by William Teach | November 7, 2017 7:00 am
The NY Times’ Jesse Drucker and Simon Bowers have done some research on the Internet, and are rather incensed that Apple and other companies would dare to “swindle” governments out of money. Along the way, they rather make the point for Trump that the corporate tax rate drives business away
After a Tax Crackdown, Apple Found a New Shelter for Its Profits
Tim Cook was angry.
It was May 2013, and Mr. Cook, the chief executive of Apple, appeared before a United States Senate investigative subcommittee. After a lengthy inquiry, the committee found that the company had avoided tens of billions of dollars in taxes by shifting profits into Irish subsidiaries that the panel’s chairman called “ghost companies.”
“We pay all the taxes we owe, every single dollar,” Mr. Cook declared at the hearing. “We don’t depend on tax gimmicks,” he went on. “We don’t stash money on some Caribbean island.”
True enough. The island Apple would soon rely on was in the English Channel.
Five months after Mr. Cook’s testimony, Irish officials began to crack down on the tax structure Apple had exploited. So the iPhone maker went hunting for another place to park its profits, newly leaked records show. With help from law firms that specialize in offshore tax shelters, the company canvassed multiple jurisdictions before settling on the small island of Jersey, which typically does not tax corporate income.
What Drucker and Bowers found in their Internet search (because this was apparently published by the German paper Süddeutsche Zeitung first) is that Apple has more than $128 billion in offshore accounts that the U.S. can’t touch. Most of it was, get this, made while Obama was president. You know, the guy Apple supported. The guy who was espousing SJW stuff that Apple agreed with. The guy was yammering on about companies paying their fair share, which Apple agreed with. Well, on paper, anyhow, not in practice.
In fact, you look at the list of the big companies who are sheltering money overseas, and it very much reads like a list of the Democrats top donors. Not all, of course, but, the top 5 are Apple, Pfizer, Microsoft, General Electric, and Google, not exactly Conservative leaning companies, eh? Facebook, likewise, has much residing in offshore accounts.
“U.S. multinational firms are the global grandmasters of tax avoidance schemes that deplete not just U.S. tax collection but the tax collection of most every large economy in the world,” said Edward D. Kleinbard, a former corporate tax adviser to such companies who is now a law professor at the University of Southern California.
If the rates are too high, and they have the ability to shelter earnings, they’re going to do it. If you had a way to legally shelter thousands of dollars, would you do it? Of course you would.
Indeed, tax strategies like the ones used by Apple — as well as Amazon, Google, Starbucks and others — cost governments around the world as much as $240 billion a year in lost revenue, according to a 2015 estimate by the Organization for Economic Cooperation and Development.
Interesting. First, they are all Liberal companies. Second, they do not cost government anything. The governments cost themselves, much in the same way a company costs itself if it raises its prices to a point where consumers take their business elsewhere.
The disclosures come on the heels of last week’s proposals by Republican lawmakers to provide several new tax benefits for multinational companies, including cutting the federal corporate income tax rate to 20 percent from 35 percent. President Trump has said that American businesses are getting a bad deal under current rules.
But the documents show how major American companies find creative ways to avoid paying anything close to 35 percent.
So, lowering the rate might well keep a bigger portion of that money from going overseas to places like Jersey. And the GOP has proposed a 10% tax on profits earned overseas, in order to attempt to get some of the money to come back to the U.S. Let’s not forget, what’s being sheltered overseas was mostly earned from overseas. Not all, mind you. Essentially, companies with the means are going to look for ways to pay as little in taxes as they can, much in the same way that Mr. Obama took advantage of every bit of the tax code to pay as little in taxes as he could. And like the NY Times does.
Crossed at Pirate’s Cove. Follow me on Twitter @WilliamTeach.
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