Apple Inc. is promising to appeal the European Commission’s decision that it owes $14.5 billion in European taxes because it says the company’s current effective tax rate of 0.00045 percent is “fair.”
That infinitesimal European tax rate saves the company from having to pay a U.S. tax bill of $360,000 for every $1 million in profits.
Apple’s CEO, Tim Cook, called the European tax bill “maddening” and expressed confidence that it would be overturned. In an interview with the Irish broadcaster RTE, Mr. Cook said the company paid its “fair” share of taxes in Ireland, the U.S. and everywhere, according to Bloomberg.
Conservatives hate the idea of corporate taxes because customers end up paying the taxes as they’re added to the price of the purchased goods.
But notoriously liberal Silicon Valley tech companies, such as Apple, seem to love corporate taxes — especially since they do not actually pay them.
As Bill Clinton first took office in 1993, Apple was one of the first major Silicon Valley tech firms to pioneer the infamous “Double Irish Flip.” The tax-avoidance scheme involves a combination of an Irish and a Dutch subsidiary in the Caribbean to shift profits to low, and then on virtually “no tax” jurisdictions.
A more sophisticated arrangement became known as the “Double Irish with a Dutch Sandwich.” It goes a step further by sending profits first through one Irish company, then to a Dutch Caribbean tax-haven shell and finally back to a second Irish company. The net effect of moving the cash is eventually a microscopic corporate tax rate.
The Treasury Departments of the European Union and the United States Treasury have been fully aware of tax strategies employed by Apple, Facebook, Google, and most other major Silicon Valley tech companies’ for decades.
Although the exact figures for how much taxes Apple Inc. shelter in Ireland are still being held secret, the U.S. Senate Permanent Subcommittee on Investigations revealed that an Apple subsidiary in Ireland paid just $10 million in taxes in 2011 on $22 billion in earnings.
A friendly IRS which allows Apple to use these tax strategies to drop its tax rate down to 0.05 percent tax rate does help to explain why the company has a $231.5 billion cash hoard.
According to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, Apple’s cash alone would make it the equivalent of the 11th largest capitalized company in the S&P 500.
Tim Cook will mark his five-year anniversary as the CEO of Apple by hosting a Democrat campaign fundraiser in California for Hillary Clinton’s. Those invited have reportedly been asked to contribute as much as $50,000.
Cook is a leader in the growing list of Silicon Valley tech executives working to raise big money to help Clinton beat Donald Trump, who has repeatedly attacked tech companies and opposes the industry on key issues like immigration and trade.
Even Laurene Powell Jobs, widow of Apple founder Steve Jobs, Salesforce CEO Marc Benioff, Google CFO Ruth Porat, Zynga Chairman Mark Pincus, Napster founder Sean Parker, SolarCity CEO, Lyndon Rive and LinkedIn founder Reid Hoffman have all contributed or raised at least $100,000 for Hillary Clinton according to a lengthy list of top fundraisers that are dubbed “Hillblazers” by her campaign website.
Sheila Krumholz, executive director at the Center for Responsive Politics, which tracks money in politics comments that “Clinton has raised far more than Trump from the tech industry — around $4 million, compared to just a tiny fraction of that for Trump.” That fraction amounted to only $200,000.