Tim Cook’s testimony before the U.S. Senate Permanent Subcommittee on Investigation has given much publicity to Apple ’s ingenuity at avoiding taxes. Although Apple is in the limelight, it is not alone in using complex schemes to dodge taxes. The crème de la crème of American corporations including Google , Microsoft , Cisco, and IBM use similar schemes to dodge taxes.
At least in theory, the U.S. tax system is supposed to have an element of fairness through its progressiveness. The rich are supposed to pay a greater share than the poor. Certain values that our society holds dear are encouraged. Americans are very charitable people and often freely open their wallets to help those in need; the tax code provides for charitable deduction.
Traditionally, home ownership has been encouraged in America. The concept is that homeowners tend to have a higher stake in their community and thus become better citizens; the tax code provides for a home mortgage deduction.
Apple’s tax dodge scheme is perfectly legal. Apple would not be doing its job if it did not take advantage of the loopholes provided by law. It is comical to see the Congress now making serious allegations against Apple when Congress itself designed the tax code riddled with loopholes.
I just took a look at Apple’s financial statements. A cursory look shows that since 2008 Apple has generated about $149 billion in operating profits. Of these profits, Apple paid about $21 billion in taxes. This amounts to an effective tax rate of about 14%. This number is meant to be a qualitative number and not a quantitative number…Read more at Forbes
