Apple's overseas hoard unfair to taxpayers

The tech giant's cash-management strategy -- and it's hardly alone in this approach -- benefits the company, not hardworking Americans.

By Jonathan Berr May 21, 2013 1:51PM
The Apple Inc. logo is displayed on the back of the new MacBook Pro David Paul Morris/Bloomberg via Getty ImagesApple's (AAPL) $102 billion in cash stored overseas is becoming a big problem for CEO Tim Cook, who was testifying before Congress on Tuesday about this issue. How big? That mountain of money is larger than the GDP of many countries, and the U.S. government can't get its hands on the cash even though most of it was earned here.

In fact, as Citizens for Tax Justice noted, that money is out of reach of the taxing authorities of any government. As leader of the iPhone and iPad maker, Cook insists his company hasn't done anything wrong. Sadly for American taxpayers, he's right.

As the nonprofit tax organization notes on its website: "Under current law, corporations can indefinitely defer paying U.S. income taxes on their offshore profits."

Companies disclose in their financial reports how much in taxes they would have paid if there were no deferral. In Apple's case, it's $35 billion. The company notes that it does pay plenty of taxes -- about $6 billion in 2012. Still, by shifting its cash around the globe, Apple kept at least $74 billion out of the IRS' reach between 2009 and 2012, according to The New York Times.

Speaking before the U.S. Senate, Cook argued that Apple doesn't depend on "tax gimmicks."

"We pay all the taxes we owe -- every single dollar," the Los Angeles Times quoted him as saying. "We not only comply with the laws, but we comply with the spirit of the laws."

Other companies, such as Google (GOOG) and General Electric (GE), have made similar arguments. These giant corporations use strategies such as "Double Irish" and "Dutch Sandwich" that sound like they could be titles for 1940s pulp detective novels.

Cook and other business executives have long argued that the U.S. tax code is too cumbersome and that business tax rates are too high. Add another complaint to that list: unfair to hardworking, taxpaying Americans.

Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.

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May 21, 2013 3:33PM
Unfair, this reporter sounds like some kind of child on the playground screaming its unfair that Apple doesn't share its toys.  When has the US tax code ever been fair?  The real complaint shouldn't be that taxes are unfair to anyone, but how much longer the American people and businesses are going to put up with this bureaucratic power grab the politicians call the tax law.  The only people and institutions that benefit from current tax laws are the politicians, bureaucrats, and the government as a whole.
May 21, 2013 3:41PM

If you were an Apple stockholder and found out that the company was paying more in taxes than it legally was required to, you'd not only be upset, you could hold Apple management liable for those losses.


This is why FairTax makes a boatload of sense, there's no incentive to keep the money offshore. Our government should figure out a way to encourage ALL companies to bring the money onshore, return it to the owners as dividends, pay off debt, invest in innovative new products.....


Our government has grown bloated, corrupt (IRS and AP scandals), and addicted to confiscation of wealth to redistribute to people that did nothing to earn it so that one party of another can remain in power. Look at gas taxes, the government encourages fuel efficiency until it diminishes tax revenues, then it looks at taxing us by the mile..... Time to take politics and politicians out of our tax policy, FairTax does that and has the side effect of eliminating the IRS and shrinking government while still allowing it to maintain essential services.

May 21, 2013 4:09PM
Why are we criticizing Apple instead of congress?  Congress doesn't like that Apple used a stupid law to avoid taxes.  Where did the stupid law come from? 
May 21, 2013 2:34PM
Hey, Apple didn't break a single law.  It is paying what it owes.

Now of course Apple must protect shareholders.   It is not the fault of shareholders that the USA has the highest corporate taxes in the world.  Our profits are not the property of the government.  Leave the money that was earned stay overseas.  Why pay any to the government?  

We should move out of the high tax environment and stop supporting the leech class here.  Let these socialist leeches pay their own way.

Maybe Apple should just exit the USA and move overseas, much like taxpayers in Detroit fled the leeches there.  Of the way people are fleeing Illinois and New York, etc...

But Apple should do more TAX avoidance!  Not giving our government, shareholder money should be their top priority!
May 21, 2013 2:43PM
Apple owes it's profits to its shareholders. It earned the money abroad. It should be used abroad. 

The US government is a broken-down mule. We needed a doctor, and got a butcher. People wake up- it is the political class, not business that is fooling you. 
 Apple, for better or worse, is doing what is in their best interests. What did Obama do for them? What does Reid, Pelosi, and Boehner done FOR them? 

More like TO them!
May 21, 2013 3:52PM
Seems that Sen. Levine (Mich.) was the biggest critic of Apple at the hearings. With guys like Levine I just can't understand why Michigan is an economic wasteland????
May 21, 2013 4:01PM
Apple complied with all laws.  The game is that the laws are passed and established and american citizens, including corporate citizens, seek out, find and use tax avoidance strategies.  It is kind of funny that the government doesn't like being beaten at its on game.
May 21, 2013 11:40PM
Only in America would a CEO be called before Congress to explain why he followed the law.
May 21, 2013 4:07PM
If you were allowed by law terms that will reduce your taxes, wouldn't you take advantage of them?  Don't you take the standard or itemized deduction?  Do you look up the tax due in the tax table and pay only the amount due or do you make an additional voluntary contribution in addtion to the amount that you are legally obliged to pay?  Get off Apple's case for utilizing legally recognized and accepted effective tax reduction strategies.
May 21, 2013 5:58PM
No matter how much they take - it seems the Government isn't satisfied, and won't stop demanding more from taxpaying American citizens, while they continue to receive high pay, raises, bonuses, and Cadillac benefits, for doing nothing but trying to make everyone else's lives more miserable. Their actions do nothing but discourage business and encourage welfare. Time to boot them all and start fresh.   
May 21, 2013 5:23PM
no, what is unfair is politicians writting rules and then blaming everybody else when there is a problem. what we need is tax laws that are not intended to help politicians get reelected.
May 21, 2013 3:37PM
Life and taxes are not fair. Get over it.
May 22, 2013 7:44AM

The revenue the government needs to provide legitimate constitutional services should be obtained primarily from a national sales tax instead of a tax on wages. All would pay based on consumption, the more you spend the more you pay. The more luxury you surround yourself with, the more you pay. Your choice. A national sales tax system would capture money spent by criminals and by illegal aliens who currently pay near zero in taxes. There would of course need to be exemptions: Cars (already have a federal excise tax) Primary Residence/Rental Properties (vacation homes would be subject to tax/rental profit would be taxed) Fresh Food (Preprocessed foods and prepared meals would be taxed – only fresh/fresh frozen/canned goods would be exempt) Insurance Premiums, Health Care & Certified Education.

May 21, 2013 4:43PM
Apple broke no laws - If we do not like it and it makes us angry we need to demand the tax laws rewritten. Otherwise stop complaining about it.
May 21, 2013 4:19PM

> Jonathan Berr does not own shares of the listed stocks.


If he did own shares of AAPL, he would want the company to protect his money from the greedy federal government.  In fact, he would be very unhappy if they over-paid their taxes.


> ...unfair to hardworking, taxpaying Americans.


Does Mr. Berr hand out 20 dollar bills to strangers on the streets without claiming taxable contributions?  No?!?  Then isn't that just as unfair as Apple protecting shareholders money from the IRS?

May 21, 2013 7:39PM
Everyone since the IRS was devised and actually not being a legal entity, have complained about the tax codes, but has anybody done anything about them.  It goes on and on and the companies are just taking advantage of the tax laws.  I wouldn't give our government a dime, if I could find a way not to.  They are the most despicable, corrupt organization imaginable since the O'Bummer took office.
May 22, 2013 10:51AM

Look if people who are INCRECDIBLY STUPID try to pass laws then those laws will be used by people who are NOT incredibly stupid to their benefit.


We need a congressional hearing to figure that out ? .?  . ?


Why doesn't congress have a hearing to try and determine why INCREDIBLY STUPID people are allowed to serve in  to congress to pass laws.


May 22, 2013 9:57AM
We have 77,000 pages of Federal Tax code.  Why do you suppose that is?   These are all the 'special interest' paybacks.  

The tax code should be limited to 10 pages maximum.   All special rewards and punishments should be removed from it.
May 21, 2013 4:12PM
We already PAY GE for doing business here. What a deal !
May 21, 2013 5:42PM
What is unfair to taxpayers are taxes.  The government should survive on donations and hard work like the citizens. 
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