Apple has called for US corporate tax rates to be slashed after it admitted sheltering at least $30bn (£20bn) of international profits in Irish subsidiaries that pay no tax at all.
In a dramatic display of how threats from multinational corporations are driving down taxes across the world, chief executive Tim Cook warned Congress that he would refuse to repatriate a total of $100bn stashed offshore unless it acted to slash the 35% US rate.
Cook said the tax rate for repatriated money should be set "in single digits" to persuade companies to bring it back. Standard tax for US profits should be, he said, in the "mid 20s".
He also revealed that Apple had struck a secret deal with the Irish government in 1980 to limit its domestic taxes there to 2%.
Three subsidiaries based in Ireland are also used to shelter profits made in the rest of Europe and Asia but are not classed as resident in any country for tax purposes – a tactic dubbed the "iCompany" by critics.
Cook's testimony to a Senate sub-committee investigating multinational tax practices largely confirmed its findings that Apple had taken tax avoidance to a new extreme by structuring these companies so they did not incur tax liabilities anywhere.
~ from Apple Chief Calls on US Government to Slash US Corporate Tax by Dan Roberts and Dominic Rushe ~
Okay, let's see if we can get this straight. Apple -- the darling of so many liberals -- has utilized quasi-legal and unethical means to avoid its patriotic duty to pay US corporate taxes. In exchange for saving itself tens of billions of dollars, the company struck a secret deal to pay peanuts to Ireland on a very small amount of its largess. If that wasn't bad enough, Apple is also manipulating the system so that it isn't paying much in the way of taxes to a slew of others countries.
With all this admitted to, the Apple CEO has the audacity to suggest that the ONLY way his company might consider behaving in a more ethical manner is IF the US changes its corporate-friendly tax laws to allow Apple to shirk even more of their civic duty! (How magnanimous of him.)
Folks, this is a showcase for unmitigated greed. It is a showcase for how multinational corporations want boatloads of perks without any communitarian responsibilities. They believe that people should pay their taxes -- just not them!
As with all discussions of this nature, please do not allow yourselves to be caught up in that 35% tax rate figure. That merely represents the marginal tax rate -- the rate before any credits, deductions or exemptions are subtracted. Few, if any, US-based corporations actually pay the marginal rate. Study upon study has shown that most large corporations pay somewhere between one-third to one-half of the marginal tax rate. In other words, their effective tax rate is somewhere between 10-20%...for those corporations who pay ANY corporate income tax at all.
This provides us with some perspective in terms of Mr. Cook's suggestion that repatriated money should have a marginal tax rate in the single digits. What he is really suggesting is that his company would be more than happy to bring their money home IF they didn't have to pay ANY penalty at all because, as noted above, the marginal tax rate isn't the effective tax rate. If the repatriated tax rate was set at something like 7%, it would be relatively easy to conjure up enough deductions to bring the effective tax rate to zero!