At yesterday's Senate hearing the CEO of Apple said they follow the law when they "defer" billions and billions of dollars in taxes they owe by keeping profits "out of the country." He's talking about the "Subpart F" corporate tax loophole that practically forces companies to move jobs and factories and profit centers out of the country. ("Double Irish" to those in the know. "Double Irish With A Dutch Sandwich" to those who know too much.) So let's change that law and make these companies pay the taxes they already owe.
Tell CEO Tim Cook that it's time that Apple pays its fair share of taxes. Stop dodging paying your taxes on more than $100 billion in profits parked in offshore tax havens. Add your name to our petition now!
Apple "follows the law." Other giant companies also "follow the law" when they pay little or no taxes. The thing is, they also do what they need to do to keep the laws from being changed to benefit We the People instead of a few ultra-wealthy plutocrats.
Apple has transferred what Senator Levin called its "crown jewels" and its "golden goose" to a non-US subsidiary company. Apple transferred its "intellectual property" to an Irish "company" that Apple owns and runs. The company doesn't really do anything except it "owns" the patents, etc. Irish law says a company that isn't actually doing anything in Ireland doesn't have to pay taxes, and US law says that Apple doesn't have to pay taxes on profits of a foreign subsidiary company until the company passes its profits to the parent US company. As a result Apple is keeping more than $100 billion in the accounts of that Irish company. (The accounts happen to be in the US.)
Google also follows the law. Its Bermuda-based subsidiary made more than $10 billion in 2011, about 80% of its pre-tax profit that year.
So does Microsoft. Business Insider explains, in IT'S NOT JUST APPLE: The Ultra-Complicated Tax Measures That Microsoft Uses To Avoid $2.4 Billion In U.S. Taxes...
"Microsoft Corp does 85 percent of its research and development in the United States. Of its 94,000 employees, 36,000 are in product R&D. The company had reported income of $23.2 billion, but with a federal tax liability of $3.11 billion only paid an effective federal tax rate of 13.4 percent. That's much lower than the top statutory rate of 35 percent for corporations.- Advertisement -
"The way the group accomplished this is through a wide variety of foreign groups in tax havens like Ireland, Puerto Rico and Singapore, and by exploiting a recently updated tax loophole.
"In fairness to Microsoft, they're doing what nearly every other major technology company does."
And HP, Cisco, Coca-Cola, Johnson & Johnson, Oracle, Pfizer, Amgen, Dell, eBay and many others. They are all "following the law." And they pay big bucks to help keep that law the way it is.
Apple keeps more than $100 billion out of the country to avoid taxes. All together, the giant US multinationals are keeping somewhere between $1.7-$2 trillion "out of the country" and this amount is growing by hundreds of billions. If they ever do "bring the money home" by transferring the money to the US-based parent corporation they have to pay taxes on it, minus any taxes already paid to other countries. We the People should just get rid of the "till they bring the money home" loophole.
How They Do It
Here is how it works: You develop intellectual property (IP) in the US -- software, patents, etc. -- using US-educated employees who drive on US-built roads, based on US-funded scientific research, and you use the US legal system and the US financial system to become big and powerful. Then you "transfer" that IP to a foreign subsidiary that is a company in a post-office box somewhere that doesn't make you pay taxes... You completely control that company but it is a "foreign" company. You pay a "license" fee to that company for everything you sell, so that company winds up with all the profits.
Watch this video describing how Google does it.
From then on, the profits made accumulate with the "foreign" company that "owns" the IP even though it is entirely controlled by the US company, set up as a "foreign" entity solely to keep the profits from being made by the US company.
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