Apple named biggest corporate tax avoider in U.S. after booking $218 billion of profit offshore last year

“Apple has been named as the biggest corporate tax avoider in the United States after booking $218.55 billion (£171.6 billion) of profit offshore last year,” Keith Gladdis reports for The Daily Mail. “The tech giant was able to save $65.08 billion (£51.1 billion) that it should have paid in tax thanks to its convoluted arrangements.”

“The report revealed that last year three quarters of the Fortune 500 companies use subsidiaries in offshore tax havens where they sent a total of $2.42 trillion (£1.9 trillion) of income,” Gladdis reports. “In the US alone this amounted to $715.62 billion (£561.9 billion) in tax which they avoided paying.”

“The study was written in the US by pressure group Citizens for Tax Justice and the Institute on Taxation and Economic Policy,” Gladdis reports. “Matthew Gardner of the ITEP said: ‘The hard fact is that the US tax code incentivizes tax haven abuse by allowing companies to indefinitely defer taxes on offshore profits until they are ‘repatriated.’ The only way to end this kind of tax avoidance is by closing the loopholes in the tax code that enable it.'”

MacDailyNews Take: In other words: What Apple does is perfectly legal.

Note: “Citizens for Tax Justice” is generally considered to be a left-wing organization. “Institute on Taxation and Economic Policy,” as well as the associated Citizens for Tax Justice, has been characterized as liberal.

“In August, the EU hit the company with a $14.39 billion (£11.3 billion) tax bill because it viewed the ‘sweetheart’ deals with Ireland as a breach of European law,” Gladdis reports. “Apple’s chief executive Tim Cook has called attempts to make it pay more tax ‘political crap’ and has said that the company follows all relevant laws.”

Read more in the full article here.

MacDailyNews Take: Tax avoidance is legal. And smart. And a major part of Apple’s fiduciary duty to shareholders.

Tax evasion, which Apple does not practice, is illegal.

The tax laws, especially for multinationals, are convoluted. Hence, so are Apple’s tax strategies when following the tax law labyrinth.

The reason Apple and so many other multinationals do not repatriate profits is because U.S. corporate taxes are too high.

Legally keeping your hard-earned money out of government’s wasteful, inefficient, unaccountable hands is a laudable practice.

Government is like a baby. An alimentary canal with a big appetite at one end and no sense of responsibility at the other. — Ronald Reagan

SEE ALSO:
Ireland’s Finance Minister Noonan: Apple tax appeal may take four years, maybe more – September 23, 2016
Apple’s EU tax nemesis Margrethe Vestager takes aim at other U.S. companies’ offshore profits – September 19, 2016
The ‘Brexit-Apple’ connection: What in the world was Margrethe Vestager thinking? – September 12, 2016
EU ministers line up to take tax bites out of Apple – September 12, 2016
Former EU competition commissioner: Vestager claim that Apple owes back taxes an incorrect use of EU law – September 2, 2016
Irish government to fight EU on Apple tax – September 2, 2016
Treasury accuses EU of trying to steal U.S. tax revenues with Apple decision – September 1, 2016
Irish residents opposed to EU’s tax demand of Apple – September 1, 2016
Apple Inc. pushes back against EU tax grab – September 1, 2016
Apple may repatriate billions of dollars next year after new U.S. President takes office – September 1, 2016
U.S. tax code allows for dramatic retaliation against EU overreach in Apple case – September 1, 2016
Apple CEO Tim Cook on EU tax demand: ‘No one did anything wrong here and Ireland is being picked on… It is total political crap’ – September 1, 2016
U.S. Treasury: The European Commission’s retroactive tax demands on Apple are unfair – August 30, 2016
EU demands Apple pay massive $14.5 billion in taxes plus interest – August 30, 2016
U.S. government warns EU: Do not hit Apple with a massive back tax bill – or else – August 25, 2016

50 Comments

    1. In general the headline, in today’s sorry world, is a red herring, a buzzer for Pavlov’s dogs, a cynical generator of memes and talking points.

      Assume every headline to be a deliberate prevarication or a provocation! Truth is not blared from the front page or the podium; it quietly inhabits the crevices of a story, which need to be scraped out with the trowel of critical thinking.

    2. This is a very idiotic article written by Economic and Financial imbeciles who conflate World Wide Revenue with profits and assume that all earnings can be taxed away! What maroons.

      They also assume that all earnings are booked off-shore from the United States to avoid US taxes instead of the actual fact that ALL earnings are actually eventually taxed in the US!

      1. That is plain stupid.

        • How many times have you paid MORE taxes that you owed?

        • How many times have you ordered something from out of states and did not pay taxes because of it? Technically you should. Why did you avoid it?

        Why do you use the “avoider” word against Apple when it is the government that wrote the laws? I know why. You don’t want to criticize the hand that feeds you. Ergo – your self serving criticism of Apple, who follows the rules.

  1. Anyone who takes any deduction is a tax avoider.

    What is particularly egregious here is that no one is acknowledging that Apple is paying more taxes than anyone else, Apple has already paid their billions legal U.S. federal, state, and local taxes, not to mention foreign taxes on their overseas earnings, and all the sickening vultures are fighting over what’s left. If Apple tries to bring their remaining earnings home, just for letting the money into the country, the United States Federal Government, the most sickening vulture of all, wants a 35% cut like some freaking mafia organization.

    There is no doubt whatsoever that Apple not only deserves to keep their earnings but would do much more good with them that the governments ever will.

    65 billion dollars in the hands of the U.S. Government. Big whoop. It will barely pay a fraction of the interest on the U.S. debt for the year. It’s just like setting it on fire.

  2. Apple should repatriate all of these massive profits they have earned overseas and pay the taxes the media claims it owes, and then use the repatriated money to build massive coal fired power plants to generate electricity to run its data centers, and also use the money to build self-driving school buses that are programmed to crash into old folks homes and burst into flames

  3. I see this coming to a head.

    If you want big corporations, and or persons, the world over, to pay more or some or their fair share of taxes or the burden to society, then you must change the tax code and apply them to everyone in a fair way. Loopholes are BS, but legal, and for that you can’t complain. You can change the rules from this day forward, but you must change them and hold not only the entity you are pointing fingers at, but yourself accountable.

    Too often the well meaning or “good guy” has to bear the burden of others, who take advantage of the system.

    Is it smart of non-tax payer to use the laws for their own gain or advantage? Yes – but it’s still not fair, as the those who pay taxes more or less didn’t write the rules that govern them.

    We all pay more for everything – while others pay less. If we all knew how to manage the system for our maximum benefit, society, economy, and government would collapse.

    I think a sliding scale flat tax without loopholes could fix this. Though I think I am screwing myself for saying it. No deductions, even if you are a $&”! businessman and lost $900 million in a year. There is no need for me to cover for your lack of business acumen.

    Again, if I am missing some aspect of the system and it’s painfully obvious I don’t know what I am talking about, you are welcome to educate me and my fellows on why the system currently is good or how it could be better.

    Example –
    In California, Prop 13 helped land owners (I am one) but screwed schools, and good programs meant to benefit our children. I am speaking of music, arts, sports etc.

    1. For corporations, maybe a total deduction ‘ceiling’ based on number of employees. This would prevent excessive deductions by large corporations with small employee counts. If there are corporations that have virtually no employees, they would be able to claim few deductions if any. This may encourage large companies that can support the employ of large number of people to do so.

    2. I think you forgot to define “fair share”. No one has dared define that since it is so subjective.

      I think those who use government services should pay for them. Isn’t that fair. To many that may sound stupid, but it’s my definition of “fair”. The Amish don’t pay taxes because they claim not to use government (or public) services and yet they do (the roads, the hospitals, etc. I have seen them). Stuff like this makes defining “fair” difficult.

      I do not use many government services so I should pay less taxes for what I get (ie infrastructure and defense). I should not have to pay for food-stamps nor welfare because I don’t use them. Again, part of my definition of “fair”.

      So what is your definition of “fair”? Once you disclose that then your comments/arguments can be better understood.

    3. “The only way to end this kind of tax avoidance is by closing the loopholes in the tax code that enable it.”

      They better be careful what they wish for because what they are ignoring is that Apple or any other corporation can and WILL move their company out of the country and move it to a more favorable tax country. This moron’s act as though it can’t happen or won’t. It will if it makes more business sense.

      Their simplistic ignorant point of view is disturbing.

    4. The act of taxing business in general is just a convoluted secondary tax on the public with improved political talking points.
      Every dollar (or what ever currency) taxed to any company is 100% passed straight through to the price the customer pays for a good or service.
      Just be straight forward and raise individual peoples taxes. Remove all the byzantine corporate tax law that really just funds the pockets of accountants and lawyers, hampers small business with overly complex rules, and adds to the general bureaucracy and cost of government.

      1. I am not an economics major. However, one way or another, everyone pays. If you receive benefits, you should pay. You pay what you can bear. Since tax is on profits, hiding profits, seems a little disingenuous. Not illegal, but cheating to say the least. Leveraging special connections to make this happen leaves the little guy out to dry, as they have few resources to take advantage of the loopholes.

        Think about it, if the middle class has to pay a higher percentage, they are the ones who bear the brunt of the tax burden and as a result have less disposable income.

        As far as not taxing corporations, they will end up being a loophole that executives will take advantage of, with expense funds, instead of personal bank accounts. To not tax a company, they have to show no profit. Their balance sheet needs to be nil.

        It’s a big Charlie Foxtrot

  4. If the government wants to change the tax code they are in their right to do so.
    However the government ever doing anything is highly unlikely. The politicians are generally petrified of their lobbyists and won’t do anything to piss them off.

  5. Apple, and all corporations for that matter, should pay 85% of their profits to Hillary Merkel…because, like she said, “Don’t let anyone tell you, you know, that businesses and corporations create jobs.” If 85% of all corporate profit went directly to Our Blessed Beloved Benghazi Breath, there would be world peace and cats would marry dogs and love would rule the planet and it would all just be so swell.

    amen.

    1. There you go again. Confused as ever.
      Here let me help, again.
      80% of all profits should be paid out to shareholders.
      20% of the profits may be held by the corporation.
      All publicly traded companies that do business in the US should have to follow this policy no matter point of incorporation.

      We live in an age of computer technology, so those shareholders that do not want the 80% of the profits can op out, and leave that money in the company. They didn’t take it so it’s not income.

      All tax deductions should be removed from the tax code. Loans should be considered income, so gaming the system ends. No deductions for anything, or any reason. That’s fair.
      Of course, you do realize lobbyist will have to find real jobs, but I can live with that.

      No Deductions for any reason! Then tax code is simple. All money coming in is income. You want a house, fine, you’ve got kids, fine, you want to start a business, knock yourself out, there should be no tax deduction, run a charity, that is commendable, no deductions, not a one, not even for giving.

      Now everyone is happy cause no one gets any advantage over another through the taxing system.

  6. By logic: if you have kids and have taken the tax write off, or if you have taken a mileage deduction, or have a home office deduction… you are a bad person who is taking tax revenue away from the poor USA. Ok. Got it.

  7. Good Grief, the economic ignorance is STRONG in this one. Apple did not “book” $218.55 Billion of “profit off shore” last year. Far from it. This reporter does not have the beginning of a clue about business, economics, or practically anything about Finance.

    In 2015, Apple’s WORLD WIDE REVENUE was $234 billion. The Net PROFIT after taxes— Apple’s Effective Tax Rate in 2015 was 26.4%—was only $53.3 BILLION! Approximately 40% of that was earned in the United States and stayed here. Approximately 60% was earned overseas and is banked there, but is taxed HERE in the United States, but will be taxed even more at the rate of 35% if brought home to be invested in the United States!
    This year, the ESTIMATED WORLD WIDE REVENUE (sales)—not what has been falsely called profits by the idiot author of this article—is a lower $218 Billion who thinks that ALL of the profits should be TAXED AWAY BY SOMEONE as he claims Apple is evading $65 Billion in taxes by nefariously keeping the money off shore, hidden away from the tax collectors” . . . but the margins are a bit lower this year so since last year, after deducting all the expenses of making all the products, advertising them and paying their employees, fees, regulatory costs, etc., Apple’s NET PROFIT was only $53.3 billion, (that’s the part that is taxable), the NET PROFIT will also be lower this year, but this idiot thinks that somehow Apple should somehow squeeze $65 billion out of a smaller NET PROFIT this year (my guess is around $50 billion).

    However the split between the US and Off-Shore will remain about the same. . . and the American profits will remain in the US and invested HERE, not be sent off-shore. Apple wants to bring the money it has off-shore home, but it can’t without being taxed exhorbitantly on money it has already earned and is, essentially Apple’s savings.

      1. As an Economist, I know for a fact that businesses do not pay taxes. Their customers pay every penny of taxes that any government charges to a business by passing it along in the business’s pricing structure so that when their customers buy their goods and services, they PAY MORE to cover the costs of those taxes. This is undeniable. I’ve been a CEO and I know my prices reflected those costs. I just collected taxes from my customers and then passed them on to the governments of various levels.

          1. Because it was earned there. If they bring it back to the United States (repatriated) there is an additional tax in the US Tax Code that requires them and other companies who bring home their earnings, of 35% of any funds they bring into the country. It is onerous and confiscatory taxation. Apple has kept the money it earned in the US and its US possessions inside the US, but that is only about 40% of Apple’s earnings now.

            Tim Cook testified before a Senate Investigating committee in May of 2014 under oath, who were under the misguided impression that Apple had paid ZERO US Income taxes according to their investigators, that Apple was sending its US earnings off-shore. Cook brought in Apple’s 2012 tax returns to show that not only was Apple paying US Income taxes, but was, in fact, the NUMBER ONE PAYER of all US BUSINESS INCOME TAXES! In 2012, Apple paid $1 out of every $40 of US business income taxes collected! Apple has been in the top two or three corporations paying US Income taxes for the past several years. In 2015, Apple’s effective US tax rate was 26.4%.

            Cook further testified that Apple had not transferred its intellectual property off-shore as the committee’s staff had asserted and that it was still owned in California at Apple headquarters. . . and that Apple paid California state taxes as well.

            He went on to tell lawmakers that Apple WANTED to repatriate its off shore cash so it could be invested in the USA, but the high US repatriation tax (we are one of only TWO countries in the world to levy such a tax, the other a landlocked African dictatorship) prevents Apple and a host of other American multinationals from doing so. . . to the tune of about $2.5 to $3 trillion being locked out of our investment markets because of idiotic tax policies!

            1. “an additional tax” that is wrong. That money held offshore has not been taxed by the United States Government. So, bringing any money in would be taxed, that is the correct phrasing and that money should be taxed, 35% is not an unfair rate.

              We can eliminate all the trick and gimmicks, to avoid paying taxes. NO DEDUCTIONS FOR ANY REASON OR THING.

              Taxing is not just about collecting money, it’s also about making money. How? I’ll give you a minute. In the mean time, politicians that rail against the tax code do so for personal power and additional income. If there were no deductions they would chase you down to offer you one so that you would give them money for doing you a favor. Big business, telling us, “It’s your money”, don’t kid yourself.
              (An aside : how did Mitch McConnell make 21 million dollars when his only job has be working as a senator or some such? )

              So let’s end this once and for all, NO DEDUCTIONS for anything. The rate is the rate. No, businesses don’t need special anything. If they can’t survive fine, another business or two or three may spring up if the product, management, or execution sucks.

              No deduction means none, including personal, charities, etc.

            2. BOB, businesses don’t pay taxes. . . how many times can I saw that before you get it? ALL BUSINESS TAXES are passed on to their customers in their price structure! Don’t you get it? The CONSUMER pays all business taxes in the prices they pay for the goods and services they buy! That is an economic fact, which you seem to not grasp.

              The United States has the highest business tax rate in the world and businesses are fleeing, taking jobs with them. WAKE UP!

            3. Swordmaker, well in that light, let’s stop kidding ourselves businesses don’t pay for anything, using your logic and that’s true. I’m wide awake. Let’s see if I can get you to the breakfast table.

              80% percent of all profits should be paid to the shareholders.
              ( of a publicly traded company )
              20% of the profits made be held by the company.
              Any business that does business in the United States must follow that rule.

              … businesses are fleeing… let them go. Why because a new young up start will start a business here?

              Look, listen, it’s nothing like being rich in the United States, ask the rich. So guess what. They are going to want to bring that money in. 35% is a fair rate for what we offer. (banking system, court system, laws to protect property, highways, streets, electrical reliable power, water, sewers, military, entertainment, etc, … heck, they want to be here, PLEASE!) Else wise it’s not on US soil, their money, so who cares.

              Sooner or later, wherever they have their money or business, that country will want more of their money, then what?

              China and Goodyear for example please: Well, in a few years China is going to throw out Goodyear and take the manufacturing plants and make tires using Goodyear’s tech. They will call the company GoodDay and sell you the tires. I can only imagine the shareholders meeting. The CEO whining to the US Government about their problem. I hope the US would tell Goodyear, the US government does not pick winners and loser. There is nothing we are going to do. That was Goodyear’s business decision. We, the US government, suggest you open in new plant in the states and compete.

            4. Every country offers what you listed. That means nothing. It’s obvious you don’t have a clue about economics. You ignore the mountain of regulation that goes along with all that in this country.

        1. The price of a product from my understanding reflects the cost of production, taxes placed on product along the way from Manufacture to consumer and profit margin the company desires for the product. Given a static production cost and margin, yes you are correct, prices should increase or decrease depending solely on the taxes placed on the product. However, if a company is willing, it can absorb some or all of those taxes and keep the price the same by reducing cost of production and/or profit margin. The case in reality however is that businesses tend to group cost of production and profit margin together as one pie (reduction in cost = increase in profit) and taxes as pass on to the consumer. Reduction in costs rarely if ever gets passed on to the consumer.

  8. AVOIDANCE: Everyone should do this to the MAX, as Apple does. Because it is legal and prudent.

    EVASION: No one should do this at all. Because it is illegal.

    However, I wouldn’t blame anyone for evasion either knowing what we know today about the $550 million the government threw away making fake terror video’s (with a foreign firm no less). Let’s not forget the trillions the pentagon cannot even account for. Thats just two examples.

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