WASHINGTON – Apple Inc. employs a group of affiliate companies located outside the United States to avoid paying billions of dollars in U.S. income taxes, a Senate investigation has found.
The world’s most valuable company is holding overseas some $102 billion of its $145 billion in cash, and an Irish subsidiary that earned $22 billion in 2011 paid only $10 million in taxes, according to the report issued Monday by the Senate Permanent Subcommittee on Investigations.
The strategies Apple uses are legal, and many other multinational corporations use similar tax techniques to avoid paying U.S. income taxes on profits they reap overseas. But Apple uses a unique twist, the report found. The company’s tactics raise questions about loopholes in the U.S. tax code, lawmakers say.Senator Carl Levin, interviewed by The Guardian, remarked,
Apple sought the Holy Grail of tax avoidance. It has created offshore entities holding tens of billions of dollars, while claiming to be tax resident nowhere. We intend to highlight that gimmick and other Apple offshore tax avoidance tactics so that American working families who pay their share of taxes understand how offshore tax loopholes raise their tax burden, add to the federal deficit and ought to be closed.Tim Cook, the CEO of Apple, in advance of the hearing in the Senate tomorrow, called for "revenue-neutral" tax reform, which we all know is a joke.
I wanted to highlight this case because I have always been irritated by the liberal embrace of Apple because of the "hipness" of its products. For instance, the Occupiers in New York had a moment of silence for Steve Jobs when he passed away while they were protesting the plutocratic practices in which Jobs's own company regularly engages. I could highlight the problem of e-waste, the labor abuses at Apple's subcontractors, Jobs's known anti-regulation and anti-labor positions, the simple fact that Apple epitomizes the concept of planned obsolescence, or many other glaring problems with Apple's business model.
Now, I am not saying that Apple is a worse abuser in these regards than HP, Microsoft, or any other tech company. My irritation lies in the disconnect between image and practice. Hipness need not bring either regard for the law or a social conscience.
Oftentimes, you'll hear liberals justify corporate practices like those of Apple and its peers by noting that the corporation is amoral, that its goal is profit maximization and that alone, and that we should expect nothing else. In other words, it seems as though Milton Friedman has won the battle of ideas. In a 1970 op-ed in the New York Times, the neoliberal Chicago economist penned a well-known piece arguing that the social responsibility of business was to increase its profits--nothing else. Friedrich Hayek, likewise, argued that questions of social justice simply have no place in a market economy; justice is a question of morality and ethics, and there is no morality but that between individual actors. As Hayek saw it, neither a firm or a system could have any moral valence to it. Opposed to these ideas has been a concept of stakeholder capitalism, which emphasizes the obligations to the community and perhaps the environment. Corporate social responsibility, when it is more than just simply PR, can offer a similar alternative, an idea of a "triple bottom line" that demands that businesses pay attention to both people and planet, not just profit alone.
If you want an example of a company with a progressive business model, turn toward Costco (which is like an anti-Walmart in its labor practices) or Dr. Bronner's Magic Soap (a personal favorite).