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Old May 20, 2013, 04:52 PM   #1
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U.S. Senators Claim Apple Has Avoided Paying Billions in U.S. Income Taxes Ahead of Tim Cook Testimony




A Senate subcommittee has released a 40-page memo accusing Apple of not paying billions of dollars in federal taxes through "extensive tax-avoidance strategies".

Apple CEO Tim Cook, CFO Peter Oppenheimer, and Apple's head of tax operations Phillip A. Bullock will appear in front of the U.S. Senate Permanent Subcommittee on Investigation tomorrow. The company issued a statement earlier today in a preliminary defense against the Subcommittee's accusations.

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The subcommittee, which previously explored tax avoidance by other multinational corporations using offshore subsidiaries, found similar practices at Apple. In addition, the subcommittee review discovered an unusual tax scheme: Apple's claim that two key offshore companies are not tax residents of Ireland, where they are incorporated, or of the United States, where Apple executives manage and control the companies. One of those Irish subsidiaries has paid no income taxes to any national tax authority for the past five years.

"Apple wasn't satisfied with shifting its profits to a low-tax offshore tax haven," said Sen. Levin. "Apple sought the Holy Grail of tax avoidance. It has created offshore entities holding tens of billions of dollars, while claiming to be tax resident nowhere. We intend to highlight that gimmick and other Apple offshore tax avoidance tactics so that American working families who pay their share of taxes understand how offshore tax loopholes raise their tax burden, add to the federal deficit and ought to be closed."
The full forty-page memorandum (PDF) goes into some detail on the company's tax strategies, and we will likely hear much more about this at tomorrow's hearing.

Note: Due to the political nature of the discussion regarding this topic, the comment thread is located in our Politics, Religion, Social Issues forum. All MacRumors forum members and site visitors are welcome to read and follow the thread, but posting is limited to forum members with at least 100 posts.

Article Link: U.S. Senators Claim Apple Has Avoided Paying Billions in U.S. Income Taxes Ahead of Tim Cook Testimony
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Old May 20, 2013, 04:55 PM   #2
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We all gotta pay taxes. If Apple doesn't want to pay them to the Feds, then maybe they should setup shop next door to Foxconn and not in Cupertino.
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Old May 20, 2013, 04:59 PM   #3
Four oF NINE
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This corporate tax avoidance by the biggest FORTUNE 500 corporations has got to stop. Figure it out, Washington!
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Old May 20, 2013, 05:00 PM   #4
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That's like saying I avoided paying thousands of dollars in sales tax by not buying that new SUV.
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Old May 20, 2013, 05:00 PM   #5
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The investigators are still not claiming that Apple broke any laws - just that they took advantage of tax loopholes. There's an easy way to "fix" this problem: fix the tax code. Expecting companies to not take advantage of loopholes and blaming them for exploiting them is just ridiculous and doesn't actually solve anything.
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Old May 20, 2013, 05:00 PM   #6
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Meet Apple's new CEO: Tim Crook.

Seriously, there are really two major issues here: The US tax code is in need of a serious overhaul to close loopholes and align practices, and Apple's practices need to be further investigated globally for any potential illegal activities. Yes, Apple appears to have broken no laws here, while doing an excellent job of showing how greedy, unethical and dishonest a company can be and still be loved by the consumer.

I spent almost four years working at Apple, watching as the company moved from a customer focused culture under Steve Jobs to a focus on reduction in quality, cutbacks on customer service and anyways that can be thought of to increase profits under Tim Cook.

I love my Apple products enough to voice my concerns with Apple's current leadership.

Last edited by RBMaraman; May 20, 2013 at 05:45 PM. Reason: Add some clarifications and qualifiers.
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Old May 20, 2013, 05:02 PM   #7
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Doesn't the IRS check for these kinds of things when companies file every year? Considering how money hungry the government is, you'd expect them to pay closer attention to large international public companies such as Apple.
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Old May 20, 2013, 05:02 PM   #8
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Ironically, if they are still within the letter of the law, the problem is in Washington. The same people who setup laws with ways to sidestep those very laws are the ones laying blame when companies actually take advantage of said laws.

I don't like it any more than anyone else, but the problem has existed for decades and only now they are trying to address it? Makes me think it took a debt crisis to make congress accountable enough to lay blame on the companies following laws passed by congress? Infinite loop.
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Old May 20, 2013, 05:03 PM   #9
Undecided
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Blame the game not the player. It amazes me that the politicians setup these various structures and then are shocked when people adapt their behavior to maximize their benefit. GET RID OF THE CORPORSTE TAX AND TAX ALL SOURCES OF INCOME AT THE SAME RATE. We have the highest corporate tax in the world. Just lowering it to be on par with the rest of the world would suffice.

Last edited by Undecided; May 20, 2013 at 06:25 PM.
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Old May 20, 2013, 05:03 PM   #10
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Originally Posted by applesith View Post
Doesn't the IRS check for these kinds of things when companies file every year? Considering how money hungry the government is, you'd expect them to pay closer attention to large international public companies such as Apple.
Yes, the IRS is doing a real bang-up job these days...
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Old May 20, 2013, 05:04 PM   #11
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We all gotta pay taxes. If Apple doesn't want to pay them to the Feds, then maybe they should setup shop next door to Foxconn and not in Cupertino.
And people wonder why jobs leave the US...
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Old May 20, 2013, 05:05 PM   #12
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To be fair, I didn't pay billions of dollars in federal taxes either.

It's easy to conclude that corporations are cheating the rest of us taxpayers by using all kinds of loopholes, but perhaps they are doing their job when they use whatever legal methods best serve their shareholders.

On the other hand, what's legal seems to depend on IRS rulings and obscure language in the tax code, not on clear-cut distinctions between what's allowed and what's disallowed. Add in the complications of taxes for a multinational company and it's hard for any of us to second guess what the accountants do and what the auditors conclude about it!
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Old May 20, 2013, 05:06 PM   #13
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Note to senators: Do your job first. Close the loopholes that Apple and the others are LEGALLY using to their advantage. Until then, you haven't earned the right to whine and moan.
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Old May 20, 2013, 05:06 PM   #14
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Originally Posted by RBMaraman View Post
Meet Apple's new CEO: Tim Crook.

Seriously, there are really two major issues here: The US tax code is in need of a serious overhaul to close loopholes and align practices, and Apple's practices need to be further investigated globally for any potential illegal activities. Yes, Apple appears to have broken no laws here, while doing an excellent job of showing how greedy, unethical and dishonest a company can be and still be loved by the consumer.
If I were you, I wouldn't be wasting my precious time on a website focusing on a company I hate/disrespect so much... I am sure that you don't own a single apple product since you view apple in such low light, no one can be such a hypocrite... Surely...!!
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Old May 20, 2013, 05:06 PM   #15
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So Obama and the U.S government are so broke, have spent all of our tax dollars, don't like the sequester, and can't wrap their heads around the idea of cutbacks rather than increased spending, and have somehow come up with the brainchild that their easy out solution is to target the one company with the largest cash reserves in an effort to win their own Powerball. Sadly enough even if they charge Apple with tax evasion and force them to pay these "billions" they owe, they'll be broke again in no time cause all Obama wants to do is spend spend spend!!
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Old May 20, 2013, 05:07 PM   #16
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The IRS has loopholes in their system, then uses tax payer money in going after the companies that use those loopholes. How about fixing those loopholes?

Ban lobbyists while we're at it.
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Old May 20, 2013, 05:08 PM   #17
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And people wonder why jobs leave the US...
Don't get me wrong, I blame the strict and unfair tax laws setup here in the States, but at the same time, if I gotta pay my fair share of taxes, it's only right that big time corporations do the same.
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Old May 20, 2013, 05:08 PM   #18
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Note to senators: Do your job first. Close the loopholes that Apple and the others are LEGALLY using to their advantage. Until then, you haven't earned the right to whine and moan.
Unfortunately that will never happen because corporate america has congress in their back pockets.
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Old May 20, 2013, 05:09 PM   #19
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Don't get me wrong, I blame the strict and unfair tax laws setup here in the States, but at the same time, if I gotta pay my fair share of taxes, it's only right that big time corporations do the same.
How much more is fair? $5B? $10B? $100B?
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Old May 20, 2013, 05:09 PM   #20
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Unfortunately that will never happen because corporate america has congress in their back pockets.
Yup. That's where it all starts.
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Old May 20, 2013, 05:10 PM   #21
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You guys are freak'n idiots thinking apple should pay more. WHY?! These politicians, either side I don't care, don't know crap. They don't know how to run this country, so they go on a witch hunt to make apple look horrible. Tax havens... how? As far as I've seen in Apple's reports is that tens of billions of dollars are held overseas in the countries that those items were BOUGHT in. They've already PAID those countries taxes. Why the F should they have to pay AGAIN? Just to have the money in the US so the greedy government can double dip?

Maybe ppl need to get their head out their arses and realize that the society we live in.. it's called a GLOBAL economy. Borders don't matter anymore in exchange of products. Stop living like it's 1950.

So for all those saying apple should pay their fair share... what is that? Is 6 Billion not enough? that's 1/40 of all corporate taxes collected. All money held off seas is held in the places that the items were bought.

No "gimmicks" except on the politicians side trying to score constituent points.
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Old May 20, 2013, 05:10 PM   #22
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How much more is fair? $5B? $10B? $100B?
Whatever their tax percentage rate is. Sorry, I'm not Apple's accountant.
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Old May 20, 2013, 05:11 PM   #23
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It's funny how few people get the irony that these obnoxious senators are beating up on Apple for following the tax laws they themselves wrote.

If the obnoxious trolls Carl Levin and John McCain don't like the way Apple structures their business, all they have to do is pick up a pen.
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Old May 20, 2013, 05:11 PM   #24
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The problem is that you cannot bitch at a company for doing its job to follow the tax codes to the fullest to remain competitive against all companies and to raise profits at all costs. If the tax codes allows it legally, then don't bitch about companies using it to the fullest.

You want companies to follow the laws, fix it first so that they cannot get around it. Very simple concept to follow, even for the US congress.

Quote:
"A company that found remarkable success by harnessing American ingenuity and the opportunities afforded by the U.S. economy should not be shifting its profits overseas to avoid the payment of U.S. tax, purposefully depriving the American people of revenue. It is important to understand Apple’s byzantine tax structure so that we can effectively close the loopholes utilized by many U.S. multinational companies, particularly in this era of sequestration.”
What the...? Apple is a global company, it's not solely an American company, it is not entitled to bring in profits in US only.

Apple didn't shift their profits, they made the profits there in the first place.

In the last quarter, over 65% of Apple's revenue are from international markets, US is not entitled to any taxes on those revenue until the company actually brings it in US.

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Sen. McCain added: "I have long advocated for modernizing our broken and uncompetitive tax code, but that cannot and must not be an excuse for turning a blind eye to the highly questionable tax strategies that corporations like Apple use to avoid paying taxes in America. The proper place for the bulk of Apple’s creative energy ought to go into its innovative products and services, not in its tax department."
BS, if those questionable tax strategies are legal, then make it illegal and go after all companies doing it.

So, they have admitted the problems are within their tax codes. How about fixing the US tax code first and then go after all companies?

Do not single out one company for doing and staying competitive with other tech companies who are doing exactly what Apple is doing. Google, Samsung, everybody are doing the same thing.
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Old May 20, 2013, 05:11 PM   #25
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Doesn't the IRS check for these kinds of things when companies file every year? Considering how money hungry the government is, you'd expect them to pay closer attention to large international public companies such as Apple.
Of course they do but Apple broke no laws.
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