Sneaky Tax Tactics Save Apple Billions of Dollars

Illustration for article titled Sneaky Tax Tactics Save Apple Billions of Dollars

The NY Times is reporting that by routing huge amounts of income through low-tax places like Nevada, Ireland, Luxembourg, and the British Virgin Islands, Apple probably avoided paying $2.4 billion dollars in U.S. taxes last year alone. That's billion, with a B.

The concept is pretty simple: since digital goods are intangible (unlike refrigerators) they can easily be sold from anywhere. Apple is flush with digital goods, from software to music. So, instead of selling everything from California—where Apple is based, and where there's a 8.84 percent corporate tax rate—they sell it from somewhere where there's little to no tax, like, say Reno. The offices they set up in these locations are often not much bigger than a hole in the wall, because nothing reeeally needs to happen there. They just need an address, primarily.

Apple is far from the only tech company to do this, they've just brought it to a level of high art. The Times goes on to report that 71 technology companies in the Standard & Poor's 500-stock index pay one-third less in global taxes (on average) than most of the other S&P companies. It's a fascinating report, and one that might elicit some introspection regarding how our economy works. Apple is a publicly held company and has an obligation to its share-holders to be as profitable as possible. But Apple is also headquartered in a state (and a country) that could really use those extra tax revenues right now. I'm just saying, for all they money they're saving, their new MacBook Pros had better be awesome. [NY Times]

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DISCUSSION

I just spent some time going through these threads and commenting on ones where people suggested that Apple somehow "owes" this money to society or [insert specific class or group].

And that's what our politicians want us to do. They want republicans and democrats to go at it, debating over what Apple should do with its amazing wealth, all while we ignore the theft that happens everyday from the American people by our own representatives via special interest, pork barrel spending, insider trading, and so on.

Here's the deal: A flat spending tax ends this. It just ends it. Abolish the income tax, and tax money when it's spent. It simplifies saving. It means the "rich" people will pay more in tax if they choose to spend lavishly. It means that illegal aliens (and anyone else working under the table) will pay tax. It means that drug dealers will pay tax. It's flat and so it is fair.

Most democrats and republicans that I have run this by have agreed. So - why isn't it so popular in Washington? Because it'd be one less thing to keep us busy fighting about.