Apple and Taxes

When the fox eats all the chickens, the farmer doesn’t get to blame the fox for the shoddy henhouse construction. The fox is just doing what a fox is supposed to do. It is up to the farmer to secure his chickens.

Same goes for lawmakers lamenting the sorry state of US tax laws.

It is difficult to criticize a company for following the rules. It can be done, but not with any credibility. I assume these lawmakers are making a big deal about it because Apple are following the rules and still making a profit, which pisses off those companies that are actually breaking laws and still can’t win. When the boss has a bad day, you have a bad day.

You can find a PDF of Apple CEO Tim Cook’s prepared remarks before Congress here.

Apple has an effective US corporate tax rate of roughly 21% after various adjustments. This is far higher than most companies. As they begin to make more of their products in the USA, that rate should increase. And all that money parked overseas? Those aren’t hidden US profits. Sixty-one percent of Apple’s revenue are from activities outside the USA. From a shareholder perspective, it would be irresponsible for Apple to bring that money into the USA under the current tax code.

Admittedly, the “incorporate in Ireland, conduct business in the USA” model is sneaky. Or, as the lawyers who came up with it probably call it, good business. Laws can be amended, but you can’t prosecute a corporation for following the rules.

But in America, everyone hates a winner.

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