overhaul that simplifies the tax structure and benefits everyone by strengthening U.S. economic competitiveness.

  4. If Apple shouldn’t state its foreign taxes as part of its “total tax liability,” then it should only be stating its domestic income as it relates to domestic (US & state) taxes. I think you’d find that the tax rate on THAT calculation would far exceed 24.2 percent.

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