Econintersect: The U.S. Senate permanent subcommittee on investigations released a report Monday 
evening 20 May 2013 charging Apple of creating what are essentially shell entities in Ireland to shelter (by special arragement with the Irish government) as much as $74 billion in income from taxation by the U.S. or any other government. Perhaps even $138 billion of income is involved; Econintersect is having trouble adding up all the numbers at this point. One of the techniques that was exercized involved both the use of U.S. tax law loopholes and by claiming they “are not tax residents of any jurisdiction”, according to the report. The committee is headed by Carl Levin (D. MI) and John McCain (R, AZ). The committee will commence hearings on the report today, Tuesday 21 March 2013.
The Washington Post has a quote from Sen. McCain:
“Apple claims to be the largest U.S. corporate taxpayer, but by sheer size and scale it is also among America’s largest tax avoiders,” McCain said.
Here is what the Financial Times had to say:
“Apple sought the Holy Grail of tax avoidance,” said Carl Levin, the Democrat who chairs the panel and will lead the hearing. “It has created offshore entities holding tens of billions of dollars, while claiming to be tax resident nowhere.”
Apple is not accused in the Senate report of breaking the law, but the committee does not necessarily dismiss any fault for the company:
“This is the definition of a tax loophole, technically something which may be in compliance with the law but violates the spirit of the law,” Mr Levin said.
…
“I have never seen anything like this, we don’t know of anyone who has seen anything like this,” Mr Levin said.
Apple does not appear to be alone in the pursuit of various schemes to avoid U.S. taxes. Last fall the subcommittee said Hewlett-Packard and Microsoft employed similar offshore schemes that enabled them to avoid paying billions of dollars in U.S. taxes.
Editorial note: Well, if these are technically legal but unacceptable situations doesn’t it seem the thing to do is to clean up the law? Oh, I’m forgetting – thats not the sort of thing this Congress works on.
Sources:
- Offshore Profit Shifting and the U.S. Tax Code – Part 2 (Apple Inc.) (Report, Permanent Subcommittee on Investigations, U.S. Senate, 21 May 2013)
- Apple avoids taxes with ‘complex web’ of offshore entities, Senate inquiry finds (Jia Lynn Yang, The Washington Post, 20 May 2013)
- US senators accuse Apple of avoiding billions in taxes (James Politi and Richard Waters, Financial Times, 20 May 2013)
