iEconomy, Part 3: The Corporate Tax Dodge

The third installment in the very insightful and popular NYT iEconomy series is front page of the Sunday NYT.

Part 1: An Empire Built Abroad: How the U.S. Lost Out on iPhone Work

Part 2: A Punishing System: In China, Human Costs Are Built Into an iPad

Part 3: Protecting Profits: How Apple Sidesteps Billions in Global Taxes

Some of the details of Apple’s corporate tax-avoidance maneuvers according to the NYT are:

• Apple’s federal tax bill was $3.3 billion on reported profits of $34.2 billion last year, a tax rate of 9.8%;

• Apple allocates 70% of its profits outside the U.S. note that the value is created in the US, but the low end manufacturing is overseas.

A Nevada shell company let’s Apple’s U.S. business sidestep California state taxes. California corporate tax rate = 8.84%, while Nevada = 0%.

California gives tax credits to Apple for conducting R&D in the state worht more  $400 million since 1996;

•  The “Double Irish With A Dutch Sandwich” routes royalties and profits through Ireland and the Netherlands and the Caribbean. On paper, Ireland “generated” one-third of Apple’s revenue last year.

•  Salespeople working in high-tax countries are employed by subsidiaries in low-tax countries.

• iTunes sales “happen” in Luxembourg –– a tax dodge with local incentives. In 2011, iTunes S.à r.l.’s revenue exceeded $1 billion

The full series is Pulitzer bait, and deservedly so.

Click thru for giant graphics

‘Double Irish With a Dutch Sandwich’

Shrinking Corporate Tax Rates

How Apple Sidesteps Billions in Taxes
NYT, April 28, 2012

This post originally appeared at The Big Picture and is posted with permission.

One Response to "iEconomy, Part 3: The Corporate Tax Dodge"

  1. Mobile device pens   June 7, 2013 at 4:35 am

    I would also like to know this. Which way are they favorable?