Apple’s Dodging $17 Million a Day in Taxes — But They’re Not The Real Problem

appleThe other night I wrote an article about how oil companies in Oklahoma (who certainly aren’t lacking for profit margins) receive additional subsidies from the state, while things like storm shelters for older schools go unfunded. As outrageous as this is, it is a small example of a much larger problem.

While Congress was busy as usual trying to find anything they can possibly use to undermine the President and set  the stage for 2014 elections and beyond, the Senate investigated Apple’s tax-dodging strategies. In an article by Business Insider, it outlines the highlights of the Senate report which found that the makers of the iPhone manage to dodge literally billions of dollars in taxes every year through offshore tax shelters and loopholes in the corporate tax code.

It isn’t just Apple that does this; Google and other tech giants use countries like Ireland to pay less taxes off the profits they make in the United States. Often when they do pay taxes, it is to a country on whose infrastructure and educational system they didn’t use to make their profits.

They manage to do this because of the fact that when it comes to taxes, they’ve bought the politicians and accountants who allow it to happen. You probably can’t afford your own politician and I certainly can’t, but they can — and with Citizens United, they can use the same tax-dodging tactics to funnel some of these untaxed profits into the campaigns of legislators (both sides of the aisle are guilty) to further stack the deck in their favor.

But looking only at the surface fails to acknowledge the big picture — the biggest problem lies within our outdated tax code. Most of it was written long before corporations like Apple or Google were bringing in billions of dollars, and as such these corporations have had years — and the best accounting help available — to figure out how to maximize their profits. As far as we can tell, what they’re doing is not illegal, and that’s a major problem. The tax code needs to be rewritten to include specific wording on this type of tax avoidance, as well as specific penalties that supersede simple monetary penalties, which are nothing but a drop in the bucket for huge multinational corporations. The blame lies squarely in Washington for this still not having been done. This, of course, circles right back around to the fact that our elected officials have had no pressure to do this — and have been rewarded handsomely for looking the other way when it comes to corporate tax avoidance.

Some people like to say “we don’t have a revenue problem, we have a spending problem,” but they’re wrong and they know they are. When companies sell billions of dollars of product every year in a country, and also use that country’s infrastructure and workers for their benefit while purposefully avoiding paying their full share of owed taxes… well, that’s blatant exploitation at best, and economic treason at the worst. Close the loopholes, draft specific penalties for tax avoidance and make things clear rather than muddying the waters and asking for trouble. Until then, we will continue to see these corporations take advantage of a system (and a country) that allows it to happen.

Comments

Facebook comments

  • But, to fix the tax code, you have to get the corrupt, paid for Senators and Congressmen to do it. How in the world do you expect someone who greatly benefits from the status quo to change it to their detriment? Public pressure won’t do it, since the great almighty dollar rules in Washington DC. If you have a way to get it done, I’m all ears!

    • You are – absolutely – correct!

    • JamesKelso

      Occupy Congress! Occupy every state legislature! Occupy The House of Representatives.

  • christian_707

    To the author of this article, you are completely wrong my friend.

    The reason why Apple, Google, and all those companies set offshore subsidiaries to dodge the US IRS is so that they don’t have to pay billions in taxes on revenue that does NOT originate from the US but from Europe, Asia etc. If Apple and Google did not setup a base in Ireland, the IRS would charge them 35% corporate tax on any revenue they make (on top of sales tax for each of those countries, which can be as high as 20.5% in France). You are deeply misunderstanding the way tax works when you say that these revenues comes from the US. Sales generated from the US are subject to local sales taxes (among other taxes), and they’ve managed to escape the 35% corporate tax by setting up their financial headquarters in Nevada, where there is no corporate tax. Those revenues you are talking about come from their Ireland subsidiary which manages their foreign, OVERSEAS revenues.

    Also, people who say that we’re spending too much are absolutely right and justified, the US waste billions of taxpayers dollars every year on ridiculously overpriced deals with countless sponsor companies like Lockheed Martin because Republicans and Democrats have all been bought out by those same sponsors. Do your research before trying to invent your own facts.

    • Barry Davidson

      Christian,

      The corporate tax rate may be 35%, but I haven’t found an instance where a large corporation has actually paid that. 18% or less was about standard the last time I looked into it. Companies like Verizon were paying about 4% back in 2006, and wound up getting a refund on top of the subsidies they received. Reagan had corporations paying an average of 25%, but all the presidents since have dropped the ball.

      Tax shelters for money earned outside the US I can understand. Those profits are supposed to be covered under other codes.

      Also, companies don’t pay sales taxes. Any tax, tariff, or other charge is passed on to the consumers.