Did Apple Cheat the U.S. Out of Billions of Dollars?
Apple (NASDAQ:AAPL) defended itself by saying it employs half a million Americans, pays billions in taxes, and donates to charities, after a news report said the company made up elaborate strategies to avoid paying high taxes.
A New York Times report titled “How Apple Sidesteps Billions in Taxes” reported that the company set up an office in Reno, Nevada, with the sole purpose of collecting and investing its profits. Apple’s headquarters are in Cupertino, California, where the corporate tax rate is 8.84 percent. Nevada has a corporate tax of zero percent. The report added that Apple used a similar strategy internationally by setting up offices in Ireland, the Netherlands, Luxembourg, and the British Virgin Islands — all low-tax countries.
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That saved Apple almost $2.4 billion last year in federal taxes, according to the report. It paid a total of $3.3 billion around the world on reported profits of $34.2 billion at a tax rate of 9.8 percent.
On Tuesday, the company reacted by releasing a statement saying it was among the top income tax payers in the country and that it conducted all business with high ethical standards while complying with laws and accounting rules. “Apple also pays an enormous amount of taxes which help our local, state and federal governments,” the statement said. “In the first half of fiscal year 2012 our U.S. operations have generated almost $5 billion in federal and state income taxes, including income taxes withheld on employee stock gains, making us among the top payers of U.S. income tax.”
Apple’s public filings say that about 70 percent of its profits come overseas, where taxes are generally lower, but the company said it was also adding thousands of jobs domestically.
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“Over the past several years, we have created an incredible number of jobs in the United States. The vast majority of our global work force remains in the U.S., with more than 47,000 full-time employees in all 50 states. By focusing on innovation, we’ve created entirely new products and industries, and more than 500,000 jobs for U.S. workers — from the people who create components for our products to the people who deliver them to our customers,” the statement said.
It said its international growth was creating jobs in the U.S. as most product parts were manufactured in at home and then exported around the world. The statement added that the company had contributed to a number of charitable causes without seeking publicity because its focus was on doing the right thing.