APPLE IS A BAD APPLE WHEN IT COMES TO PAYING ITS TAXES
The Apple Corporation wants lawmakers in Washington to once again grant a repatriation tax holiday – this time for up to $1.7 trillion in profits that multinational corporations are holding offshore. Federal law allows corporations to “defer” paying U.S. income taxes on these foreign profits until they are brought back or “repatriated” to the United States.
This tax holiday is being sold to the public as a boon to new investment and job creation as it was sold to Congress in 2004 when the first repatriation holiday was enacted. Under that scheme, corporations were able to bring their profits back and pay a tax rate of no more than 5.25 percent – rather than the statutory rate of 35 percent or a lower effective tax rate.
Numerous reports, including one by the Congressional Research Service,[i] found that “there is no evidence that [the tax holiday] increased U.S. investment or jobs, and it cost taxpayers billions,” according to a senior U.S. Treasury Department official.[ii]
Apple may even be working with many of its multinational colleagues to push for a territorial tax system, another huge giveaway to profitable corporations at the expense of all American taxpayers. A territorial tax system is in effect a permanent repatriation tax holiday. Under it, U.S. corporations would never have to pay U.S. corporate taxes on their overseas profits, thereby encouraging companies to use numerous tax dodges to shift capital to overseas tax havens that assess little or no corporate income tax, risking wages and jobs at home.
It’s time for Apple to start paying its fair share of taxes and for the U.S. Congress to reform the tax system so that companies like Apple can no longer defer paying taxes on their profits no matter where they are earned. If deferral were ended it would not matter which tax loopholes a company used to shift its profits to overseas tax havens – those profits would still be subject to U.S. taxes, minus the taxes paid in the jurisdiction where they were claimed as earned.
Below is a compilation of ways that Apple currently avoids paying its fair share of taxes:
But doubts have been raised about the accuracy of Apple’s claimed federal tax bill due to the use of foreign tax dodges and other loopholes:
 Donald J. Maples and Jane G. Gravelle, “Tax Cuts on Repatriation Earnings as Economic Stimulus: An Economic Analysis,” Congressional Research Service (May 27, 2011). http://www.ctj.org/pdf/crs_repatriationholiday.pdf
 Michael Mundaca, Assistant Treasury Secretary for Tax Policy, “Just the Facts: The Costs of a Repatriation Tax Holiday” (March 23, 2011). http://www.treasury.gov/connect/blog/Pages/Just-the-Facts-The-Costs-of-a-Repatriation-Tax-Holiday.aspx
 Paid2Trade.com, “Apple Form 10-K Fiscal Year Ending September 30th 2012 (Nov. 2, 2012).
 Apple, Inc. Form 10-K filing with the U.S. Securities and Exchange Commission (accessed May 20, 2013). http://investor.apple.com/secfiling.cfm?filingID=1193125-12-444068&CIK=320193
 Marty Sullivan, “Apple Reports High Rate But Saves Billions on Taxes,” Tax Analysts (Feb. 13, 2012). http://taxprof.typepad.com/files/134tn0777.pdf
 Charles Duhigg and David Kocieniewski, “How Apple Sidesteps Billions in Taxes,” The New York Times (NYT) (April 28, 2012). http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html?_r=3&
 Citizens for Tax Justice (CTJ), “Apple, Microsoft and Eight Other Corporations Each Increased Their Offshore Profit Holdings by $5 Billion or More in 2012” (March 11, 2013). http://ctj.org/pdf/offshorechampions0313.pdf
 Ryan Tate, “In Apple’s War on Taxes, Surrender Costs $28 Billion,” Wired (January 7, 2013). http://www.wired.com/business/2013/01/apples-28-billion-dollar-tax-war/
 Op cit, NYT.
 Mike Godfrey, “Apple Pays Less Than 2% Tax On Non-US Earnings,” Tax-News.com (November 7, 2012). http://www.tax-news.com/news/Apple_Pays_Less_Than_2_Tax_On_NonUS_Earnings____58140.html
 Op cit, Tax Analysts.
 Richard Rubin, “Offshore Cash Hoard Expands by $183 Billion at Companies,” Bloomberg News (March 8, 2013). http://www.bloomberg.com/news/2013-03-08/offshore-cash-hoard-expands-by-183-billion-at-companies.html
 Kimberly A. Clausing, “A Challenging Time for International Tax Policy,” Tax Notes (July 16, 2012).
 U.S. Senator Bernie Sanders, “Fact Sheet on the Sanders/Schakowsky Corporate Tax Fairness Act” (accessed May 20, 2013). http://www.sanders.senate.gov/imo/media/doc/CORPTA%20FAIRNESSFACTSHEET.pdf
 Op cit, Tax Notes.
 The President’s Economic Advisory Board, Report on Tax Reform Options: Simplification, Compliance, and Corporate Taxation (August 2010), pp. 89-91. http://www.treasury.gov/resource-center/tax-policy/Documents/PERAB-Tax-Reform-Report-8-2010.pdf
 CTJ, “Executive-Pay Tax Break Saved Fortune 500 Corporations $27 Billion Over the Past Three Years” (April 24, 2013). http://ctj.org/pdf/excessstockoption0413.pdf
 Op cit, NYT.
 U.S. Senate Permanent Subcommittee on Investigations, “Offshore Funds Located Onshore, Majority Staff Report Addendum, December 14, 2011, to Repatriating Offshore Funds: 2004 Tax Windfall For Select Multinationals Majority Staff Report, October 11, 2011,” pp. 4-5. Apple had $29 billion in undistributed accumulated foreign earnings as of FY2010. http://www.hsgac.senate.gov/download/report-addendum_-psi-majority-staff-report-offshore-funds-located-onshore
 Reuters, “Factbox: WIN America members include Microsoft, others” (August 24, 2011). http://www.reuters.com/article/2011/08/24/us-usa-tax-holiday-factbox-idUSTRE77N43720110824