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How Apple Avoids Billions in Taxes Worldwide

Posted on Apr 28, 2012
bfishadow (CC BY 2.0)

By putting an office in Nevada, where there is a zero percent corporate tax rate, Apple avoids paying the millions of dollars in taxes that would be levied in California, the home of its headquarters.

The company is set to make $41.4 billion this year, which would mean lots of revenue for the various countries where it does business if it didn’t exploit tax loopholes.

Without such loopholes, Apple’s U.S. federal tax bill would have been $2.4 billion higher last year, according to Treasury Department economist Martin A. Sullivan. In total, the company paid $3.3 billion in international taxes on profits of $34.2 billion. Wal-Mart paid $5.9 billion on profits of $24.4 billion.

Read The New York Times’ detailed report to get the story in full. —ARK

The New York Times:

Setting up an office in Reno is just one of many legal methods Apple uses to reduce its worldwide tax bill by billions of dollars each year. As it has in Nevada, Apple has created subsidiaries in low-tax places like Ireland, the Netherlands, Luxembourg and the British Virgin Islands — some little more than a letterbox or an anonymous office — that help cut the taxes it pays around the world.

Almost every major corporation tries to minimize its taxes, of course. For Apple, the savings are especially alluring because the company’s profits are so high. Wall Street analysts predict Apple could earn up to $41.4 billion in its current fiscal year — which would be a record for any American business.

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Samson's avatar

By Samson, May 1, 2012 at 7:31 am Link to this comment

The original idea of allowing corporations was that the
state had the right to revoke the corporate charter if
the corporation failed to be of benefit to the state. 
Claiming not to pay appropriate state taxes by doing
something like this would seem to be an example of why
they did that.

Yet another wise idea that was abandoned by politicians
and judges both paid off with corporate money.

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vector56's avatar

By vector56, April 29, 2012 at 6:20 pm Link to this comment

“My point is simple: if the wealthy, the corporations and the privileged want to pretend they are “true Americans” who have the most to lose (well don’t they?), then they need to pony up a bigger share of their wealth to defend, develop and invest in THIS COUNTRY and it’s citizens. “

Well put mrfreeze; but it runs a little deeper than what you have stated above. Consider who the US Military is really protecting? The people of the Middle East have no personal beef with you or me; they are attacking the Multinational Corporations BP, EXXON Mobile… who loot their natural resources and steal wealth from generations yet unborn!

Just as the United Fruit Company gave the people to the south hell, many of the Multinationals use the US Military to “Loot” natural Resources and “Guard” those assets once their are taken. These “Global Pimps” make Whores of us all. Most in the so-call third world want to fight those who stole their resources; we seem to take great pleasure putting ourselves between the Elite and the rightfully justified angry masses?

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mrfreeze's avatar

By mrfreeze, April 29, 2012 at 1:28 pm Link to this comment

yamispade - Simply put, you greatly overstate the effects “welfare recipients” who don’t deserve it have on a lack of funding for education. In fact, I’m sure if you did a little research you’d find that what all those regular folk (cheaters) don’t pay in taxes pales in comparison to what Apple, Microsoft, Boeing and the oil companies don’t pay in a couple of months due to all of their “welfare” benefits.

My point is simple: if the wealthy, the corporations and the privileged want to pretend they are “true Americans” who have the most to lose (well don’t they?), then they need to pony up a bigger share of their wealth to defend, develop and invest in THIS COUNTRY and it’s citizens.

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By steve, April 29, 2012 at 1:20 pm Link to this comment
(Unregistered commenter)

You know it would be irresponsible for the people who
run these companies to not exploit these loopholes for
their shareholders. Big corporations are very often
sociopathic in their behavior. There is no morality
there and none should be expected. These big companies
weren’t formed to pay taxes; they were formed to make
money for their owners. The failure here is on the
states and federal government to have a cohesive policy
to disallow these loopholes in the first place but
Instead we have collusion and graft on a unimaginable
scale. So Good luck with that

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By jpe, April 29, 2012 at 7:25 am Link to this comment
(Unregistered commenter)

@ Faith: DE, like most states, imposes a corporate
income tax rate on corps that do business in DE. 
Merely being incorporated in DE doesn’t mean one does
business in the state, though. 

Corps incorporate in DE not for tax purposes but
because of the excellent court system, which is
unparalleled by any other state.

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By kafantaris, April 29, 2012 at 7:23 am Link to this comment
(Unregistered commenter)

Greed feeds on greed, but those steeped in it are too self-absorbed to take such notice.
The states, therefore, should impose a minimum corporate tax against companies like Apple that have gotten too clever for our own good. If Apple does business in the United States, then it should pay a minimum state tax to be shared by all the state where it actually does business. And if Nevada does not want the tax, it should be shared by the states that do. Either way, the company pays an overall state minimum tax. This should discourage the bogus operation centers now set up in places like Reno.
And if Apple decides to pack up and go altogether to Ireland or the Netherlands, the states should deem such move to be an effort to skirt state tax laws—with stiff penalties ready to be imposed.
A corporate minimum tax is not a new idea in federal taxation. The states should find a way to implement it as well. Waiting for the free market to fix the problem is not only naive, but also foolish.

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By yamispade, April 28, 2012 at 11:59 pm Link to this comment
(Unregistered commenter)

You know this isnt suprising but for those that want the education system to get a boost, its not just cooperations exploiting loopholes in the system, its also those who claim welfare that dont need it, and we arent talking about the person that makes just above minimum wage were talking about the people who live in decent apartments, the people who would rather have kids than goto school to support them. The epidemic that screws education isnt just the cooperations that make a fuckton of money its the people who refuse to work and live off the system because its far easier to take a handout than to find a job, which in turn gives companies less of a need to hire, and since they have less of a need to hire they then have to pay whatever they are required. For those that dont look at the national budget if you get a chance check it. Welfare is funded roughly twice what education is and about half what the defense budget is. Also on the prior note regarding those who would stay dumd and slaves to welfare, there is even more wrong than just the idea that you get something for nothing, if anyone watched the movie or read the book the time machine, this society atleast in america is becoming alot like that, which the people that control and stand to benefit from a dumbed down lazy society that doesnt do research, that doesnt look into things deeper than what the media tells them or what easy to find on google, that doesnt care about who is a candidate because they assume they are all corrupt and choose the best one that seems less corrupt, for them its easier to lay down and die than to challenge things, its also these same values that are why these loopholes exist. You can john doe that works, pays taxes and lives off what he makes and pays a third or so of what they make to the tax system. But hey its what the people want out of failure to act.

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mrfreeze's avatar

By mrfreeze, April 28, 2012 at 10:23 pm Link to this comment

Microsoft does the same thing. Here in the State of Washington, where MS loves to employ tons of Indians with “special visas” and where our public educational system could use an injection of revenue, MS uses the NV loophole to avoid paying taxes…..Funny thing is, when one of their executives was called-out on this fact (“you say you support WA State education, but you avoid paying millions in taxes that could go for education”) on our local NPR affiliate, the executive simply said, “it’s complicated.”

No it’s not complicated my friends: All of these corporations are fucking cheating…legally…and until the public quits going to the polls and voting for politicians who craft pro-corporate legislation, these entities will continue to cheat the system.

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vector56's avatar

By vector56, April 28, 2012 at 4:41 pm Link to this comment

Your point? Nevada is just Delaware with a better climate.

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By faith, April 28, 2012 at 4:21 pm Link to this comment

Seriously?  Are most people here familiar with Delaware?  Where many businesses
incorporate in order to avoid the huge taxes.

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vector56's avatar

By vector56, April 28, 2012 at 3:19 pm Link to this comment

When that Corporate Vulture Steve Jobs died the Left acted like a bunch of “groupies” rushing backstage to give a Rock Star a Blow Job! This Capitalist Vampire consumed “Billions” in wealth generated by those “wage-slaves” in China. To quote Makana (“We are the many”)
Jobs, “locked them in a cage to steal from them the value of their wage”!

Apple is the personification of Jobs; they take and take only to return nothing but useless “gadgets”  that help the “powers that be” steal what is left of our freedoms.

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