Updated April 15, 2018-
In taking advantage of the Trump tax-reform law, Apple says it will bring back most of its $252 billion in cash it’s been hoarding abroad, and make a big investment in the U.S.
This means Apple is making a one-time $38 billion payment to the U.S. for the repatriated cash while taking advantage of the new 25.7 percent corporate tax rate.
Meantime, Goldman Sachs, Amundi SA and BlackRock are ostensibly managing about 13 billion euros ($16 billion) in the back taxes Apple will likely have to pay to Ireland.
This, in the wake of the European Commission’s Aug. 2016 ruling that Ireland had granted unfair deals to Apple. While Apple and Ireland appeal the decision, the commission demanded Ireland hold the money in escrow. The appeal may take as long as five years.
The commission sued Ireland last October for failing to collect the taxes. The money, which was initially due Jan. 3, 2017, is being collected in Q2 this year.
So, Apple’s strategy to avoid paying taxes in the U.S. has ostensibly backfired in the wake of the European Commission’s €13bn tax assessment.
The tech company has received massive Irish tax benefits, which the commission ruled is illegal. By sheltering profits in Ireland, Apple has also avoided paying U.S. taxes.
Ireland allowed Apple to pay 1 percent in taxes – significantly less than other companies.
Apple and Ireland say they’re appealing the ruling.
The most nonsensical irony in corporate America involved Apple CEO Tim Cook’s tax strategy which drew fire from the European Commission. Why? It’s apparently backfiring.
Why? It’s unpatriotic and shortsighted. Apple and others haven’t been paying their fair share to the U.S. treasury.
They disingenuously avoided paying America’s 35 percent corporate tax rate while being heavy donors to Democrats.
Mr. Cook’s tax philosophy was illustrated in a far-reaching interview published in the Washington Post.
“The tax law right now says we can keep that [profit] in Ireland or we can bring it back,” Mr. Cook told the newspaper.
While capitalizing on a mega tax loophole, such CEOs opposed the candidacy of Donald Trump, who campaigned on dramatically lowering the onerously high tax rate to a low 15-percent rate.
He has also lamented the the nation’s $21-trillion debt and failing infrastructure such as roads, bridges and airports.
Mr. Trump has blasted Apple for outsourcing jobs and inversions to shelter its income.
While complaining about high taxes, CEOs like Mr. Cook favored Hillary Clinton who famously wanted to split up the economic pie in income redistribution while hiking taxes even higher.
Apple has about $292 billion in cash, so it’s very strange fiscal thinking.
Conversely, Mr. Trump’s plan revised the tax code to make it possible for corporations to keep most of their money and incentivizing them into hiring more employees.
Having faced mounting criticism for taking its American profits overseas, the tax-dodging CEO said he won’t bring his company’s money back to the U.S. until there’s a “fair rate.”
Other critics of Mr. Cook’s strategy said he’s been guilty of unpatriotic behavior.
“It is the current tax law. It’s not a matter of being patriotic or not patriotic,” Mr. Cook was quoted as saying.
Poised to take a bite out of Apple is the European Union. Ireland has prospered with its tax code – the lowest in the EU.
But EU officials want a piece of the action and are strategizing to penalize such companies for more tax revenue.
Apple isn’t the only global American company to capitalize on Ireland’s tax code. Many others are, too.
It is a matter of patriotism to pay American taxes, eliminate the nation’s $21-trillion debt, rebuild the nation’s infrastructure and to create family wage jobs.
Plus, by evading America’s tax structure – assuming the EU prevails – Apple and other companies will eventually pay a higher price for sheltering their American profits in Ireland.
From the Coach’s Corner, here are editor’s picks:
How CEOs, Taxes and Policymakers Fail the U.S. — Like it or not in President Obama’s second term, stagnant growth means there’s still the possibility of a double-dip recession. We’re in a precarious position, largely, because businesspeople and consumers lack confidence in the economy – for good reasons.
How Not to Fear an IRS Audit – 6 Tips — The key to dealing with an IRS audit is to have done your homework. If you do all your homework, you don’t have to fear an audit.
Ideas to Accelerate Slowest Economic Recovery in Decades — Most voters are likely to vote their pocketbooks. So for them the positive spin on the economy by Hillary Clinton and President Barack Obama doesn’t reflect reality.
Governments – from Cities to Federal – Dangerously in Debt — The U.S. economy has been slowly mending. However, the situation is bleak for governments at all levels. Why? High debt is dangerous and economic growth is dreadfully slow. This is best illustrated by the enclosed U.S. Debt Clock.
‘Dirty Little Secrets’ Trump Hasn’t Told You about Economy — Donald Trump has pushed the envelope to say the least. Many businesspeople get it. So do entrepreneurs, and millions of different demographics of voters who are angry at the economic decline of America.
Academic Study: Rich Pay More than Their Share in Taxes — The 2016 study by the National Center for Policy Analysis reveals the current tax code is highly progressive. It’s entitled, “U.S. Inequality, Fiscal Progressivity, and Work Disincentives: An Intragenerational Accounting.”
“We shall tax and tax, and spend and spend, and elect and elect.”