Apple Lobbies Obama For Tax Holiday, Wants To Bring Its Riches Home

Apple Lobbies Obama For Tax Holiday, Wants To Bring Its Riches Home

Credit: aresauburn/flickr

Apple’s profits stashed overseas is getting restless for a trip the the United States. The tech giant, frequently seen wealthier than the U.S. government and Exxon-Mobile, is lobbying the U.S. government for a five percent ‘tax holiday.’ In a bizarre picture, Apple is aligned with Republicans and against the Democratic American President.

At it’s last quarterly report, Apple announced it had almost $80 billion in cash.

Google, Oracle and Cisco are also part of the “WIN America Campaign” that argues “incentives to invest at home is a common sense solution that will immediately inject up to $1 trillion into our economy and provide businesses with the security and certainty they need to help Americans get back to work,” according the the group’s website. So far, the proposed bill has picked up support of 15 Republicans and eight Democrats in the House of Representatives.

So far opposed to the effort is President Barack Obama, to whom the companies donated $1.3 million in 2008.

Apple has a growing interest in protecting its foreign profits. During the last quarter, 62 percent of the iPad and iPhone maker’s profits came from international sales. For some time, Apple executives have pointed to China as holding a huge potential for sales growth.

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  • gareth edwards

    Pay the TAX apple. Do the right thing.

  • crateish

    As much glee I experience over Apple’s crushing profitability over the competition, here I cannot cheer them on. Pay your taxes, Apple.

  • FriarNurgle

    Amazing when your business becomes so large that lobbying plus campaign donations are less than paying your taxes. 
    I love you Apple, but pay your fair share.

  • Dave Arthurs

    The only reason these companies have so much money overseas is that they have used various accounting techniques to shelter the money outside of the US, and have avoided paying taxes to the country they call home. The idea that they now want any government to encourage this behavior by giving them a “tax holiday” is both laughable and insulting. Also, the idea that releasing these funds will create jobs is total BS. Companies employ people to meet demand in the marketplace. These monies put more more capital in the hands of the companies that produce goods, but they will not produce more goods if there is no additional demand. I like Apple, but this pisses me off.

  • cliqsquad

    Oh man it things like this that remind me that Apple is just another company, just like all companies.

  • quietstorms

    I like Apple but they can kiss my ass when it comes to this. This is the reason that the country is going broke.

  • Shaunathan Sprocket

    Now now gentlemen, let’s play some political ball:

    Ok Apple.  Here’s the deal.  You want a 5% tax break?   I’ll give you an 8% tax break, if you move all manufacturing from Foxconn and other Asian suppliers to the US.  Hire humans or robots.  But if you hire robots they need to be designed, fabricated, and assembled in the USA.

    THAT will bring trillions into the US economy.  And your tax break will be well deserved.

  • Scott Brookman

    really?  So when Apple hired all the engineers and developers to design the iPad they were hiring them to meet demand in the market place?  I think your argument is misplaced.  Companies with money will invest in new products and create new markets, THAT will create jobs. Without that cash cushion they will not take the risk.

  • Jay Floyd

    I’d take that a step further.  Pay MORE than your ‘fair’ share.  Your country is in trouble.

  • quietstorms

    >Companies with money will invest in new products and create new markets, THAT will create jobs. Without that cash cushion they will not take the risk.

    Wrong. They will take they risk because there is money to be made, regardless of the tax breaks. How was innovation in the 50s when the tax rate was more than double what it is today for companies?

     It has never been proven that cutting taxes actually increases jobs. 

    How many jobs were created during the Bush era with his tax cuts?
    Answer: He lost jobs. 

    How many jobs were made because of the tax breaks oil companies received?
    Answer: They’ve cut jobs over the past five years while making more money than they’ve ever had before.

  • Tony C

    Give me a break, I know that Corporations are holding a lot of their profits off shore but it’s time to close the loophole. I can understand giving them a break on the percentage but our Government is spending our great grandkids money and we’re losing ground every day. Dear Apple, pay your share.

  • Gregintosh

    Do you realize how much Apple gear would cost if they did that? Get ready for the new iPad 3… only $2,999! How about a new MacBook Air? It’s a bargain, made in the USA for just $5,999! 

    I bet the lines won’t be as long then, I guess.

  • Patrick

    They’ve already had a tax holiday. It’s going on right now and has no end in sight! They should have already paid taxes on all that money. This is exactly the kind of tax loopholes that are making us broke, but no… we need to tax the poor more? Ridiculous! Pay your damn taxes Apple like everyone else!

  • Patrick

    So, for the companies that pay $0 in taxes because of tricks like keeping their profits overseas… that’s their “fair” share?

  • Gregintosh

    How does Apple having money making you “go broke”? You can’t go broke if you spend less than what you get, so the trick is to LIVE WITHIN YOUR MEANS (that goes for the gov’t too, which is what I assume you meant by ‘us’). 

    Apple having money isn’t making the US Gov’t go broke. Spending too much is.

  • Dave Arthurs

    I completely agree about living within your means, however it is a question of both spending and REVENUE. Ignoring half the problem wont solve anything. Apple (and other companies) not paying their share does contribute to the problem

  • Dave Arthurs

    Quick, how has all this supply-side economics worked out, seeing as how we have just exited an 10 year experiment with all of this? If any of these supply-side ideas actually worked, we would be in a very different place right now. They don’t, and the proof is in the pudding.

  • Bluelou65

    they keep their profits overseas because we have the highest corporate tax rate in the world next to japan.  it’s this high taxation that basically forces american companies to go overseas; it’s not a trick in so much as it is good business.  congress needs to wake up and realize that 34% of nothing is nothing and reform the tax code to allow for more investment here in the U.S. 

  • Turner ALEX

    I just p a i d $21.87 for an i P a d 2-64GB and my boyfriend loves his Panasonîc Lumîx GF 1 Camera that we got for $38.76 there arriving tomorrow by UPS.I will never pay such expensive retail prices in stores again. Especially when I also sold a 40 inch LED TV to my boss for $657 which only cost me $62.81 to buy.
    Here is the website we use to get it all from, http://BídsFírst.Com

  • Bluelou65

    MORE than your fair share? Are you stepping up to the plate and paying more than your fair share?  it would be the patriotic thing to do to just mail the IRS $1,000 and write “cuz i’m a m’fuggin patriot” in the memo line.

  • Gregintosh

    But that assumes that massive spending is inevitable, and it isn’t. 

    For example, The US Federal Government alone doesn’t HAVE to spend more money than France and Italy’s ENTIRE COUNTRY’S GDP combined.

  • imajoebob

    I’ve been contemplating a paper on Apple’s ‘Un-American’ business practices for a while.  They talk about being a great corporate citizen, how they keep making products “greener,’ how their new building will have such a (relatively) small eco-footprint, yada-yada-yada.  But when it comes down to it, Apple is an avaricious giant who keeps taking and taking from America and gives little back.  Now they want US to give them even more?

    Apple is sitting on possibly the largest pile of cash on the planet.  Maybe even more than China.  We can see China investing in THEIR infrastructure.  except on the rarest of occasions (like the Cloud center) Apple doesn’t reinvest to any notable degree, they don’t distribute dividends, they don’t even have a monster education foundation to develop engineers and mathematicians in the US (a vested interest), or fight disease and hunger in the US or the third world.  Jobs is just sitting on all that cash and doing NOTHING with it.  And he’s asking to make the pile even bigger at our expense?

    Along with returning to a sane tax rate for the ultra-rich, it’s time for the US to consider a ‘Wealth Tax.”  All we ever hear form the wingnut crowd is that cutting taxes increases investments and creates jobs.  Every responsible economist knows that cutting taxes on the wealthiest just creates larger and larger piles of unproductive capital – like Apple’s.  They’ve cut the taxes and driven up these unproductive caches.  So we should start taxing “dormant reserves.”  If Apple wants to suck $75 billion out of the economy, they should pay for that privilege.  Reserves over a certain threshold, based on both raw numbers and relative ratios, that sit idle should be taxed.  If you make long term investments you don’t have to pay taxes.  But if all you do is play the capital markets and make 8-hour loans through megabanks, then you’ll pay a price for not contributing to economic growth. 

    Man-up Jobs.  Take a cue from Warren Buffett, and start giving back a small fraction of what you’ve gotten from America.  Or just move to China, and enjoy the “potential” over there.

  • Dave Arthurs

    It doesn’t assume anything. If you decrease revenue, you have less money, period. Even if spending stays the same, or decreases at a rate less than revenue, you run the risk of a deficit. I agree that the US spends way too much money on all sorts of things it shouldn’t be, but this one-sided view that the solution is always on the spending side is absurd. Spending and revenue are two sides of the same coin.

  • Equality 7-2521

    And here lies the purpose of government regulations which is to leech from productive companies.

  • Christian Valle

    This is so true.  The american people get taxed the corporations use loopholes to pay little or nothing in taxes.  Apple and all other companies that are getting away with these tax loopholes you should pay your fare share.  America is dying we all need to bring it back to life.  

  • ChKen

    This was an odd article.

    • Where did it point to where Apple lobbied Obama?
    • Why does it use the word “stashed”, since we know that is pejorative? Apple makes profits overseas, and retains them there, like most companies. If Toyota made profits in the US, we in the US, generally expect them to reinvest some of those profits in the US. There should be nothing negative about a company keeping the profits earned in a country, in that country.
    • If Apple is “aligned with the Republicans”, then why are 1/3rd of the bill’s sponsors Democrats?

    • Can you at least point out that foreign profits earned, have already been taxed by the countries in which they were earned, so that the numb nuts who believe that these companies are somehow doing some sort of money laundering will shut up?

  • Shaunathan Sprocket

    You’re making assumptions that my simplified offer did not take minimum wage or entitlement into consideration.  This is a false assumption.

    Apple already owns massive R&D assets.  They can easily design their own manufacturing robots to create the products.  They also have supply chains for all the materiel to make this happen.   Owning their own robot manufacturing requires a large front loaded investment.  Something Apple has cash on hand to accomplish.  In the end.  Even High School Economics teaches that owning the means to production is the cheapest road to fabrication.  iPad 3 for 2,999?  Hardly, how about iPad3 starting at just 299. 

  • ChKen

    Dude, you don’t know the first thing about economics. Apple is not making the pile “bigger at [your] expense”. It’s not your money. Those are Apple’s foreign profits for which it has already paid foreign taxes. It now belongs to the shareholders, and if they don’t complain, then Apple can keep it on its balance sheet.

  • ChKen

    Please look up Apple’s financials. They don’t pay $0 in taxes, they paid $7,300,000,000 in the last 12 months, about 25% of profits.

    They pay US taxes on US profits. They pay foreign taxes on foreign profits. They don’t repatriate those foreign profits because the US will tax those profits again, unlike many other countries.

  • ChKen

    Apple paid $7,300,000,000 in taxes last year. Have you even looked up the facts before spewing nonsense?

  • Dave Arthurs

    Italy and France are much smaller countries that the US, so this is not
    surprising. It would be better to compare the government spending as a percent of GDP numbers.

    Percent of GDP Government spending for Italy, France and the US

    France – 56.2%

    Italy – 48.8%

    US – 40.6%

    As you can see, the US government has lower spending on a per capita basis than these countries.

  • Nic Foster

    BOOOOO! i SMELL CORPORATE GREED!! BAD APPLE!

  • middle_america

    It is expensive to run multiple wars for the empire.  In the Great Depression there was a strong national voice that FDR responded to.  The US has a profound lack of collective vision that is reflected in the absurd and disconnected posturing inside the Beltway.

    I bet Apple would prefer to make all their products in the US if the right conditions existed.  And I do not think it would require destroying unions or wage slave conditions.

    We are still the wealthiest country in the world, we simply allow that wealth to be flushed down the military industrial complex.

    Have you ever listened to President Eisenhower’s farewell address?

  • Gregintosh

    You bring up a good point that many people miss. The profits that are being spoken of HAVE been taxed in other countries in accordance with the laws of those countries, so its NOT like Apple is just saying “look guys we got all this money hidden all over the world, can we just not pay any taxes? k thx bye”

  • Gregintosh

    Yeah, and France and Italy are broke and about to take down the Euro with them. Let’s not try to turn the US into another Greece.

  • Gregj7

    Delusional socialist blather. It ain’t your money and it ain’t the gub-ment’s money. Apple should distribute a portion of it to shareholders (who can decide when and where to spend it) in a one time dividend so greedy anti-capitalists like you don’t steal it for “higher purposes”. Several promising hi-tech companies could also be acquired for future growth.  Apple would be stupid to pay a 35% repatriation tax on already taxed foreign earnings ergo a “tax holiday” or a corporate tax rate reduction (to 10% or 15%) is the right route to putting this cash back into the economy. Gold is a perfect example of a dormant reserve. Whiney liberals like Al Gore (Apple’s de-facto lobbyist board member)  should pay no taxes and hard working  business builders should pay all the taxes? Go ahead and change the rules after the game has been played – that will really encourage future investment right?

  • Mike Rathjen

    “They should have already paid taxes on all that money.”

    They did. They already paid taxes in the countries that they earned the money, according to the local tax laws in each country. They are asking that they not be taxed twice by simply moving the money into the USA.

    We should *encourage* them to bring the money into the USA, where they will invest and spend it. The activity from that investment and spending will be taxed. The alternative is to encourage them to spend it where it is.

  • Honyant

    Have they paid taxes in the foreign countries where they earned he profits? They need to pay them at least once but I don’t believe that they should have to pay twice.

  • Gregintosh

    If you consider that Foxconn has about 1.2 million employees, and their revenues are $55 billion a year, thats about $55,000 USD per employee. 

    That does not take into account how much they have to spend on raw materials, electric bill, etc.

    Their net profit is just $2.2 billion, or $2,200 per worker per year. That means they can afford to raise wages about $183 PER MONTH at most, otherwise they have to raise prices of products.

    Considering that Chinese workers get about $2 per hour (some around $1/hour), unless you think American workers are willing to work for around $2-3 per hour, THEY WOULD HAVE TO RAISE PRICES DRAMATICALLY even at the minimum wage.

    At the minimum wage of $7.25 in some states, they would have to come up with extra $10 billion dollars just to pay 1 million workers the minimum wage, and that does not take into account management and supervisory pay (you won’t attract good managers if you’re paying less money than Best Buy pays its cashiers), benefits, etc. Add those things, and you’re looking at adding about $25 to $35 billion in extra costs. Prices would have to at least DOUBLE.

    That still does not take into account many other factors involving in making a move, such as expensive real estate here that would have to be purchased, equipment setups, etc. Even if amortized over 5-10 years, they would probably add tens of billions more to the cost of moving operations here. So now prices would have to at least TRIPLE.

    So I guess I was wrong, it would probably realistically drive an entry level iPad from $499 to $1,497. Would you pay $1,497 for a 16GB Wi-Fi iPad?

  • prof_peabody

    Dude you should really hold back on the commenting until you know something.  You’re always quick with the comment, and you’re almost always dead wrong on the facts.  Apple is one of the few big corporations that *does* pay it’s taxes.  

  • Shaunathan Sprocket

    You just ignored my point so you could waste three paragraphs complaining about human labor?

    I see what you did there. 

  • Dickusmagnus

    Yes, and George Washington’s too. We didn’t listen to either.

  • Dickusmagnus

    Not the whole picture and not a fair comparison. That’s just the Federal government in the US. You have to add at least another 20% for state and local governments.Italy and France collect almost all taxes centrally and distribute it to provinces. Here in the US government at every level has its hands on your wallet.

  • RaycerXray

    Really, Apple? You’re sitting on $75 billion in cash and you feel like you need still lower taxes. The last time big business pitched for a tax holiday –  the money wasn’t used to hire people (like they had promised) and just used it for bonuses and other non-job-creating activities.

    If you get your tax holiday will you hire more developers so you can fix Final Cut Pro X? Nah. I didn’t think so….

  • jonnyshocko

    You must be utterly incoherent in the way economies of scale work, economics fundamentals should be necessary before making such a subjective and obtuse statement.

  • jonnyshocko

    That has nothing to do with it, the nation is over taxed as it is and we have the second largest corporate tax rate in the world.

  • jonnyshocko

    We live in a world economy, deal with it or make your own clothes

  • jonnyshocko

    Thank you for the common sense

  • jonnyshocko

    Stop the over taxing and their wouldn’t be a loophole. It’s the government that has the issue, always, not the companies that play by the rules set before them, be it apple google or any worldwide company

  • jonnyshocko

    No you idiot. It’s not. It’s the government not being able to stop playing war all over the world.

  • jonnyshocko

    Grow up

  • jonnyshocko

    Such an ignorant mind

  • ChKen

    Given the amount of confusion in the comments where most responses seem to assume Apple is not paying taxes, domestic or foreign, one has to assume the article was deliberately written this way.

    Apple paid over $7,300,000,000 in taxes last year, roughly 25% of income. It pays foreign taxes where it generates foreign income. Why is it so hard for this article to state that up front? Instead, it’s written in a way to imply that Apple is avoiding taxes, that it isn’t paying its fair share. The author used the word “stashed” implying money laundering. Why?

    This is a deliberate hack job.

  • Jay Floyd

    Yes.  More.  Who gets hurt if Apple paid more than their share of taxes?  If you’d realize that the corporate structure in the country is decidedly not your friend, maybe you wouldn’t be such an asshole about this idea.  Unless you’re in the top 1% already, which I’m assuming is not the case.

  • imajoebob

    My masters from the London School of Economics says I know a lot more about than you.  Apple’s “foreign profits” are also piles of domestic profit that they use ridiculous loopholes to make believe they were made overseas.  That way they can pay almost nothing in foreign taxes instead of the paltry 17% the average corporation pays on domestic earnings

    But you’re not too stupid to not already know that.  You’re just too stupid to recognize that companies like Apple are doing it AT YOUR EXPENSE, and then convincing enough blithering idiots that taxing megarich people and corporations is a threat to the middle class.  All the while shifting the tax burden off the ultrarich and onto yourself more and more every day.

    You may get what you deserve, but stop taking the rest of us with you on your trip through fantasy land.

  • imajoebob

    Pay for your own roads, schools, firemen, police, food safety, street lights, drug safety testing, electrical generation and distribution, and water system first.  Then start calling everybody else a socialist, wingnut.

    But you, Mr WIzard, want to “change the rules after the game has been played” so Apple doesn’t have to pay their full taxes?  You’re not just an ignorant wingnut, you’re a flaming hypocrite.

  • ChKen

    Classic. If you were so smart, you’d KNOW that the merits of an argument are not built upon a flimsy resumé. Only a fool thinks his background is superior to someone’s he doesn’t even know. 

    As for your argument that domestic companies are shifting income overseas to take advantage of paltry foreign taxes and that Apple is one of these companies, then please explain why Apple’s taxes are far above the 17% you cite as the average rate US corps pay?

    Given your lunatic ravings, I find it hard to believe even LSE would accept you as a student and confer a degree upon you.

  • ImaPC

    We may have the second largest tax rate, but that’s not the rate they pay!!  It’s the rate I pay, as a small business though…

  • ImaPC

    Apple does pay more than the 17%, I’ll give them that.  But let me say, they needed that money a lot more when they were small.  Read an article where he sold his van to get his company going.  Do you discount the environment we need, prior to a companies to success, to get these innovations off the ground?  As a small business I’m paying close to 35%…maybe, just maybe it’s backwards?  We’re going to praise the ones that have arrived and give them breaks in hopes that they will hire more (they really don’t have much motivation to), and let the future innovators struggle.  Who’s more likely to be a “job creator”??  There is no forward thinking in this logic…

  • ImaPC

    Nobody’s paying the 35% so how can you call that the deterrent.  So much for common sense eh.  It’s true you know, there is no such thing.

  • ImaPC

    no tax break is well deserved.  they’re only going to do what they want to do and that should be based upon their own business decisions.  Enough with the government trying to lure them in or change anyone’s business practices in order to falsely manipulate our economy.  No tax breaks – not the way to solve our problems…

  • ChKen

    One, there is no evidence in the story above that Apple lobbied anyone. It’s a sensationalist headline. Apple discloses its lobbying budget like everyone else, and Apple is notorious for spending next to nothing on lobbying Washington.

    As for your notion of the tax rates being upside down, you do realize that Apple generates more sales outside the US than in the US, thus Apple’s predominant tax rates are foreign ones, which are predominantly lower, thus Apple’s average tax rate is lower than for a company that has sales only in the US.

    Can we stop talking about Apple getting tax breaks, until someone can actually point to what tax breaks they are taking?

    As for jobs, Apple may be the largest hirer in the US over the last 10 years. Apple has a little over 30,000 retail employees, with around 3/4 of them in the US. Since Apple Stores have only been with us for 10 years, one can safely assume those were all hired in the last decade. 

    Apple now has over 55,000 employees, when they only had 11,700, ten years ago. As noted, many of those are retail, but even if you back those out, they appear to have doubled their engineering and other staff at Cupertino. As you know, Apple is planning to build a 13,000 staff building, to replace leased office space that houses 9,000 staff. None of that includes the staff at their current HQ.

    It’s clear Apple is a big hirer of engineers and retail in the last decade.

    And, as I’ve pointed out numerous times, Apple paid $7.3 BILLION in taxes the last 12 months. How many companies pay that much? Not much.

  • Hmphrsmr

    Bad thing is this, with ALLLLLL that 80 Billions dollars they are sitting on, Apple stopped giving ANY money at all to ANY charity back when Steve Jobs became CEO. As he put it, “Apple will NO LONGER give any funds to charity until they are seeing a profit.” Now they have 80 Billion dollars and NOT ONE RED CENT TO ANY CHARITY!!! BUT THEY WANT TAX BREAKS FOR THEIR PROFIT??????

    OMG! Is this not a prime example of big business’s greed!!!!!

  • ChKen

    The amount of misinformation is pathetic. Apple has ALREADY PAID taxes on the cash it has on its balance sheet. The cash earned in its US operations has been taxed in the US. The cash earned in its foreign operations have been taxed by those foreign countries.

    It, as part of a consortium of US companies would like to avoid double taxation on the part of their cash that are foreign profits. That’s something like $40+B. Since we know that Apple regularly runs Project RED promotions, we KNOW you are lying. Why?

About the author

Ed SutherlandEd Sutherland is a veteran technology journalist who first heard of Apple when they grew on trees, Yahoo was run out of a Stanford dorm and Google was an unknown upstart. Since then, Sutherland has covered the whole technology landscape, concentrating on tracking the trends and figuring out the finances of large (and small) technology companies.

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