Apple is history’s worst criminal for paying 1.9 percent on international earnings

Associated Press, via Washington Post:

Apple Inc. paid an income tax rate of only 1.9 percent on its earnings outside the U.S. in its latest fiscal year, a regulatory filing by the company shows.

We’ve heard a lot about income tax this year in the U.S. presidential race because of Mitt Romney’s tax returns (and lack thereof), and I guess this sensationalistic piece from the AP is trying to tap into some of that – Apple paid a scant 1.9 percent on earnings outside the United States. The article conveniently drops the fact that the domestic corporate tax rate is 35 percent to give readers some sense of outrage, painting Apple as corporate tax dodger by inference.

Look, the reason Apple and just about every other international corporation that does business in the US, Mitt Romney and other people with decent tax accountants on the payroll pay less than the rest of us is because they can, thanks to a hopelessly screwed up tax code that’s rife with loopholes.



  • Vamsmack

    One more point aside from the fact they can do this. Apple has a responsibility to their shareholders to do this. If they didn’t and paid closer to the 35% then they’d be called out as being the biggest bunch of suckers on the planet for pissing away their money on tax they’re not legally required to pay due to those loopholes whilst pissing off those people with a financial interest in Apple.

    • http://www.nithin.net Nithin

      Amen to that!

    • http://digitizedsociety.tumblr.com/ DigitizedSociety

      Not to mention could you imagine the financial industries outrage? They have a stroke if Apple only grows by 50% in a quarter.

  • http://twitter.com/lordwhaleman Johan Hansén

    I’m no expert on this (in fact I’m a biologist, so that’s about as far from an economist you can come), but are they trying to spin this as a bad thing that Apple actually pays US tax at all for profit made by their non-US subsidiaries? From what I understand Apple Distribution International pays tax to Ireland and iTunes S.à.r.l. to Luxembourg and if they didn’t have European subsidiaries they would end up on the wrong side of EU and have extreme fees added to everything.

  • JDSoCal

    Uh, Jim, important quote:

    “Like other big companies, Apple leaves cash overseas. If it brought it home to the U.S., it would have to pay U.S. corporate taxes on the money”

    THE MONEY ISN’T REPATRIATED. IF APPLE BRINGS IT BACK, THEY WILL PAY TAXES ON IT. A SECOND TIME.

    Not a loophole.

    • hrpanjwani

      But its unlikely that they will ever need to bring anything but a very small fraction of it back from a financial point of view and I dont think there is any mandatory time frame to bring all of it back legally, like money earned in 2010 must be brought back by 2020. So they will spend it where they earn it; to pay wages, buy supplies, run local offices etc.

      The bigger issue here is that at present globalization is half assed. We need a solution like Keyne’s Bancor to fix the fundamentals of a global economy. http://en.wikipedia.org/wiki/Bancor

      I think that Keyne came up with an amazing inclusive solution but US imperial ambitions of the time knocked his idea out of running. The US could never form an empire as such, instead what we have are effectively fiefdoms in which many of the larger players are US citizens/institutions.

      Can Keynes solution work today? Yup, but the battle will be much more uphill now.

  • JS

    RANT <This was published because it’s about Apple. The content is irrelevant. Articles about Apple draw page clicks. If you read the financial websites they all publish multiple articles a day about Apple on their homepage. Websites like thestreet.com often have contradictory articles on the homepage at the same time. Neither truth or facts matter. News organizations long ago gave of the search for fact and truth in favor of page clicks.> END OF RANT

  • JS

    RANT “This was published because it’s about Apple. The content is irrelevant. Articles about Apple draw page clicks. If you read the financial websites they all publish multiple articles a day about Apple on their homepage. Websites like thestreet.com often have contradictory articles on the homepage at the same time. Neither truth or facts matter. News organizations long ago gave of the search for fact and truth in favor of page clicks.” END OF RANT

  • Boo

    The economic illiteracy of the AP article (which is pretty typical for them) is stunning.

    Shareholders, many of them retirement funds, pay taxes separately on any gains and dividends. Also the more products Apple sells the more tax revenue that is generated in sales tax. Different tax but it ends up in the same coffers. Also, the more people Apple employs directly or the jobs generated by companies that sell their products generates income taxes.

    This narrow focus on domestic corporate tax rate by some misses the enormous tax revenue created by corporations like Apple and the wealthy. They don’t hoard their assets in a vault like Scrooge McDuck to swim in, they are invested in a multitude of ways.

  • Bob

    Every person and company has a social responsibility to pay taxes so that we can have nice things. (Hospitals, police, roads, Internet etc)

    Apple has a responsibility to pay a fair and reasonable amount of tax in each county they operate.

    Unfortunately its unlikely to happen.

  • Tut

    What would Apple do if forced by a new law to pay taxes in the US for money earned abroad? Do like so many other companies have done before: move to some tax haven. R&D can still remain in the US, but taxes would still only be on the earnings made in the US, not those made elsewhere.