Monday, April 30, 2012

Sunday Globe Special: Bad Apple Avoids Taxes

Related:

"Apple said Tuesday its fiscal second-quarter profit almost doubled to $11.6 billion."

"Apple slashes its tax bill with legal, cutting-edge practices" by Charles Duhigg and David Kocieniewski  |  New york times     April 29, 2012

RENO - Apple, the world’s most profitable technology company, has done something central to its corporate strategy: It has avoided millions of dollars in taxes in California and 20 other states....

Setting up an office in Reno is just one of many legal methods Apple uses to reduce its worldwide tax bill by billions of dollars each year.

As it has in Nevada, Apple has created subsidiaries in low-tax countries such as Ireland, the Netherlands, Luxembourg, and the British Virgin Islands - some little more than a letterbox in Luxembourg - that help cut the taxes it pays around the world.

Do not war-profiteers like Halliburton do the same thing?

Almost every major corporation tries to minimize its taxes, of course. For Apple, the savings are especially alluring because the company’s profits are so high. Wall Street analysts predict Apple could earn up to $41.4 billion in its current fiscal year - a record for any US business.  

Yeah, that's billion with a B, readers. And they are on a pace to beat it.

When someone in the United States buys an iPhone, iPad, or other Apple product, a portion of the profits from that sale is often deposited into accounts controlled by Braeburn Capital, and then invested in stocks, bonds, or other financial instruments, say company executives. Some profits from those investments are shielded from California tax authorities by virtue of Braeburn’s Nevada address.

Since founding Braeburn, Apple has earned more than $2.5 billion in interest and dividend income on its cash reserves and investments around the globe. What’s more, Braeburn allows Apple to lower its taxes in other states because many of those jurisdictions use formulas that reduce what is owed when a company’s financial management occurs elsewhere. 

It's not that I'm against Apple making money; however, this is in the face of the hollowing out and destitution of the American middle class.

While Apple’s Reno office helps the company avoid state taxes, its international subsidiaries, particularly the company’s assignment of sales and patent royalties to other nations - help reduce taxes owed to the US and other governments.... 

Apple serves as a window on how technology giants have taken advantage of tax codes written for an industrial age and ill-suited to today’s digital economy. Some profits at companies like Apple, Google, Amazon, Hewlett-Packard, and Microsoft derive not from physical goods but royalties on intellectual property, like the patents on software that makes devices work.

Other times, the products themselves are digital, like downloaded songs. It is much easier for businesses with royalties and digital products to move profits to low-tax countries than it is, say, for grocery stores or automakers. A downloaded application can be sold from anywhere.

Apple, former executives say, has been particularly talented at identifying legal tax loopholes and hiring accountants who are known for their innovation....

Apple was a pioneer of an accounting technique known as the “Double Irish with a Dutch Sandwich,’’ which reduced taxes by routing profits through two Irish subsidiaries and the Netherlands and then to the Caribbean. In 2004, Ireland, a nation of less than 5 million, was home to more than one-third of Apple’s worldwide revenues, according to company filings.

Without such tactics, Apple’s federal tax bill in the United States most likely would have been $2.4 billion higher last year, according to a recent study by a former Treasury Department economist, Martin A. Sullivan. As it stands, the company paid cash taxes of $3.3 billion around the world on its reported profits of $34.2 billion last year, a tax rate of 9.8 percent. (Apple does not disclose what portion of those payments were in the US, or what portion are assigned to previous or future years.)

That's all?

By comparison, Walmart last year paid worldwide cash taxes of $5.9 billion on its booked profits of $24.4 billion, a tax rate of 24 percent, which is about average for non-tech companies.  

Walmart has it's own problems these days.

Apple said it “has conducted all of its business with the highest of ethical standards, complying with applicable laws and accounting rules.’’  

That doesn't make it right.

Apple also said it “pays an enormous amount of taxes which help our local, state, and federal governments. In the first half of fiscal year 2012, our US operations have generated almost $5 billion in federal and state income taxes, including income taxes withheld on employee stock gains, making us among the top payers of US income tax.’’  

And I'm not for raising their tax. I'm for cutting back on the empire abroad and tyranny at home. There will be plenty of money for all our needs once we get rid of the theft and waste.

--more--"  

Also see: State Street Stealers

Not only did they and others not pay taxes, they got a big old tax check from the government!

You SEE where your TAX LOOT is going?