Apple takes a bite out of U.S. tax base

By Dave Palmer

The New York Times , Apple has been dodging corporate taxes not only in the United States, but also in many other foreign countries using complicated corporate hijinks and clever accounting. “Apple wasn’t satisfied with shifting its profits to a low-tax offshore tax haven,” said Senator Carl Levin, a Michigan Democrat. “Apple sought the holy grail of tax avoidance. It has created offshore entities holding tens of billions of dollars while claiming to be tax resident nowhere.” Apple CEO Tim Cook  has denied these charges, claiming, “Apple does not use tax gimmicks.”

According to the Times, at the heart of the controversy is Apple Operations International, which is incorporated in Ireland. There, they were able to negotiate a special tax rate of only 2%. However, Apple keeps is bank accounts in the United States and holds its board meetings in California. The author of the article states, “Because the United States bases residency on where companies are incorporated, while Ireland focuses on where they are managed and controlled, Apple Operations International was able to fall neatly between the cracks of the two countries’ jurisdictions.”

As a result of this unique lack of tax residency, Apple has not filed a tax return in the last five years. During this time, Apple amassed more that $30 billion in profits.

Despite all of this, the Senate Permanent Subcommittee on Investigations has been unable to find anything patently illegal about Apple bilking the government out of an estimated $40 billion in tax revenue. Yet, in the past we managed to send Al Capone to jail for tax evasion.

Sadly, while this news story can be filed under the categories of “disgusting” and “egregious”, it also falls under the category of “What else is new?” American corporations have diligently lobbied for, and been awarded, these ridiculous tax loopholes that they subsequently use to avoid paying their fair share of U.S. taxes. According to an article on this topic on Yahoo!, individual income taxes contributed $1.1 trillion to federal coffers, while corporate taxes added up to $181 billion.

Yes, you read that right. That’s roughly an $800 billion difference between what corporations pay in taxes and what you and I pay in taxes. Never mind the fact that they use the public roadways, benefit from police and fire protection, and use public services the same way you and I do. (Actually it is probably to a much greater extent than the average person.) Never mind that when they cut health benefits, cut pay and lay people off they actually increase state and national deficits by forcing more people into the arms of the social safety net. Just as long as they can continue to afford their CEO’s multimillion dollar salaries and keep the dividends flowing to their shareholders, never mind the damage they are doing to the economy, to government funding, and to society at large.

Of course, the easy solution would be to eliminate all corporate tax loopholes. Instead of providing legal ways for them to avoid paying their fair share of taxes, we should simply make corporate tax avoidance schemes illegal.

In case Congress is confused as to how this could be done, the law could be written in the following fashion: If you do business in the United States, you have to pay corporate income tax.

The fact of the matter is that the United States already has the lowest corporate tax rate in the world (35%). Yet, for some reason or another, corporations aren’t satisfied with the lowest corporate tax rate in the world (barring “special negotiated tax rates”.) In fact, the CEO of Honeywell went on the record with his belief that corporations in this country should pay zero taxes.

Enough is enough. We the people deserve better than this. Call your Representatives and Senators and tell them that you believe that corporations should contribute their fair share to the American tax base and that they should not be allowed to squeeze the American taxpayer for taxes the corporations feel they are entitled to dodge.