John Paczkowski

Recent Posts by John Paczkowski

Apple Says It Abides by Tax Laws, Loopholes and All

tim_cook3

Asa Mathat / AllThingsD.com

Apple, like all multinational corporations, works hard to minimize its tax liability, but it is in full compliance with U.S. tax law and the tax laws in nations where its subsidiaries operate.

That was the gist of Apple CEO Tim Cook’s testimony before the U.S. Senate’s Permanent Subcommittee on Investigations Tuesday: Apple is a good corporate citizen that pays all taxes due.

“We pay all the taxes we owe. Every single dollar,” Cook said during a Tuesday morning hearing. “We not only comply with the laws but we comply with the spirit of the laws. We don’t depend on tax gimmicks.”

No gimmicks, just standard U.S. tax code which, according to the Senate panel’s investigation, allowed Apple to pay little or no corporate taxes on at least $74 billion in profits over the past four years.

And to be clear, that’s not illegal. Indeed, the Senate investigation into Apple’s practices found no evidence that the company did anything but comply with tax law. This, despite the fact that investigators also found that three of Apple’s subsidiaries in Ireland claim to have no responsibility to pay income taxes to any country, and one of them that reported $30 billion in income over the past four years and didn’t file an income tax return for any of it.

Extraordinary, right? But those Irish subsidiaries? They’re authorized by U.S. law. They comply with all U.S. tax regulations. And they’re audited by the IRS. Which says far more about our flawed corporate tax system than Apple’s alleged abuse of it. Given the opportunity to shelter overseas profits from U.S. taxes, what company wouldn’t take it?

As Martin Sullivan, chief economist at nonprofit Tax Analysts, told the Washington Post, “[Apple] would be stupid not to do it. It’s the loopholes in the U.S. tax laws that makes this all possible. All their competitors are doing it.”

If that’s the case, maybe the Senate’s time is better spent overhauling the U.S. tax policy that has allowed Apple and other companies to legally minimize their tax liability in the first place. If what Apple was called before the Senate for doing isn’t illegal, isn’t the big policy question today simply whether it should be allowed to do it in the future?


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