Apple’s decision to hold $216 billion out of its total $232 billion fortune overseas amounts to a “fraud,” claims Nobel economist Joseph Stiglitz.
Stiglitz, who is advising Hillary Clinton’s presidential campaign, said that there is something “obviously deficient” about U.S. tax laws which make this a possibility — and singled Apple out as one such beneficiary.
“Our current tax system encourages companies to keep their money abroad, opens up a vast loophole through what is called the transfer-pricing system that allows them not only to keep their money abroad but, effectively, to escape taxation,” he told Bloomberg in an interview. The perspective was brought up in response to a question about whether Clinton may develop a plan designed to make companies like Apple repatriate their overseas cash pile.
“Here we have the largest corporation in capitalisation not only in America, but in the world — bigger than GM was at its peak — and claiming that most of its profits originate from about a few hundred people working in Ireland – that’s a fraud,” Stiglitz noted. “A tax law that encourages American firms to keep jobs abroad is wrong, and I think we can get a consensus in America to get that changed.”
Apple has long been criticized in some quarters for its tax structure, which means moving money to low-tax locations like Ireland, where the corporate tax rate stands at 12.5 percent — compared with the U.S. top tax rate of 35 percent. It is currently the subject of an E.U. investigation, although Tim Cook has always maintained that Apple pays every cent that it owes.
During last year’s “Inside Apple” episode of 60 Minutes, Tim Cook labelled reports that Apple doesn’t pay its taxes as, “total political crap.” In the same interview he also railed against the idea of U.S. tax codes built for the industrial age instead of the digital age. “It would cost me 40% to bring [Apple’s overseas cash pile] home, and I don’t think that’s a reasonable thing to do,” Cook argued.