Apple has a lot of smart people working for the company; Some design iPhones, others craft beautifully-engineered tax shenanigans.
By now it’s not news that Cupertino shelters more than $181 billion in profit overseas- more than any other US corporation- in order avoid paying the IRS its 35% cut. Apple CEO Tim Cook has stated that the company won’t repatriate that hoard of cash until the corporate tax rate is lowered.
In the meantime, Apple has invested much of that untaxed profit in Treasury bonds, Bloomberg has found. This means that the US government, and by extension, American taxpayers have been effectively paying Apple to stash “much of its foreign earnings—tax-free—right here in the U.S.”, according to the report. Over the past five years, the Treasury Department paid Apple at least $600 million in interest for lending it the very cash that it is owed. The money makes its way from Cupertino’s Irish subsidiaries to custodial bank accounts in New York to an investment firm in Reno, Nevada, which directs the purchase of government bonds on behalf of Apple.
“[It’s] as if you are paying someone to borrow a bike that’s actually yours to begin with,” said University of Michigan law professor Reuven Avi-Yonah to Bloomberg.
According to Ars Technica, the sum Apple earned works out to around $6 per American taxpayer over the past five years. The technology publication also notes that Apple currently pays an effective 2.3% tax rate on overseas profits by exploiting various flaws and loopholes in the tax code. Other multinational tech companies like Google engage in similar activities.
It’s all completely legal, and more than a little ironic.
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