By David Cay Johnston

Separate But Unequal: Apple Defers Its Taxes, You Foot The Bill

May 23, 2013 7:22 pm Category: Economy, Memo Pad 96 Comments A+ / A-
Separate But Unequal: Apple Defers Its Taxes, You Foot The Bill

The richest of the rich are different from you and me because instead of paying taxes, Congress lets them pay interest.

This little-known difference was on full display before the Senate Permanent Investigations subcommittee this week, though you would hardly know that from the news reports of testimony by Apple CEO Tim Cook and his top finance and tax executives.

The reality is that America has two income tax systems, separate and unequal. And as with all such separate and unequal systems, the powerful benefit by sticking everyone else with the costs.

The system is so unequal that corporate tax departments at the biggest multinationals have been transformed from cost centers into what Enron called its tax office: a profit center.

To most Americans, taxes are an expense. The idea that a tax can make you richer may seem hard to believe, but as the Apple executives showed in their testimony, it is standard operating procedure these days.

But instead of reporting this, we got mostly fluffy political stories. The New York Times account was typical, focusing on how Cook so charmed senators he had them “practically eating out of his hand.”

What Apple is really doing is eating your lunch.

Let’s start with how Congress taxes most people. It does not trust them to report their incomes in full or to pay their taxes, and with good reason since numerous studies show that a third or more of self-reported income simply does not get written down on income tax returns.

We all know this as the “underground economy” of people who get paid in cash; clean pools, cut grass or sell another type of grass. (Many drug dealers, however, report their incomes in full knowing that if they get caught dealing and cheating on their taxes their prison terms will be longer.)

People who work, and pensioners, have their taxes taken out of their checks before they get paid — which is why we call the shrunken cash that we pocket “take-home pay.”

Because Congress also does not trust workers and retirees to report their incomes in full, it requires their employers and pension plans to verify how much they make. The Social Security Administration adds up all the W-2 wages-paid forms for people with any paid work. In 2011 there were 151,380,759 people who earned  $6,238,607,249,941.26, which would usually be written up as $6.2 trillion.

Congress also says you can defer tax on money you save in a 401(k) plan if your employer offers one, a maximum of $23,000 for older workers. If you do not have a 401(k) you can save no more than $6,000 this year and pay taxes when you withdraw.

In other words, you get fully or almost fully taxed when you earn.

But Apple operates under very different rules. At the end of March it has more than $102 billion of mostly untaxed profits. If Apple were a worker it would have paid the federal government $36 billion in taxes.

Instead of paying taxes, Apple has taxes that are deferred for as long as it chooses.

In total, I estimate from corporate disclosure documents, American multinational companies have $2 trillion of untaxed profits offshore because they did just what Apple has done.

Had Congress required those companies to pay up last year it would have been the equivalent of all the income taxes paid by everyone in America from January until July 10. Imagine that, all the income taxes taken out of your pay or pension from January into the middle of summer just so Apple and other multinational companies can profit today and pay their taxes someday.

The $700 billion of income taxes that would have come due without deferral would also have reduced the federal budget deficit last year by more than two-thirds. Instead, the federal government borrowed a little more than a trillion last year to pay its bills.

In effect the federal government loaned Apple the $36 billion in deferred taxes at zero interest. Imagine how rich you would be if you could keep all the income taxes withheld from your paycheck this year and then pay the money, interest-free, 30 years from now.

Because taxes deferred are at zero interest, inflation erodes the value of the taxes owed. If Apple waits 30 years and then chooses to pay its taxes the government will get the equivalent of 40 cents on today’s dollar, assuming 3 percent annual inflation.

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Separate But Unequal: Apple Defers Its Taxes, You Foot The Bill Reviewed by on . The richest of the rich are different from you and me because instead of paying taxes, Congress lets them pay interest. This little-known difference was on full The richest of the rich are different from you and me because instead of paying taxes, Congress lets them pay interest. This little-known difference was on full Rating:

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Comments

  • docb

    If all corporations and wealthy paid the taxes owed at the rate dictated by code.without the giveaways ans loopholes…..where would America be financially.? .Someone should calculate that for all Americans. to see.

  • charleo1

    Not long ago, when there was some interest in whether Romney would disclose
    more than one previous year’s tax return, plus his current one. To dispel the
    possibility he had cooked the books, to make him appear he paid his taxes more
    or less the same as anyone else. That is anyone who receives the bulk of their
    income through capital gains. I made what I thought was a fairly innocuous
    statement, that the rich had been getting away with murder for years on their
    taxes. I was immediately slammed with a deluge of angry comments, of how
    half the people in the Country pay no taxes. And the other half was lounging
    on the beach, waiting for their disability checks to come in. And demanding to
    know why I thought punishing people for their success, was how a Capitalist
    Country ought to treat it’s most productive citizens? And, I thought. Wow, you
    can really buy one heck of a public relations campaign, if you have enough dough.

  • Tom

    You neglect to compare, ahem, apples with apples. What happens when a US citizen has a job outside the country? Guess what: they are exempt from taxes, up to a certain amount. That’s the topic here here: taxes on profits made outside the US.

    • Tanya Neidermeyer

      That’s not apples to apples though – if a person has a job outside the US they’re in that other country – they’re not also operating IN the US. Meaning – they’re not enjoying the benefits of actually being in the US (driving on roads, etc). These companies ARE IN the US and are able to enjoy the benefits of a screwed up tax system because they’re here, actually IN the US, yet (basically) pretending that they’re not.

    • sigrid28

      Americans working abroad must often pay taxes in their country of residence, so they would be taxed twice if certain income abroad were not exempt. Overseas workers must often file in both countries–the U.S. and where they work. Let’s say you are taxed in the U.S. on income over $100,000 that you make in France. In France, you are taxed on that $100,000 within the French revenue system. The U.S. and France have come to this arrangement through a treaty.

  • http://www.facebook.com/dominick.vila.1 Dominick Vila

    The only positive thing I can think of is that at least they are paying interest on what they owe. Many stash their loot in tax shelters overseas and never bother to report it. I wonder what would happen if we tried something like this…

    • JDavidS

      Yes… does the name Mitt Romney ring any bells?

      • Independent1

        Yes it does – and not only for tax avoidance but also for being a much larger American company/job destroyer than he was ever an American company/job creator.

    • Lisztman

      I keep hearing, over and over, that the USA has one of the highest corporate tax rates in the world. On paper that may be true. But, in effect, it has one of the lowest — because so many of these large American corporations use all these fancy loopholes to avoid paying taxes.

      So we (i.e., Congress) have choices: one, eliminate most, if not all, of the fancy deductions (which would possibly allow us to reduce the actual tax rate); two, establish an AMT (Alternative Minimum Tax) for all corporations — just like plain old taxpayers see on their 1040′s; three, you either pay your taxes in the tax year, or you pay not only interest but heavy penalties, and you do NOT get to defer them. Period.

      Except that there’s a distinct shortage of big-boy pants in Washington and no one has the cojones to actually do something for the benefit of the nation.

      • http://www.facebook.com/dominick.vila.1 Dominick Vila

        The claim the GOP loves to make regarding our tax rates compared to those in other industrialized nations is a lie. Ours is actually one of the lowest. both for corporations and individuals. The theory behind our insistence on ridiculously low tax rates is that it encourages investment and consumerism. There is a certain element of truth for the latter, the former is only true if we take into consideration the tendency of American entrepreneurs to invest overseas.
        Yes, the first thing we should go after is loopholes and subsidies to corporations that are posting huge profits and don’t need our help to be prosperous, and make the use of tax shelters abroad a crime punishable by time in prison for fraud. Needless to say, that will never happen, the same people who lied in their applications for tax exempt status are the same ones that benefit from the status quo and they will make sure nothing changes.

        • Independent1

          Dominick, I think the table below supports your lead in comment that implies that our tax rates (are not higher) compared to those in (the majority of popular) other industrialized nations, is born out by the table of European tax rates below (But I’ll let other posters verify that. And viewing the U.S. capital gains rules in effect after 2012, you can see why millionaires like Mitt Romney work to get their effective tax rate below 15%):

          European Countries’
          Income/Vat/Capital Gains
          Tax Rates

          Austria – 50%/20%/0%
          Bulgaria -10%/20%/10%
          Croatia – 40%/25%/0%
          Cyprus – 35%/17%/20%
          Czech Rep – 15%/21%/15%
          Denmark – 55.4%/25%/32%
          Estonia – 21%/20%/21%
          Finland – 53%/24%/28%
          France – 75%/17.6%/33%
          Germany – 45%/ 19%/0%
          Georgia – 12%/19%/?
          Greece – 45%/23%/10%
          Hungary – 16%/27%/16%
          Ireland – 41%/23%/20%
          Italy – 45%/21%/0%
          Latvia – 23%/21%/15%
          Liechtenstein – 17.89%/8%/0%
          Luxembourg – 38.95%/15%/19.48%
          Malta – 35%/18%/12%
          Netherlands – 52%/21%/1.20%
          Norway – 54.3%/25%/28%
          Poland – 32%/23%/0%
          Portugal – 46.5%/23%/15%
          Romania + 16%/24%/0%
          Russia – 13%/18%/30%
          Slovakia – 19%/20%/19%
          Slovenia – 41%/20%/10%
          Spain – 52%/21%/18%
          Sweden – 56.6%/25%/30%
          Switzerland – 45.5%/8%/0%
          Turkey – 35%/18%/0%
          Ukraine – 17%/20%/1.00%
          United Kingdom – 45%/20%/28%
          U.S. – 39.6%/Varies1/ Varies2

          Varies1: U.S. sales taxes (Vat in Europe) vary from NONE in
          several states to a high of 7.5 in Calif.
          Varies2: After 2012, dividends will be taxed at the taxpayer’s ordinary income tax rate, regardless of his or her tax bracket. After 2012, the long-term capital gains tax rate will be 20% (0% for taxpayers in the 10% and 15% tax brackets).

          • http://www.facebook.com/dominick.vila.1 Dominick Vila

            Thank you for providing factual information that can be verified by anyone interested in comparing our tax rates with those in other industrialized nations. An aspect of this issue that is seldom addressed is what we get and what others get in exchange for the taxes paid.

          • Lisztman

            I’m not sure where your data comes from, Indy. I’m neither an accountant nor a tax lawyer (I’ve 40 years in engineering, comma, electronics). It appears that you’re quoting individual taxes, not corporate taxes.

            For comparison:
            http://money.cnn.com/2012/03/27/pf/taxes/corporate-taxes/index.htm

            … shows the UK at about 27%, Italy at about 31%, vs. your data, 45% and 45%, respectively.

          • Independent1

            You’re correct – those are individual tax rates – I’m fairly sure that’s what Dominick was refering to when he said:”The claim the GOP loves to make regarding OUR taxes….” Our meaning, the ones normal people pay not the ones Corporations gimmick to suit their bottom lines.

          • Lisztman

            TY, Indy. I was referring to Dominick’s observation, “Our [tax rate] is actually one of the lowest. both for corporations and individuals.” Individuals, yes. Corporations, no.

            The relatively low individual tax rates may cause one to wonder why the Tea Party does so much screaming about taxes (“Taxed Enough, Already,” I believe it stands for). The Bush 2001 temporary (ha!) tax cuts were an electioneering gimmick. Well, of course, who likes paying taxes? But whether one prefers food stamps or aircraft carriers, neither is free. The money has to come from somewhere.

            The criminality of our tax code lies in the obscure tax-avoidance games available to corporations and individuals with the wherewithal to enjoy their benefits. If “plain old individuals” such as we have deductible thresholds for, say, medical expenses, or caps on particular deductions (e.g., my wife, a teacher, may take off only $250 for stuff she buys out-of-pocket for her classroom) — then the rich should also have deductibles and caps. I find it annoying that my taxes are financing the mortgages on multi-million-dollar estates.

          • Independent1

            Sorry that I missed your point about the corporate rates. And I concur with all your comments, but given that corporations in America can choose to defer their tax liabilities for decades and pay zero for years, wouldn’t that really result in America’s effective corpprate tax rate being lower than the Europeans? (I’m not sure I fully understand the technicalities of all these games corporations can play.)

      • David Jensen

        There is an argument that corporate tax rates are too high, therefore it is OK to move operations overseas, therefore tax rates should be lower. The question is: Do other countries have the same tax deferral system for their corporations. This would mean that US corporations have to compete with other countries that are using similar tax deferral systems assuming corporations have to compete globally by having lower prices created by lower tax liability systems. I do not think this is a valid argument, but I think the author’s article should have included it. Mr. Johnston has made very thorough arguments in the past.

        • Independent1

          David, corporations in Europe generally were paying about 20% in taxes but a recent article says that many countries there are lowering the tax rates – some to around 5% in order to keep European companies from doing what Apple has been doing – sheltering their profits offshore. Apparently, it’s become a global game that companies play. However, I wasn’t able to find anything with respect to European countries that’s akin to our tax code which allows corporations to defer paying taxes on their profits for decades.

        • David Colvin

          In real tearms American Corporations wind up paying 13%….>and then there are those that pay nothing and get huge amounts back in the hundreds of millions, corp frams, Exxon, BP
          and this list is as long as your arm. Used to be when corps paid about 60% of our tax and the people paid 40%, now they pay 15% of taxes and we pay 85% now! They now want to show incomatance of IRS and use it as a pawn aginst Obama Care!

    • http://www.facebook.com/Jkirk3279 William Carr

      Did you know America is the 5th biggest Tax Haven in the world?

      Companies in other countries stash their cash HERE to avoid taxes !

      • davidcayjohnston

        Almost any country can be a tax haven for another depending on the tax and accounting rules. We also have among the most beneficial disclosure rules for terrorists and drug dealers to move money undetected. The GWBush Administration declined to spend $12 million more to pursue Osama’s money in FY2004, as I reported at the time quoting WH and Treasury officials, who basically justified that as too costly for the American taxpayer to bear. What all these facts have in common is showing how mindless anti-government ideology, and assertions that government is the problem, result in badly run government with poorly crafted rules.

  • adler56

    I will never buy anything Apple sells- EVER.

    • Fern Woodfork

      Same Here My Friend NEVER!! Steve Jobs Stole What He Started It Was Told In Pirates Of Silicone Valley!! :-(

      • http://www.facebook.com/alankwells Alan Wells

        Great movie! One could argue Gates was even worse, however. Linux for all!

    • http://www.facebook.com/alankwells Alan Wells

      Suffer on with Wintel brother. Using Apple products makes me far more productive. I’m worth it. My time is valuable.

    • GreginPottsville

      Wow Adler, that would REALLY devastate Apple.
      Do you realize Apple pays the most taxes of ANY corporation now in America?

      • David Colvin

        did you NOT read this ?

        • Independent1

          David, I’m sure he read it, but unfortunately, there are tons of people in this country who value the almighty dollar more than playing the game fairly. And I guess Greg hasn’t stopped to think about the fact that what Apple is doing is resulting in he himself probably paying twice as much in taxes as he would be if Congress would put a stop to these games that corporations play.

        • GreginPottsville

          I did sir, and noticed it left out the FACT that Apple pays more taxes than any corp in the country.

          • robertblair3174

            As reported by Forbes, Apple’s tax rate for 2011 was an incredible 7%.

          • Independent1

            And for the fourth time – YOU ARE WRONG!! Exxon pays more than twice as much in taxes as Apple!!!!!!

      • Independent1

        That’s because of the fact that the majority of the companies in America are playing the same games which has resulted in more than 300 of the Fortune 500 companies paying ZERO TAXES in any given year. All of which doesn’t make what Aplle is doing RIGHT!!!

        • GreginPottsville

          They did nothing illegal. When you take all your deductions legally allowed, do you feel guilty?
          Are you going to call out GE? They pay NOTHING sir.

          • robertblair3174

            While Apple may not be doing anything illegal, (Still a debatable point) it begs the question “Why do we allow the system to be gamed in this manner?”

          • Independent1

            Robert, I believe it’s because of all the money corporations throw into elections to get people elected that will push for legislation that allows them to play games with their taxes. Coupled with the fact that there are millions of Americans who pay such little attention to what candidates are really all about, that they vote in politicians that are more concerned more about serving their ‘donors’ than the people who elected them.

          • plc97477

            We could take a step farther and say it is because corp. are now people.

      • plc97477

        Did you read the article?

  • JDavidS

    Next app out…iDodgetaxes…uPay

    • GreginPottsville

      Uh what corporation pays the most taxes in the US? APPLE
      What is the largest corporation that pays ZERO taxes? GE (big Democratic donor by the way).
      You liberals are making fools of yourselves here. I am getting a belly ache.

      • JDavidS

        Miss the point of the article, did we, Skippy? Have someone read it to you.

      • robertblair3174

        I’m pretty sure that we all agree that NONE of them should be getting away with this

  • disqus_fsqeoY3FsG

    Paul Rand said regarding the hearing Apple CEO testified out – “Congress owes Apple an apology”. Well that should tell you who Paul Rand represents and it does not include the Middle Class or the Poor.

    • Lisztman

      I can think of a few very simple, single, words, to describe the likes of Rand Paul, but none of them is printable (at least, by my personal standards).

  • Lisztman

    Wait — you mean they’re sending all their piles of profit OVERSEAS? I
    thought they were using it to create jobs for unemployed Americans!

    • Independent1

      Corporations and the wealthy create jobs!!! That’s only a fairytale told by the likes of Mitt Romney and his ilk!!!

      • Germansmith

        Actually they do.
        We need wealthy people and corporations and banks (very few jobs and new industries and products are created by government , unless we have a war going on)
        The key thing is to have a system where people can get rich and wealthy without screwing up the rest of us….too much
        People need to study the history of the US. America is a rich country build by the Carnegie, Rookefellers, Mellon and so on, by squeezing labor, blood, sweat and tears of waves of immigrant workers.
        We are also a Great Country because we have modified a lot of the world to our benefit. As any Empire we get benefits from the influence our power and money give us…we are just the continuation of the British Empire.
        Think about that next time you sit with a cold one in air conditioning watching a 55″ TV bought in Walmart

        • Independent1

          Technically it’s customers that create jobs – corporations only add workers if there are CUSTOMERS to buy their product or service.!!! So if the GOP takes this transfer of wealth from the middle class to the rich too far, the rich are going to find that the middle class that their sucking all their money from will not be there for them to suck money from anymore.

          • Germansmith

            Your mind is back in the middle ages when needs were few like food, shelter , water and clothing (not universal healthcare)
            Did anybody actually had a need for an IPad before there was one? Or a Walkman? Or an skateboard? or maybe even the Pyramids, or Versailles or Disney World.
            Now a days, a product gets created, Mktg. creates a need and people buy them and money flows around and new service requirements (like Pyramids’s archeologists) are created.
            Do customers create that?, do poor people create those things?
            Maybe those facts do not fit with the modern Democratic Party, but we need rich people and corporations as much they need the rest of us to propel the economy. The key thing here is to let the talented and hard working get rich while making sure the rest of us also gets a good deal in the process.

    • GreginPottsville

      Apple pays the most taxes to the US Gov’t of any corporation.

      • Lisztman

        You are correct in that Apple paid $6B in taxes in 2012. (I can’t vouch for them paying more than any other, but I won’t debate it, and that’s not the point.)

        The point is that one would expect Apple to be paying more taxes than others, because they had more income than others. The suggestion that they shouldn’t be paying an equal share (i.e., more dollars) is rather specious. It’s rather like a billionaire complaining that he pays millions in taxes while someone making $15K annual is paying only $600 (or whatever).

        The point is that fair income taxation is a percentage of income. Not absolute dollars. And the avoidance of declaring income for the purpose of avoiding taxation is morally reprehensible.

        • Independent1

          And Greg is incorrect about Apple being the US’s largest tax payer. Exxon paid more than twice as much as Apple and Chevron paid 6 billion more than Apple also for 2012.

  • http://www.facebook.com/edwin.lee.5836 Edwin Lee

    Not only are these companies taking out very low interest bonds… when interest rates finally go back to customary levels, those bond prices will drop and Apple will be able to redeem them well below par value. Also, by sucking up billions in loans, Apple is depleting sources of loans for those who might use them to create jobs.

    • http://www.facebook.com/alankwells Alan Wells

      I’d say that effect is courtesy of the Fed, and that Apple is responding rationally to the irrational actions of the government.

      • Independent1

        Sorry, I consider what Apple is doing is being totally unpatriotic – just because the tax laws offer corporations loopholes, does not mean that they have to take them to the level of excess that Apple has. Given their level of profits and monies in hand, had Apple had any sense of patriotism over the past years, they would not of devised the many devious schemes that they did – JUST BECAUSE THE LAW ALLOWS IT!!!!

        • GreginPottsville

          Apple pays the MOST TAXES of any corporation to the US Gov’t!
          What about GE? They paid ZERO last year. Are you mad at them too? Or are they ok because they donate heavily to Democrats?
          Funny how liberals pound on the one corporation that pays the most taxes in the US.

          • Independent1

            You keep making the statement that Apple is the largest taxpayer when it is not – Exxon and Chevron pay much higher taxes than Apple (Exxon’s are more than double).

          • Lisztman

            I can pound GE if you’d prefer. I’ve pounded GE in the recent past. The subject of the article under discussion (go back to the top, sir) is Apple.

            Yes, I’m mad at GE, too. What’s with your “liberal” thing? And why do you choose to defend Apple? IOW, you’re perfectly fine with them ducking their tax bills? (Note: “Legal” is not the same as “moral”.)

      • plc97477

        The fact that it is legal and possible to do does not make it right or ethical.

  • m8lsem

    The problem is that Apple could be sued by its stockholders if it did not take advantage of loopholes in the Internal Revenue Code. Corporations are, generally speaking, not permitted to make gifts of billions of dollars based on moral purposes divorced from business purposes.

    Congress should not get mad at Apple, and taxpayers should not get mad at Apple.

    Taxpayers should get mad at Congress, and Apple should support changes in the law which apply to all corporations so as to eliminate sham parking of money in foreign countries. Apple might piss off its shareholders by initiating that, but Congress should.

    Apple’s executives have seemed to prefer Democrats when making their contributions, and none have ever been known to favor the Teapugnicans.

    • Independent1

      Sorry but I don’t agree. I don’t believe that the majority of stockholders (certainly me) has ever expected a company to go the totally UNPATRIOTIC level that Apple has in order to make profits – especially when it’s obvious that given the level of excess profits that Apple has been making – none of the fancy schemes Apple created was really necessary for the company to have posted profits that virtually every stockholder would have been more than happy with. And especially if stockholders realize that with corporations taking full advantage of all these schemes – it’s THEM that are being required to pay MUCH HIGHER taxes than had these corporations not played their silly games.

      • Germansmith

        Well, you are a better person than most of us.
        When looking at my investments, I am greedy and not patriotic at all
        I am just looking at my returns as well as any pitfalls in the future of the investment that would affect my future returns.
        As a financial advisor I have never had a question from a client regarding how patriotic is a company and if they pay their taxes fully without evasion…if ever they do ask…I probably would NOT know how to answer

        • Independent1

          I’m not surprised by your comment because I doubt most investors ever even thought about how corporations have created schemes to shield their assets from taxes to which I think Apple has carried things to an extreme. And I doubt too that most investors ever realized that by corporations playing these tax sheilding games that it’s your inviestors that are ending up paying a price for these games via higher taxes that THEY ARE being asked to pay. Personnaly, I doubt that a corporation’s stock price is enhanced enough because of these tax shielding games that it even comes close to the extra taxes investors are paying – have you stopped to reflect for a moment as to just how much lower everyone’s taxes may be if everyone was truely paying THEIR FAIR SHARE?? I really think someone needs to make a projection of what that might be, because it’s my hunch that if investors found out just how much excess taxes corporations are dumping on them – investors coming to you will be concerned about companies like Apple playing such tax sheilding games. (And my outrage with Apple isn’t because they’re taking advantage of a loophole in our tax system, it’s because of the extreme too which they’ve taken it – not only sheilding billions upon billions of dollars from American taxation but also in doing it in such a way that they’ve been basically shortchanging Ireland on the taxes they should be paying there.)

        • plc97477

          I think it is wrong of you to assume most people are greedy and unpatriotic. I know many who are happy to be able to pay their taxes.

          • old_blu

            You plc are absolutely right, I know it takes money to run a country and I pay my taxes and are happy to do so. I think everyone should do the same.

          • Germansmith

            Well, that is true. I rather and am quite happy to be taxpayer, not a charity case. BUT, having said that, I am not about to pay a single penny more than I have to and I am not very happy in how our government uses our money.
            Patriotism is a point of view and is a vacuous term. Everybody on both sides of the aisle call themselves patriots.

      • Lisztman

        Or, to approach it from a different direction — If Congress is so all-fired-up about the budget deficit, WHY does it permit corporations (as well as wealthy individuals) to get away with stuff that is inaccessible to the majority of others (both corporations and individuals)?

        Could it be that they’re paying homage to the god of re-election campaign funding?

        • Independent1

          I think you’ve got it. Corporations are pouring millions into our elections in order to get candidates voted into office that will serve the demands of companies more than their constituents.

          The fact that Romney was able to get a number of CEOs to actually try and influence the voting of their employees by having them send out letters saying that if Obama was re-elected that they may be laid off, is testimony to that. The Koch Bros., the CEOs of GE, BofA and others actually did what Romney suggested and sent out letters before the last election.

  • http://www.facebook.com/alankwells Alan Wells

    “Income” or “profit” are just opinions of an accountant with a bunch of (government) rules. The best way to resolve this situation it to reduce overall corporate taxes to near nil, so as to avoid spending time and money better used elsewhere. This nonsense just sucks productivity out of the system. The problem is government spending, not Apple (or GE) “tax avoidance.”

    • Independent1

      Apparently you’re not aware that President Obama has reduced spending over the past 4 years at the fastest rate since Truman reduced spending after WWII; and that he’s actually reduced spending to the lowest percentage of GDP since Eisenhower was in office in the 1950s. The PROBLEM IS NOT SPENDING!! The problem is the GOP House that REFUSES to pass even one of Obama’s bills over 2 years. Had they passed his American Jobs Act bill two years ago, it’s very likely that the unemployment rate today would be much closer to 5.5% instead of 7.5%.

      • GreginPottsville

        Sorry Charlie, but the last Bush year you are referring to INCLUDES OBAMA’s Stimulus!
        Try again.

        • Independent1

          Sorry but that’s not true – Bush created his last budget in the fall of 2008 – his 10/1/09 to 9/30/09 budget – THAT BUDGET had 1.6 trillion in deficit spending in it before Obama even took office. Obama’s stimulus was a totally separate thing and is THE ONLY MONIES added to the deficit that can realistically be charged to Obama (under 1 trillion) – all the other 4 plus trillion added to the deficit since Obama took office are GEORGE BUSH’S RESPONSIBLITY FOR HAVING CREATED AN ECONOMIC DISASTER CALLED THE GREAT RECESSION!!!!

          • GreginPottsville

            You might want to proof read sonny.

            “his 10/1/09 to 9/30/09 budget”
            That makes no sense. And as most people know, the fiscal year that ended DURING Obama’s first term DID include the stimulus.
            That Stimulus was added to Bush expenditures. Yet some liberals continue to thing spending is “down” during the Obama years, based on one article from a left wing loon who forgot to add that in.
            Secondly, even liberals I know, do know the recession you are referring to was caused almost exclusively by the sub-prime mortgage crises, generated by the Clinton administration. I cannot find one smart liberal that denies that fact.
            Here is some real simple math for you, sir. Look at what our National Debt was when Bush left office. Look at what it is now. If that doesn’t make you want to puke, I want what drugs you are on sir.

          • Independent1

            I’m not sure why you say my comment makes no sense: Presidential budget years run from 10/1 thru 9/30 of the following year – that is to give a new president time to create a budget and get it passed before 10/1 of the next year.
            So George Bush created a budget before he left office that took affect on 10/1/08 and ran through 9/30/09; that budget included a projection of 700 billion dollars in deficit spending for the TARP program that Bush signed into law on 10/2/08 plus a lot of other deficit spending for two unfunded wars, and unfunded Medicare drug benefit, unfunded tax cuts, and unfunded federal programs like No Child Left Behind, etc. etc. There was 1.6 trillion of deficit spending in George’s last budget BEFORE Obama even took office on 1/20/09. When Obama took office he proposed and got passed on 2/17/09 a 787 billion stimulus package that was a totally separate issue AND WAS NOT INCLUDED IN THE 10/1/08 TO 09/30/09 BUDGET YEAR. For 8 years, Bush included between 250 & 500 Billion of deficit spending that was not included in any budget. Ronald Reagan started the practice of presidents keeping billions in spending outside of his budget – Bush Sr. did the same thing and so did Bush Jr. Clinton did not.
            And for the record, EVERY GOP president, starting with Nixon’s 2nd term, has governed with significant deficit spending, and every DEM president starting with Carter, has decreased t he deficit spending they inherited. And Prsident Obama has reduced the deficit faster than any president since Truman; Obama has reduced deficit spending PER YEAR by almost 1 trillion dollars over the past 4 years.

            Despite your comments – ALL OF MY COMMENTS STAND AS I POSTED THEM. I have not been wrong.

          • Independent1

            About the national debt – let’s start with the first of the drunken sailor spending presidents – Reagan. When Reagan took office, carter had gotten the deficit to the lowest percentage related to the GDP of any president in the past 100 years – to 32% of GDP. The deficit was 800 billion dollars. In 8 years, Reagan spent more money than all the presidents in the previous 50 years combined, almost tripling the deficit to 2.3 trillion dollars. Bush Sr. almost doubled the deficit by adding 2 trillion of deficit spending to 4.3 trillion. Clinton reduced deficit spending and actually got to several years of surplus budgets but interest on the deficit brought it up to 4.9 billion. Plus, the budget Bush inherited from Clinton included about 300 billion of projected surplus. But Bush immediately got an unfunded tax cut passed and then got us into 2 unfunded wars, and then another unfunded tax cut, an unfunded drug benefit giveaway to the drug industry, and before you know it the deficit was 10.6 trillion when Bush left office. So Obama inherited a 10.6 trillion deficit PLUS a budget with 1.6 trillion in deficit spending he couldn’t do anything about, Plus an economy that was in free fall losing 800,000 jobs per month along with hundreds of companies going belly up and an auto industry on the verge of bankruptcy all of which resulted 14 million lost jobs and tax revenues being down almost 1 trillion/year. Surprisingly, by following through with the Stimulus and the auto bailout, Obama was able within 6 months to stop the job loss slide and slow the loss of companies going bankrupt. George Bush is directly responsible for 12.3 trillion in deficit spending and the major portion of the remaining 4 trillion in increased deficit increases that have been needed to turn around the disasterous economy he passed to Obama. Reagan and the two Bushes are responsible for more than 90% of our current 16.8 trillion in debt.

          • Lisztman

            No, Greg — the 2008+ recession was NOT caused “almost exclusively” by the sub-prime mortgage crisis. You have obviously read THIS treatise:
            http://www.aim.org/guest-column/the-cause-of-the-2008-financial-crisis/
            … and accepted it as “the answer”.
            For a more thorough analysis, which actually places blame on both sides of the aisle, but predominantly upon government overseers who failed to oversee…
            http://www.nytimes.com/2011/01/26/business/economy/26inquiry.html?_r=0

            Meanwhile: “…some liberals continue to thing spending is down.” You may want to proofread, sonny. And stop being an asshole while you’re at it.

          • GreginPottsville

            Sorry Sir, I cannot help the sheep.

    • GreginPottsville

      Seems nobody here (except maybe you) realizes Apple is the highest taxpayer in the US. Wonder why nobody is mad at GE? Oh, big fundraiser for Dems. Go figure.

      • Independent1

        Your comment is only correct if you exclude oil companies – Exxon is BY FAR the largest taxpayer in the US. For 2012 Exxon paid 31 billion in taxes on 79 billion in earnings; Chevron was second, paying 20 billion in taxes on 46 billion in earnings; Apple was 3rd, paying 14 billion in taxes on 56 Billion in earnings; Note that Chevron paid a much higher tax rate than Apple.

        • davidcayjohnston

          Independent1, the National Memo columnst here….

          No, Exxon did not pay $31 billion in taxes. It recorded an accounting reserve of that amount. Some was paid immediately, much of it will not be paid for many years and, if it chooses, some will never be paid.

          • Independent1

            Thanks for the info David! I responded to Greg based on tax liabilities listed on USA today’s website (their website shows it as ‘Income Tax Expense”). So if, as you say, Exxon really didn’t pay the taxes already and only booked the liabilities, then it’s quite likely that the ‘Income Tax Expense’ for Chevron and Apple probably are only liabilities also and not really taxes paid. Which means that Greg’s comment about Apple being the biggest US taxpayer still is not true; in that none of them has really paid what they owe. Am I correct in assuming that?

          • davidcayjohnston

            Correct. The accounting rules show what is due in theory. The wedge between taxes actually paid and taxes due at a later date is a zero interest loan. The loan proceeds are then invested, as I show on the second web page of my column above.

      • Independent1

        As I mentioned in another post – Apple is the third largest taxpayer behind Exxon and Chevron – just for the record.

    • Independent1

      Sorry, but you are MISTAKEN. Obama has cut spending faster over the past 4 years than any president since Truman after WWII; he’s actually reduced yearly spending by almost 1 trillion dollars over those 4 years; discretionary spending (that spending other than for the entitlement programs like Social Security and Medicare) is actually almost down to the lowest level in the past 60 years. THE PROBLEM IS NOT SPENDING!! THE PROBLEM IS LOSS OF TAX REVENUES!! When the GOP’s policies allowed the economy to run amok and end up in the Great Recession, more than 14 million jobs were lost and hundreds/thousands of companies went belly up. All those people out of work and lost companies are no longer sending in tax revenues. Tax revenues were down around 1 trillion/yr and are in the process of recovering.
      Obama has gotten us out of Iraq and is winding down the Afghan war and has worked to streamline government such that he’s actually cut around 600,000 people from government payrolls. He’s also started a war against fraud in the defense and healthcare sectors that have recovered over 4 billion in fraudulently charged monies in these two sectors – more than was recovered during the Clinton and two Bush administrations combined. All of this has resultled in revenue savings. What is needed is for the GOP to stop stallling on passing the American Jobs Act that would have created millions of jobs over the past 2 years had the GOP passed it; the unemployment rate would be closer to 5.5% instead of 7.5% had the GOP gotten out of the way.

  • David Turrentine

    If corporations are “people” as the Supreme Court has indicated, they should be subject to the same penalties as real people.

  • http://www.facebook.com/silence.dogood.9212 Silence Dogood

    If Apple were unionized and paying their tribute (money) to the Dems they would be left alone.

  • David Colvin

    We have a voice America, it’s called the VOTE…> time to VOTE out all TEA PARTY & Republicians and let President Obama fix this once great nation ! We need to creat the jobs so that yes we can pay taxes to get moving again, this time in the right direction or fail and let big multi-nations take over all of our lives!

  • Germansmith

    Apple did what other Americans do…Avoid taxes as much as possible as allowed by law.

    The only reason we are outraged is because their tax avoidance are in the $$$$BILLIONS.

    Apple is not the only one. I am sure other corporations are doing the same.

    Direct your outrage to Congress and the executive branch. I would probably bet that tax code simplification is an item most Americans both right and left could agreed on.

    Lower corporate rates, but remove those loopholes that encourage them to hire armies of lawyers and accountants to avoid taxation. In the long run, we will get more tax income out of them.

    Also, I do not buy Apple products because they do not play well with others and when they do, it cost the consumer a arm and a leg. Their products are made in China by employees working under bad working conditions.

    Stop buying Apple crap !!! Stop buying at Walmart !!!
    And if you bought your Apple product at Walmart, shame on you, What kind of progressive are you?

  • R502112

    Well, well……These people in congress set up the rules when it very well suits their needs and now getting stung by the very rules they enact? This, ladys and gentlemen is the corupt representatives we are conned into voting for cuz were too ignorant and gullible to see thru the BS they say, so quit your complaining cuz we only need to look in the mirror to assess blame……..but not all is lost cuz that very person we see in the mirror has the power to change things…..ponder the thought

    • Independent1

      Unfortunately, there are lots of us who are wishing that there weren’t all these clueless people who are voting in these idiots and therefore, I think, rightly have the right to complain. It’s really pockets of clueless Americans that the GOP has located and are using to keep themselves in power via gerrymandering that are doing the damage – these pockets of clueless people really need to be made aware of what they’re allowing the GOP to do to the country.

      • R502112

        I do agree with your reply to some extent. The only way these clueless pockets of GOP supporters will only see anything when it hits them in times of need (IE: disasters, economic issues). Both parties, especially the GOP are part of the same problem, only sticking to their idilogocal beliefs instead of governance to benefit the country. they both need to compromise before worse things happen. Congress is only sowing the seeds of discontent and perhaps civil unrest, the writing is on the wall…………will they see it before it’s too late?

  • bhaggen

    I don’t own an Apple product, but I did have a good chunk of their stock and made quite a killing. I don’t care about the price of gas because my oil/energy stocks pay great dividends which more than pay for my gas AND I drive a sub-compact! The system is set up to encourage investment…….So you too can enjoy a piece of the pie. Don’t try to beat em; join em!

  • soul68

    Funny how people are so quick to crucify Apple over this but what about EVERY OTHER huge corporation that does the exact same thing? Why do they get a free pass. I’m not saying Apple shouldn’t pay more, I’m saying EVERYONE should pay more. I’m opposed to the singling out of Apple.

    The tax laws are set up by the Congress. Blame them.

    • Independent1

      I certainly don’t doubt that other corporations are playing some of the same profit shielding games that Apple is playing, but I’d have to see evidence in writing that other companies are carrying it to the extreme that Apple has been. I actually find it very repulsive that a corporation would go to the extreme that Apple has to set up a basically fake corporation in Ireland in such a way that it not only allows Apple to shield billions of dollars of profit from American taxation, but also allows it to grossly shortchange even Ireland in the process. I mean give me a break – the management of Apple is so ethically and morally devioid that it boggles the mind. And it’s not only this, but the level of profits that they’re shielding from taxation – almost 100 billion dollars!!! Come on!! If GE or BofA or Wells Fargo or some of the oil companies like Exxon or Chevron are playing the game to the same extreme – then of course they deserve the same outrage – but someone needs to research these companies and prove that before they deserve the same condemnation as Apple. You can be certain I will never buy another product made by Apple – not as unpatriotic as it has been proven to be. (And don’t forget – you’re paying higher taxes than you should have to be beause of the games Apple is playing – so it’s a personal thing too!! They’re putting the screws to me, you and millions of other taxpayers -JUST SO THEY CAN IMPROVE THEIR BOTTOM LINE!!!!)

    • davidcayjohnston

      Columnist here… Of course the point of the hearings was to show that the rules need updating.

  • montanabill

    Wonder why in the course of the article it never mentioned just how much Apple does pay in taxes or what percent of the total taxes that payment amounts to. Also have to wonder why the article didn’t make clear that everything Apple does is strictly according to the tax code and, therefore, not illegal. Also have to wonder why Obama’s buddy Jeff Immelt wasn’t there explaining why GE pay no U.S. taxes. Also wonder why the article didn’t make clear that U.S. companies earning money in the U.S. that pay taxes on the money actually get the money from you and me.

    • davidcayjohnston

      Columnist here,

      We do not know how much Apple paid.

      We know what its accounting reserve for taxes is, and what its cash paid was, but those are not “what it paid.”

      As various others have noted Apple pays very little anywhere relative to its profits and much of its profits are, as I report above, UNtaxed.

      See the report by Citizens for Tax Justice, a group whose integrity in its numbers has been vouched for people people at Heritage and Cato (who dislike CTJ’s views): http://ctj.org/ctjreports/2013/05/apple_holds_billions_of_dollars_in_foreign_tax_havens.php#.UaTZ0ZWxP8s

      My colleague at Tax Analysts, Lee Sheppard, who is widely followed by the country’s leading tax lawyers and is one herself, describes Apple’s strategies as “brazen.” I agree. But understanding that requires a deep understanding of arcane accounting and tax rules.

      The point of the hearings was to show that the law needs changing.

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