Apple in the hot seat. Lawmakers say the company dodged billions in taxes on overseas profits. We’ll look at the world of offshore tax escapes.
The headlines looked pretty bad for Apple this week on taxes and offshore shelters. “Gimmicks.” “Schemes.” Billions dodged. Stateless subsidiaries paying taxes nowhere, on giant revenues.
Then on Tuesday, Apple CEO Tim Cook in the hot seat in Washington, insisting that Apple is proud to be an American company, that it’s broken no laws. Reminding Congress of the billions it does pay in U.S. taxes. Apple is not the only U.S. corporation working the edges of tax law in the global economy. It’s a big deal.
Up next On Point: Apple’s taxes, American law and offshore escapes.
– Tom Ashbrook
Edward Kleinbard, professor of law at the University of Southern California’s School of Law. He served as Chief of Staff of the Joint Committee on Taxation.
Alan Auerbach, professor of economics and law at University of California Berkeley and director of the Burch Center for Tax Policy and Public Finance there. He also served as deputy Chief of Staff of the Joint Committee on Taxation.
From Tom’s Reading List
Politico: Tim Cook Defends Apple Tax Policy – “Apple CEO Tim Cook on Tuesday vigorously defended his company on Capitol Hill against charges that the tech company stashes billions of dollars overseas to lower its U.S. tax bill. In his first appearance before Congress, Cook told a Senate investigative committee that the company is a leading U.S. taxpayer that’s generated thousands of new jobs. And he countered that the U.S. Tax Code itself is faulty because it hamstrings ‘American corporations in relations to our foreign competitors.’”
Bloomberg Businessweek: Google Joins Apple Avoiding Taxes With Stateless Income – “Google, for example, has used a pair of tax shelters known by tax attorneys as the ‘Double Irish’ and ‘Dutch Sandwich’ that move foreign profits through Ireland and the Netherlands to Bermuda to avoid about $2 billion in income taxes a year, according to the company’s filings in the U.S. Like Apple, Mountain View, California-based Google shifts profits into an Irish subsidiary that doesn’t pay taxes in Ireland. In Google’s case, it says the unit is managed in Bermuda, which has no corporate income tax.”
Slate: Scrap The Corporate Income Tax – “If you’re bothered about companies like GE, scrap various tax breaks. If you’re worried about companies paying high rates, lower the rate. If you’re annoyed about Apple, go after foreign accounts. But looking at them all simultaneously suggests an alternative to reform. Just give up. Though the corporate income tax as presently constructed supports a small army of accountants, tax lawyers, lobbyists, and CNBC talking heads, it doesn’t raise very much revenue.”
The Economist: Tax Havens: The Missing $20 Trillion — “Getting rich people to pay their dues is an admirable ambition, but this attack is both hypocritical and misguided. It may be good populist politics, but leaders who want to make their countries work better should focus instead on cleaning up their own back yards and reforming their tax systems.”