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Apple strategy used to underscore US tax loopholes

updated 05:20 pm EDT, Sat April 28, 2012

Apple and others reposition funds to minimize tax

Apple served as the example for a wider industry issue once more on Saturday through an investigation on Saturday. The iPhone maker was already known to be offshoring most of its income, but it's now known by the New York Times to have divisions across Europe, the British Virgin Islands, and elsewhere outside of the US to minimize how much it's taxed. Within the US itself, it has taken advantage of Nevada's absence of corporate tax to boost some of the gains that come into the US.

Google, Dell, Yahoo, and other companies also use these loopholes, paying about a third less on average than many companies in the Standard and Poor index. Apple is mostly just more skillful at reducing that tax rate to a lower point than others, anonymous executives said. One of these tricks includes the "Double Irish With a Dutch Sandwich," which routes through its namesake countries before going to the Caribbean and a further discount.

About 70 percent of Apple's net income is typically outside of the US.

Apple in response has defended itself, saying it met the "highest of ethical standards," and is entirely within its legal reach at present. Some of the reduced taxes have come from lobbying by multiple companies to get tax credits for research and other special circumstances. These companies have together been pushing for tax breaks as incentives to get their revenue back into the US.

Many firms, including Apple, do contribute locally, such as giving to Stanford University or to charity groups like (Product) RED. Since Tim Cook became CEO, the company has begun charity donation matching programs. However,it's considered possible that billions of dollars between these companies would normally be owed to both federal and state agencies, and could significantly reduce government debts.



By Electronista Staff
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Comments

  1. senojsitruc

    Fresh-Faced Recruit

    Joined: Feb 2007

    +31

    Reducing Government Debt?

    > However,it's considered possible that billions of dollars between
    > these companies would normally be owed to both federal and
    > state agencies, and could significantly reduce government debts.

    Right. Because the federal government has always been fiscally responsible; and giving it additional funds will surely not result in additional spending.

    If Apple can avoid paying additional taxes without breaking any laws, good for them.

    Comment buried. Show
  1. MyRightEye

    Fresh-Faced Recruit

    Joined: Apr 2008

    -11

    It's sad that this site

    is full of bleeding heart liberal tax and spenders that just love to spend other people's money.

    But it is.

    Lower the tax rates, generate MORE revenue. If you have tax rates too high, people will find a way to avoid them altogether. Apple will not bring that money back into the country because they will get taxed on, but they have ALREADY been taxed on it. Do you want that money spent into the economy? LOWER taxes!

  1. SergioRS

    Fresh-Faced Recruit

    Joined: Sep 2004

    +4

    Lower Taxes?

    How can they get any lower than 0% on 70% of Apple's income? This site may be filled with "bleeding heart tax and spenders" but many people have also been brainwashed by the "Right" that somehow avoiding paying ANY taxes is somehow the American Way, and it wasn't like this until fairly recently.

    Comment buried. Show
  1. MyRightEye

    Fresh-Faced Recruit

    Joined: Apr 2008

    -15

    Because...

    They become 0% BECAUSE they were raised too high. If you LOWER it, they will PAY it!

    And I am NOT on the RIGHT. I am an AMERICAN!!

  1. Feathers

    Grizzled Veteran

    Joined: Oct 1999

    +40

    Back?

    There is a huge misnomer in the idea that money is somehow "leaving" the U.S. and that it should be returned or brought "back". As a global multinational whose shares are owned by people across the World, why the h*** should any tax be paid or due in the U.S.A. for the 70% of revenue that is generated entirely outside the U.S.A. ??? Tax on profits generated within the States perhaps but nothing else, period. That America thinks its laws, tax-wise and otherwise, should somehow extend beyond its own borders is what gives rise to foreign antagonism and sometimes tragedy.

  1. climacs

    Junior Member

    Joined: Sep 2001

    0

    @MyRightEye

    you have clearly been brainwashed into believing in only half of the Laffer curve.

    By your cockeyed argument, we should lower taxes to 0, which would result in infinite revenue for government.

    Which would... er... be a bad thing according to conservatives, right?

  1. Bobfozz

    Fresh-Faced Recruit

    Joined: Jul 2008

    +22

    Change the laws and the loopholes

    Somehow Congress and the IRS are reluctant to do this. Why?

  1. hayesk

    Professional Poster

    Joined: Sep 1999

    +40

    Typical

    Again, Apple is being singled out for the actions of many.

  1. apostle

    Junior Member

    Joined: Apr 2008

    +12

    Just playing the game

    I always liked to think that people were inherently good, honest and ethical. But more and more it seems that people are generally "just in it for themselves". That this seems to be the norm. Stub your toe at Burger King? Sue for a million dollars! But I digress. These companies are just playing by the rules of a game they did not create. Ethical or not. Everybody does it so it must be ok. The solution would seem to be electing an ethical and honest government. And instituting a system where an elected official can be voted out of office at any time. And then of course getting people to take more of an active role.

    And while we're at it, I'd like a pony for my birthday...

  1. facebook_George

    Via Facebook

    Joined: Apr 2012

    +12

    Nothing new to big oil

    This is a tactic used by the oil companies to save on the billions that they make and pay little to no taxes. They have been in the yearly billion plus profit area years longer than Apple - Where is their article. Pffff...

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