A new congressional report announced that Apple has avoided paying tens of billions of dollars in taxes by creating subsidiaries in other countries that are not required to pay taxes in the U.S. The complex web of offshore companies was so large it spread across multiple continents and even tookthe analysts off-guard, according to the report.
It is reported that some of these offshore companies had no actual employees and were run by senior-level managers at Apple’s headquarters in Cupertino, California. By keeping these companies overseas, Apple was able to keep profits exempt from standard bookkeeping practices and avoided paying billions in taxes. In most cases, the offshore companies are not even required to file tax returns.
According to a quote from the New York Times from Senator Carl Levin (D-Michigan), chairman of the Sentate Permanent Subcommittee on Investigations, “Apple wasn’t satisfied with shifting its profits to a low-tax offshore tax haven. Apple sought the holy grail of tax avoidance. It has created offshore entities holding tens of billions of dollars while claiming to be tax resident nowhere.” See the full video here.
Investigators have not accused Apple of breaking any laws in the United States, but have stated that the companies large-scale tax avoidance efforts have resulted in at least $74 billion of tax-exempt dollars between 2009 and 2012, making it one of the largest tax avoiders in history. Clearly, the loopholes in our tax system are larger than ever for businesses, and these actions continue to spark outrage around the globe. Corporate tax avoidance strategies force governments to rely on household income taxes and payroll taxes; in 2011 individual taxes collected were $1.1 trillion dollars, while corporate taxes were just $181 billion illustrating the true effects of offshore tax havens on the economy.