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.
Luke Dormehl is a U.K.-based journalist and author, with a background working in documentary film for Channel 4 and the BBC. He is the author of The Apple Revolution and The Formula: How Algorithms Solve All Our Problems … and Create More, both published by Penguin/Random House. His tech writing has also appeared in Wired, Fast Company, Techmeme and other publications.
13 responses to “Nobel economist calls Apple’s tax arrangement ‘fraud’”
So now he’s challenging this that’s been around since 1912?
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When Apple moves money from other countries into the US, do they have to pay 30% of the amount they bring in, or just the profits? Some of the money in these other countries are based on gross sales, and they have the cost to mfg, SG&A, etc. after whatever taxes they would have paid in order to do business in these other countries.
In a way, it is kind of fraudulent in the fact that all of the money in Ireland wasn’t generated in Ireland, but that company is set up as a holding company, not necessarily a sales division, right?
It’s more of the cost of doing a transfer from Ireland Holdings (Euro with zero to low taxes) to United States Banks (USD with mega taxes for billionaires). The transfer rate is very high (40% of Apple’s earnings) to be all american again. So he would lose several billion dollars to get it done. 93 Billion Dollar fee.
It would be a rate of 35% with credit for foreign taxes paid on those funds…..In the case of Apple that is virtually ZERO!
Another thing to consider is they have to keep some of it oversees because they use that money to build new locations, spend money on marketing, etc., so it would be far more difficult and costly to constantly move money back and forth. Yeah, I’m sure the US government wants a big chunk of that $200+ Billion sitting in investment in Europe. That’s what they are doing is just looking for large cash piles they can suck more money out of..
“A tax law that encourages American firms to keep jobs abroad is wrong,” Hey, I’m all for collecting more tax revenues from large corporations but as noted in the quote, there is nothing illegal about what Apple and what most if not all global corporations do. If he doesn’t like the law, then get it changed.
liberals have a flow chart they follow
1. can the money make it back to my pockets or liberal friends pockets? yes or no
2. are the voters stupid and will reelect us because they are stupid ? yes
3. repeat above mentioned steps and then increase taxes
You forgot buy Cadillacs with your food stamp cards.
I wouldn’t expect anything less from the multinationals or countries to welcome them to hide billions of dollars, it just wouldn’t make for good press releases.
Yep. The largest company in the world pays less than 2% tax while I earn not even 30.000$ a year and pay 20% tax… makes sense. Not to mention then sell stuff in 28 european countries and only pay taxes in 1 of them. I”m glad it’s being investigated.
These companies aren’t doing anything illegal, so get off that high horse before you break a leg. The tax laws allow it, so go after the law makers. So you never claimed anything off your tax to reduce your taxes? Everybody does.
You Marxist peice of shit.