Mikey Campbell
With a year-long congressional inquiry regarding the accounting strategies of several U.S. tech companies coming to an end, Apple on Thursday issued a statement saying it paid $6 billion in taxes for fiscal 2012, representing about 2.5 percent of all collected corporate taxes combined.
Citing people familiar with the matter, The New York Times reported that the Senate Permanent Subcommittee on Investigations is wrapping up an investigation into a number of technology companies that use specialized accounting practices to avoid U.S. taxes, which are higher than those levied in many foreign countries.
According to the sources, Apple had become the focus of the inquiry as its accountants have managed to allocate some 70 percent of taxable income overseas despite running a base of operations in the U.S. The tactics used are completely legal, though head of the investigations committee Senator Carl Levin said off-shoring income and intellectual property is hurting the U.S. budget and ultimately average Americans.
“This subcommittee has demonstrated in hearings and comprehensive reports how various schemes have helped shift income to offshore tax havens and avoid U.S. taxes,†Senator Levin said at a hearing involving testimony from Microsoft and Hewlett-Packard. “The resulting loss of revenue is one significant cause of the budget deficit, and adds to the tax burden that ordinary Americans bear.â€
Senator Carl Levin, Chairman of the Senate Permanent Subcommittee on Investigations.
Source: U.S. Homeland Security and Governmental Affairs
As for Apple, Senator Levin said the ongoing investigation revealed the company to have deferred taxes on over $35.4 billion between 2009 and 2011. The amounts Apple does pay, however, are not insubstantial as the U.S. government collected $3.3 billion in cash taxes from the company for the 2011 fiscal year.
In its statement on Thursday, Apple said it was "one of the top corporate income taxpayers in the country, if not the largest," and noted that it "conducted all of its business with the highest of ethical standards, complying with applicable laws and accounting rules.â€
For the past fiscal year, Apple said it paid "an enormous amount of taxes" to local, state and federal governments. “In fiscal 2012 we paid $6 billion in federal corporate income taxes, which is 1 out of every 40 dollars in corporate income taxes collected by the U.S. government,†according to the statement.
Apple is known to be a trendsetter, and apparently this extends into corporate accounting as well. In the 1980s the company created a method that routed income through subsidiaries in Ireland, the Netherlands and the Caribbean called the "“Double Irish With a Dutch Sandwich.†The Times said that hundreds of corporations now use a variation of that tactic, or the exact method Apple uses, to reduce tax burdens.
Apple's European headquarters in Cork, Ireland.
In the U.S., Apple was accused of sidestepping billions of dollars in taxes by moving profit and investment operations to a headquarters in Nevada to effectively avoid California's 8.84 percent state tax.
Apple is reportedly cooperating with the senate subcommittee's investigation, which is expected to yield recommendations to Congress that may have an effect on future tax code discussions.
William Gallagher
Christine McKee
AppleInsider Staff
Chip Loder
Malcolm Owen
160 Comments
That seems like a lot of money to take off someone, even a big corporation like Apple.
What? They paid $6 billion in taxes, or about 2.5% of all corporate taxes combined? Bit like their market share, isn't it¿ Seriously, I think it's perfectly ok for companies to [I]"managed to allocate some 70 percent of taxable income overseas despite running a base of operations in the U.S"[/I] but I'm afraid this thread is going the other direction, if previous reports on this issue are any indication.
This is great for Apple and all but reading things like this makes me think the US tax code needs to be completely overhauled. So many legal loopholes for big corporations. Just lower rated across the board for everyone. But I guess millions of high end accountants would lose their jobs if that happened...
Your remarks are on the same level as the article, which ignorantly states:
The resulting loss of revenue is one significant CAUSE of the budget deficit, and adds to the tax burden that ordinary Americans bear.
The "tax burden that ordinary Americans bear" has very little to do with taxes paid or not paid by big corporations. "Corporations not paying enough taxes" is not what got our country into its current financial mess. Your tax burden has everything to do with how much Democrats spend on Welfare and Republicans spend on Warfare.
Your elected officials KNOW how little or how much money they will get in taxes. They know! But despite knowing what they know, they continue to spend more money than they know they will get. And they have no qualms about it because unlike you and me, they can print new money to pay off debts (albeit, while destroying the value of the US Dollar).
The budget could be balanced and debt paid off WITHOUT endless complaints about big corporations dodging taxes or without any tax increases either, simply by taking a knife to spending (both by liberals and by conservatives). And it's crucial to note that true "cuts" are not defined as "reductions in proposed spending increases," but rather "spending XX% less than we did last year." Once our debts are paid off, we simply need to stay fiscally minded. Doing that has nothing to do with Apple. Simply passing the buck to those whom we define as "rich" does nothing to change the financial mess we are in. If anything, blaming the so-called "rich" ends up making America into another Greece. When my family faces hard times, we spend less money to better make it through those hard times. The government should be no different. But they are different insofar as they think that "spending more in times of crisis" will magically make the economy better. Sorry, but that's not how it works in reality. The reality is that to balance a budget, you need real and meaningful cuts. And if the people complain about government cuts, it's only a sign that they've grown dependent on government programs. But as is the case with drugs and alcohol, there comes a time when one needs to end the addiction. That time is now. No program should be exempt from cuts, neither Social Security or Defense.
Consider well that our elected officials are only doing what "we the people" elect them to do.
Stop pointing the finger at Apple. Individual Americans must point the finger squarely at themselves.
Very true.. But I HATE these one sided articles that somehow only equate Apples tax burden to that of the only corporation out there "taking" advantage of loopholes. Meaning they are hardly the worst offender considering companies like GE paid ZERO in taxes not to mention the oil companies etc etc etc. How bout the QUADRILLIONS in other taxes Apple has generated of late.. Umm let me think...sales taxes for states and local economies, taxes on labor from all it's North American operations -- export fees, etcetera etc etc etc. The "tax revenue INCREASES" as a result of Apples recent successes is incalculable. Seriously. Stop crying.