In a Wall Street Journal article by Danny Yadron, Kate Linebaugh and Jessica Lessin, they tackle the fact that Apple, Inc didn't pay one penny on taxes on $74 billion! In an elaborate shell game, the corporation used a series of entities to avoid paying taxes in any country. The failure to pay taxes on that amount couldcost Americans a total of $25 billion!
To put that in perspective, the entire Head Start program could be paid with those extra taxes with billions to spare.
The Journal reports:
Apple Inc. paid no corporate income tax to any national government on tens of billions of dollars in overseas income over the past four years, Senate investigators found, a revelation that fuels the debate over whether the U.S. tax code needs an overhaul.
Apple paid little to no corporate taxes over the last four years, a Senate report found, a revelation that fuels the debate over whether the U.S. tax code needs an overhaul.
The disclosure follows a lengthy examination of the technology giant's tax practices by the U.S. Senate's Permanent Subcommittee on Investigations, which is expected to air its findings at a hearing on Tuesday. Apple Chief Executive Tim Cook is preparing to testify at the hearing, and is expected to propose changes to a tax code that provides American companies strong incentives to keep overseas earnings bottled up at foreign subsidiaries.
Apple used technicalities in Irish and American tax law to pay little or no corporate taxes on at least $74 billion over the past four years, according to the Senate panel's findings. The investigation found no evidence that Apple did anything illegal. Aides to the subcommittee said they have never seen a company use a subsidiary that didn't owe corporate income taxes to any country.
The Senate panel's new report focuses on Apple units in Cork, Ireland, where Apple has long based its operations for Europe, the Middle East, India, Africa, Asia and the Pacific. The units are beyond the reach of the Internal Revenue Service, which counts corporations as American if they are incorporated in the U.S.
But Irish tax law only considers companies residents of the small European country if they are managed and controlled there, and Apple manages them from the U.S.
The result: Apple pays little or no taxes to either country on much of its revenue earned outside the U.S., according to the report.
One of the units, Apple Operations International, hasn't filed a corporate tax return anywhere in the past five years, the Senate panel found. The unit is the main holding company for Apple's business outside of the Americas.
Meanwhile, the U.S. is undergoing a debate about the earnings that U.S. companies are keeping overseas. The profit at foreign subsidiaries are out of the reach of the IRS, and largely unusable to their U.S. operations.
The sums amount to an estimated $1.9 trillion, according to an analysis by Audit Analytics, which reviewed filings from more than 1,000 companies in the Russell 3000 Index that report the figure.