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For the die-hard fans who lined up to purchase Apple’s latest iPhone last month, it’s hardly news that the California-based company still lives up to its reputation for technological innovation. The world’s No. 1 smart phone manufacturer last week released its annual financial report revealing it also remains No. 1 in crafty tax avoidance strategies.
Apple moved a record $50 billion offshore in the last year, far more than any company has achieved in a single year. It now holds a staggering $186.9 billion in cash offshore.
The company’s brazen exodus of cash is even more remarkable because it acknowledges it has paid virtually no tax to any nation on its offshore stash. Apple’s recently released annual report indirectly admits the company has paid an effective tax rate of about 2.2 percent on its permanently reinvested foreign profits. This means the beloved iPhone maker has avoided $56.9 billion in federal income tax on its offshore cash.
Apple’s unsavory tax practices are well-documented. A 2013 Senate investigation conclusively demonstrated that the company artificially shifted its U.S. profits into foreign tax havens. And for much of the past year, European Union (E.U.) officials have focused on the special tax deals worked out between European tax haven countries and companies including Apple, Starbucks, Fiat and Amazon.
As Citizens for Tax Justice (CTJ) documented in a recent report, Apple is only part (albeit the biggest part) of the problem. Hundreds of Fortune 500 corporations admit owning subsidiaries in known tax haven countries, and most of these companies now claim to hold large amounts of cash abroad. CTJ’s sensible recommendation to end companies’ ability to indefinitely defer tax on allegedly foreign profits would very likely accomplish what public shaming of Apple’s tax avoidance clearly has not: putting an end to corporations’ use of offshore tax havens to avoid paying U.S. taxes.