Apple, Inc., which is based in the northern part of California, is best known for its iPhones, iPads and Mac computers, along with several other innovative tech gadgets. It is not as well known for being able to avoid paying the IRS approximately $30 billion in taxes. That fact may not have gotten the attention of the general public, but it certainly caught the attention of Congress.
Congress actually launched an investigation into California’s tech giant to determine whether Apple broke any laws by not paying the taxes. The investigation turned up no wrong doing on Apple’s part. Congress did admonish Apple, however, for using what Congress considers a “shady global-scale tax structure” to avoid paying the $30 billion. One U.S. Senator actually protested Congress even conducting the investigation.
Apple was able to avoid paying the taxes by shifting liability to subsidiaries and offshore accounts. Other giants such as MicroSoft and Google take advantage of the same holes in the tax code. There isn’t anything illegal about it. Is it right? Maybe or maybe not, but as long as the holes in the tax code exist, corporations will continue to use them.
If any other California company had the same type of profits that giants like Apple, MicroSoft and Google do, they could also use the tax code to their advantage. Stockholders tend to be happiest when they are receiving large dividends. A savings of $30 billion in taxes not paid to the IRS could potentially make stockholders very happy.
Source: The Bottom Line (UCSB), “An Apple is an Apple: Why Apple Inc. Can’t be Blamed for Avoiding Taxes,” Anis Vijay Modi, May 29, 2013