Panel: Apple dodging U.S. taxes

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.

The spotlight on Apple’s tax strategy comes at a time of fevered debate in Washington over whether and how to raise revenues to help reduce the federal deficit. Many Democrats complain that the government is missing out on collecting billions because companies are stashing profits abroad and avoiding taxes. Republicans want to cut the corporate tax rate of 35 percent and ease the tax burden on money that U.S. companies make abroad. They say the move would encourage companies to invest at home.

Apple CEO Tim Cook, the company’s chief financial officer and its tax chief are scheduled to testify and explain the company’s tax strategy at a hearing by the subcommittee Tuesday.

The company refuted the subcommittee’s assertions in testimony prepared for the hearing and released to the public Monday evening. Apple said it employs tens of thousands of Americans and pays “an extraordinary amount” in U.S. taxes, citing the roughly $6 billion it paid in fiscal 2012.

Apple “complies fully with both the laws and the spirit of the laws,” the testimony says.

“And Apple pays all its required taxes, both in this country and abroad.”

“Apple does not use tax gimmicks,” the statement says. The company insisted that it does not, as the subcommittee asserts, move its intellectual property rights into offshore tax havens and use it to sell products back into the U.S. to avoid taxes.

The company has made clear that given current U.S. tax rates, it has no intention of repatriating its overseas profits to the U.S.

Apple reiterated in its testimony its support for comprehensive tax reform as a way to support economic growth and boost U.S. companies’ competitiveness.

The subcommittee also has examined the tax strategies of Microsoft Corp., Hewlett-Packard Co. and other multinational companies, finding that they too have avoided billions in U.S. taxes by shifting profits offshore and exploiting weak, ambiguous sections of the tax code.

The subcommittee’s report estimates that Apple avoided at least $3.5 billion in U.S. federal taxes in 2011 and $9 billion in 2012 by using the strategy.

The company, based in Cupertino, Calif., paid $2.5 billion in federal taxes in 2011 and $6 billion in 2012.

More in Business

Newest must-try eatery: 85°C Bakery Cafe in Lynnwood

The popular bakery, part of a Taiwan-based chain, is already drawing out-the-door crowds.

Trudeau: Canada could stop dealing with Boeing over dispute

Boeing had petitioned the U.S. to investigate government subsidies of Bombardier’s CSeries aircraft.

Toys ‘R’ Us files for bankruptcy but keeps stores open

Retailers of all kinds are struggling. Toys ‘R’ Us is among at least 18 other bankruptcies this year.

Marysville-Arlington fiber-optic link planned by Comcast

The high-speed internet line, to be ready next year, is seen as a boost for business development.

‘Cheese that was grass 24 hours ago’ wins a farm accolades

Ferndale Farmstead specializes in authentic Italian cheeses — made with with American milk.

Snohomish County Business Licenses

PLEASE NOTE: Business license information is obtained monthly from the Washington Secretary… Continue reading

Coastal Community adds business relationship manager

Coastal Community Bank has hired Corbin Resseguie as a business relationship manager… Continue reading

Operation School Bell celebrates 52 years of service

On Sept. 20, Operation School Bell celebrates 52 years of service. Operated… Continue reading

Aerospace supplier MTorres consolidates into Everett site

Aerospace supplier MTorres has relocated into a 60,000 square-foot building in southwest… Continue reading

Most Read