Economic News, Entertainment

Apple Legally Shelters Billions of Dollars Overseas

Apple is a huge company.  While they have been around for nearly four decades; it is only since about the year 2000 that the company has been popular.  They are innovators, creating devices and gadgets that are cutting edge and stylistically appealing.  Their products are expensive, yet through clever marketing and well performing devices they hold a massive share of the market.  These expensive products are bringing in a lot of wealth for Apple.  Something that they have been holding overseas in order to avoid US corporate taxes.

Apple has set up a series of sub-companies that do business in and outside of the US.  For the majority of their work outside of the Americas, however, they have a company that is incorporated in Ireland.  This particular company earned $30 Billion from 2009 until 2012.  However, they managed to pay nothing in corporate income taxes.  How is this even possible?

The United States requires that taxes be paid on money earned by companies incorporated here in the States.  However, this company is incorporated in Ireland.  Ireland requires that taxes be paid on money earned by companies that are operated and managed in Ireland.  However, this company is operated and managed from the US.  Apple has managed to find a way to comply with the laws of both countries, and save themselves billions of dollars in the process.

Some might argue that it is just a sleazy tactic employed by Apple in order to save some money.  However, nearly all the large companies operate this way.  They make so much money that they are able to hire the best lawyers and incorporate in areas where the taxes are much lower than in the US.  If these loopholes didn’t exist, many of these companies would simply leave the US and cease to do business here.  This would mean even less tax revenue coming in from them.

Many politicians are annoyed by the fact that Apple can effectively shelter money and not pay any taxes on it.  So much that they are working on a tax reform that will not allow this sort of sheltering.  However, this reform is not without its own set of problems.

The system has many loopholes that can be exploited.  Apple is just one company that has managed to hide billions of dollars in revenue over the past few years.  However, even though they did not pay taxes on their full profits, they still paid $6 Billion in taxes in 2012 alone.  If the system is overhauled so that the company would have to pay more in taxes (they already are paying about 33%) they may take their headquarters somewhere like Albania, where the top tax rate is a mere 10%