As a result, over the last decade alone Apple has amassed a stunning $231.5 billion cash pile abroad, subjected to little or no taxes.
This hasn't stopped Apple from richly rewarding its American shareholders with fat dividends and stock buybacks that raise share prices. But rather than use its overseas cash to fund these, Apple has taken on billions of dollars of additional debt.
It's a scam, at the expense of American taxpayers.
Add in the worldwide sales of America's Big Tech, Big Pharma, and Big Franchise operations, and the scam is sizeable. Over 2 trillion dollars of U.S. corporate profits are now parked abroad -- all of it escaping the U.S. corporate income tax.
To make up the difference, you and I and millions of other Americans have to pay more in income taxes and payroll taxes to finance the U.S. government.
Why can't this loophole be closed? In fact, what's stopping the Internal Revenue Service from doing what the European Commission just did -- telling Apple it owes tens of billions of dollars, but to America rather than to Ireland?
The dirty little secret is the loophole could be closed, and the IRS could probably do what Europe just did even under existing law. But neither will happen because Big Tech, Big Pharma, and Big Franchise have enough political clout to stop them from happening.
Ironically, the European Commission's ruling is having the opposite effect in the United States. It's adding fuel to the demand Apple and other giant U.S. global corporations have been making, that the United States slash taxes on corporations that move their overseas earnings back to the United States.
In other words, they want another tax amnesty.
Congress's last tax amnesty occurred in 2004, when global U.S. corporations brought back about $300 billion from overseas, and paid just a tax rate of 5.25 percent rather than the regular 35 percent U.S. corporate rate.
Corporate executives argued then -- as they argue now -- that the amnesty would allow them to reinvest those earnings in America.
The argument was baloney then and it's baloney now. A study by the National Bureau of Economic Research found that 92 percent of the repatriated cash was used to pay for dividends, share buybacks or executive bonuses.
"Repatriations did not lead to an increase in domestic investment, employment or R.&D., even for the firms that lobbied for the tax holiday stating these intentions," the study concluded.
The political establishment in Washington is preparing for another tax amnesty nonetheless. In a white paper published last week, the Treasury Department warned that an American corporation like Apple, ordered by the European Commission to make tax repayments, might eventually use such payments to offset its U.S. tax bill "when its offshore earnings are repatriated or treated as repatriated as part of possible U.S. tax reform."
Rather than another tax amnesty, we need a crackdown on corporate tax avoidance.
Instead of criticizing the European Commission for forcing Apple to pay up, American politicians ought to be thanking Europe for standing up to Apple.
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