This blog very rarely does any kind of 'breaking news' analysis, that too of a business or political event. But this event is quite outrageous and shocking in the sense of the depths to which social values and ethics are plummeting in the US political and corporate sphere.
So far it seemed that Wall Street, Big Banks and Oil and Gas majors were the 'bad boys'. But now they have the company of one of the 'most admired' companies of the world, Apple Inc.
Apple Inc., which has to its credit some very popular and innovative products like iMac, iPod, iPhone, iPad, iTunes etc., now has iCheat to add to its roster of accomplishments.
Apple now stands accused of massive tax evasion, avoidance, dodge or however you may like to term it, to the tune of nearly $74 Billion, by exploiting loopholes in US and international taxation laws.
People who may have familiarity with the Indian tax and corporate landscape can find echoes of this with tax evasion and shady accounting antics of Reliance Industries. The difference is that Reliance Industries has not been called out on its tricks and frauds. In Indian colloquialism, companies like these are called 'Chor Companies'. Sadly it looks like Apple Inc is no better than a 'Chor Company'.
Additional details of this sordid unfolding event can be gathered from these article links
I will try to summarize in the following points the problems and issues arising out of the Apple Tax Evasion. The anger, despair and outrage is not at what Apple has done, but at the way in which political establishment of US executive appears to mollycoddle Apple and its transgression of law and socially acceptable corporate behavior.
While readers and critics are encouraged to go thru these articles above in detail, I am quoting below some parts of the reports on Apple's massive tax evasion crime. I am also highlighting in these sections the more egregious and revolting aspects of the Corporate daylight robbery that is taking place with impunity and with the aid of legal and political blessing of US Govt. and polity.
A report by one of the US Senate committees showed that Apple, one of the world’s largest companies by market capitalization, pays almost no taxes on the bulk of its income. The report found that between 2009 and 2011, Apple paid only $21 million in taxes on all of its earnings outside the United States—an effective tax rate of 0.06
Apple CEO Tim Cook used his appearance Tuesday at a hearing of the Senate Permanent Subcommittee on Investigations—called to investigate Apple’s evasion of billions of dollars in taxes—to call for a sharp reduction in the corporate tax rate. The senators on the committee, Democratic and Republican alike, agreed with Cook that the appropriate response to the systematic evasion of taxes carried out by Apple and other US corporations was to enact pro-corporate tax “reform.”
Apple managed to avoid paying taxes on its worldwide profits by funneling them through global subsidiaries, the main ones being based in Ireland, where the company pays a nominal corporate tax rate of 2 percent. The report found that in 2011, Apple posted 64 percent of its global pretax income in Ireland, a country that accounts for less than one percent of its global sales.
Apple CEO Cook was completely unapologetic at the hearing, saying, “We pay all the taxes we owe… Every single dollar. We not only comply with the laws, but we comply with the spirit of the laws.”
The Senate committee concluded as well that Apple had violated no laws by evading billions of dollars in taxes. To the extent that this is technically true, it only demonstrates the corrupt character of the entire tax structure, which is designed to allow major corporations to avoid paying taxes.
Cook went on to call for “comprehensive tax reform” that would slash the corporate tax rate while supposedly eliminating tax loopholes. He concluded his prepared remarks by saying, “Apple has recommended to the Obama administration and several members of Congress… to pass legislation that dramatically simplifies the US corporate tax system.”
Cook treated the senators with well-deserved contempt, knowing he had nothing to fear from them. They, in turn, treated Cook with cringing deference.
“Apple is a great company,” said the committee chairman, Carl Levin (Democrat of Michigan), at the beginning of his remarks. Other senators followed suit, heaping praise on the company. No one suggested that any sanctions, criminal or financial, be imposed, or that any action be taken to hold Cook and the company accountable for defrauding the American people.
Kentucky Republican Rand Paul openly defended Apple, presenting the firm as the victim of a federal tax structure that penalizes US corporations. “I’m offended by a $4 trillion government bullying, berating and badgering one of America’s greatest success stories,” he declared, and demanded that the committee “tell me what Apple’s done that is illegal.” He continued: “What we need to do is apologize to Apple and compliment them for the job-creation they’re doing.”
While major US corporations routinely move profits offshore to minimize their taxes, investigators told the committee that Apple was the first company they had seen that claimed a substantial portion of its profits was not taxable by any country.
Apple’s evasion of corporate taxes is not the exception for corporate America, it is the rule. In September, the same senate panel investigated tax avoidance by Apple’s competitors, Microsoft and Hewlett-Packard, which used similar methods to avoid paying billions of dollars in taxes.
General Electric paid an 11 percent effective tax rate in 2011, according to Citizens for Tax Justice, after paying negative taxes for the previous three years as a result of vast tax breaks given to US manufacturers.
The Senate report noted the correspondence between the expansion of the US federal debt and the decline in the effective corporate tax rate, noting, “At the same time the US federal debt has continued to grow—now surpassing $16 trillion—the US corporate tax base has continued to decline, placing a greater burden on individual taxpayers and future generations.”
So far it seemed that Wall Street, Big Banks and Oil and Gas majors were the 'bad boys'. But now they have the company of one of the 'most admired' companies of the world, Apple Inc.
Apple Inc., which has to its credit some very popular and innovative products like iMac, iPod, iPhone, iPad, iTunes etc., now has iCheat to add to its roster of accomplishments.
Apple now stands accused of massive tax evasion, avoidance, dodge or however you may like to term it, to the tune of nearly $74 Billion, by exploiting loopholes in US and international taxation laws.
People who may have familiarity with the Indian tax and corporate landscape can find echoes of this with tax evasion and shady accounting antics of Reliance Industries. The difference is that Reliance Industries has not been called out on its tricks and frauds. In Indian colloquialism, companies like these are called 'Chor Companies'. Sadly it looks like Apple Inc is no better than a 'Chor Company'.
Additional details of this sordid unfolding event can be gathered from these article links
Apple CEO defends multi-billion-dollar tax dodge
Apple and Corporate America's Sociopathic Behavior
The 1 Chart That Reveals Just How Grossly Unfair The U.S. Tax System Has Become
Apple iCheat: How the World's Biggest Company Also Became the Most Unethical
I will try to summarize in the following points the problems and issues arising out of the Apple Tax Evasion. The anger, despair and outrage is not at what Apple has done, but at the way in which political establishment of US executive appears to mollycoddle Apple and its transgression of law and socially acceptable corporate behavior.
- Apple does not seem to be apologetic about cheating the US treasury of billions of tax dollars and from the response of its CEO, it is quite brazen and defiant about it.
- While the lower order of US govt like the US senate committee, which identified and documented the tax evasion tactics of Apple has done a service to the public, the higher echelons of US Senate are falling over each other to gloss over the gravity of Apple's act and even apologizing to Apple's executives for calling them to an investigative hearing.
- Apple's CEO has had the gall to blame the US Tax Code and system for making Apple exploit loopholes and cheating the system of billions of dollars.
- Apple then goes ahead and puts on a act of 'injured innocence' and lectures the US senators on the need to lower tax rates and simplify many provisions of the 'complicated' tax code. The CEO, Tim Cook calls for a lowered tax rate of mid-20's from the current US corporate rate of 35%.
- It is amazing that this company which has in recent years paid an effective tax rate of just 0.06%, would be willing to pay 20%+ taxes on its profits, if the Corporate tax rate is lowered. Such is the bizarre logic and bogus argument of a corporate behemoth that even a 9th grader would laugh at this and see thru the con game of Apple.
- It is a tragedy that leaders of US Senate, who spent more time fawning over the gadgets of Apple and paying tributes to 'technical innovation' than grilling the executives of Apple, cannot see through the pretense and sham of Apple's tax evasion tactics. But is this not what beneficiaries of Corporate patronage and bribery are supposed to behave and act? As hand-maidens of their corporate sponsors like Apple.
- The Apple CEO then went ahead to rub more salt into the wounds of an already wounded system that is reeling from corporate thievery by pompously lying that "We not only comply with the laws, but we comply with the spirit of the laws.”. There cannot be a worse or greater mockery of the spirit of law of the land. But then one begins to wonder whether the laws of US any longer have a real social sense or spirit.
- As one opinion piece which is quoted later below mentions, far from suggesting or calling for any sanctions, criminal or financial to be imposed, or that any action be taken to hold Cook and the company accountable for defrauding the American people, US senators have been all praise for Apple and have been directing their attacks on further loosening tax treatment of Corporate Income.
- Apple PR propaganda machine has the gall to flash its job-creator card (its job creation record is a joke with more of its jobs being outsourced than being generated in US) and use it to blackmail the system from acting in deterrence to its avaricious objectives.
While readers and critics are encouraged to go thru these articles above in detail, I am quoting below some parts of the reports on Apple's massive tax evasion crime. I am also highlighting in these sections the more egregious and revolting aspects of the Corporate daylight robbery that is taking place with impunity and with the aid of legal and political blessing of US Govt. and polity.
A report by one of the US Senate committees showed that Apple, one of the world’s largest companies by market capitalization, pays almost no taxes on the bulk of its income. The report found that between 2009 and 2011, Apple paid only $21 million in taxes on all of its earnings outside the United States—an effective tax rate of 0.06
Apple CEO Tim Cook used his appearance Tuesday at a hearing of the Senate Permanent Subcommittee on Investigations—called to investigate Apple’s evasion of billions of dollars in taxes—to call for a sharp reduction in the corporate tax rate. The senators on the committee, Democratic and Republican alike, agreed with Cook that the appropriate response to the systematic evasion of taxes carried out by Apple and other US corporations was to enact pro-corporate tax “reform.”
Apple managed to avoid paying taxes on its worldwide profits by funneling them through global subsidiaries, the main ones being based in Ireland, where the company pays a nominal corporate tax rate of 2 percent. The report found that in 2011, Apple posted 64 percent of its global pretax income in Ireland, a country that accounts for less than one percent of its global sales.
Apple CEO Cook was completely unapologetic at the hearing, saying, “We pay all the taxes we owe… Every single dollar. We not only comply with the laws, but we comply with the spirit of the laws.”
The Senate committee concluded as well that Apple had violated no laws by evading billions of dollars in taxes. To the extent that this is technically true, it only demonstrates the corrupt character of the entire tax structure, which is designed to allow major corporations to avoid paying taxes.
Cook went on to call for “comprehensive tax reform” that would slash the corporate tax rate while supposedly eliminating tax loopholes. He concluded his prepared remarks by saying, “Apple has recommended to the Obama administration and several members of Congress… to pass legislation that dramatically simplifies the US corporate tax system.”
Cook treated the senators with well-deserved contempt, knowing he had nothing to fear from them. They, in turn, treated Cook with cringing deference.
“Apple is a great company,” said the committee chairman, Carl Levin (Democrat of Michigan), at the beginning of his remarks. Other senators followed suit, heaping praise on the company. No one suggested that any sanctions, criminal or financial, be imposed, or that any action be taken to hold Cook and the company accountable for defrauding the American people.
Kentucky Republican Rand Paul openly defended Apple, presenting the firm as the victim of a federal tax structure that penalizes US corporations. “I’m offended by a $4 trillion government bullying, berating and badgering one of America’s greatest success stories,” he declared, and demanded that the committee “tell me what Apple’s done that is illegal.” He continued: “What we need to do is apologize to Apple and compliment them for the job-creation they’re doing.”
While major US corporations routinely move profits offshore to minimize their taxes, investigators told the committee that Apple was the first company they had seen that claimed a substantial portion of its profits was not taxable by any country.
Apple’s evasion of corporate taxes is not the exception for corporate America, it is the rule. In September, the same senate panel investigated tax avoidance by Apple’s competitors, Microsoft and Hewlett-Packard, which used similar methods to avoid paying billions of dollars in taxes.
General Electric paid an 11 percent effective tax rate in 2011, according to Citizens for Tax Justice, after paying negative taxes for the previous three years as a result of vast tax breaks given to US manufacturers.
The Senate report noted the correspondence between the expansion of the US federal debt and the decline in the effective corporate tax rate, noting, “At the same time the US federal debt has continued to grow—now surpassing $16 trillion—the US corporate tax base has continued to decline, placing a greater burden on individual taxpayers and future generations.”
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