The headlines on everything from CNBC to Drudge Report featured the same thing yesterday – Apple is going to pay $38 billion in taxes this year. While that is great news, the story behind that announcement is even more compelling.
CNBC’s headline has been picked up by most news outlet, both liberal and conservative: Apple will make a $350 billion “contribution” to the U.S. economy over the next five years, although it’s unclear exactly how the company came to that number.
The company also said it will spend over $30 billion in capital expenditures, create 20,000 stateside jobs, and open a new campus within the next five years.
Tim Cook, the CEO of Apple, said: “We have a deep sense of responsibility to give back to our country and the people who help make our success possible.”
The question is why now?
President-elect Donald Trump publicly called out Apple’s reliance in 2016 on its Chinese supply chain, saying he would “get Apple to build a big plant in the United States or many big plants in the United States.” Many ridiculed Trump’s promise as either ignorant or overblown bravado. Part of Apple’s commitment is to build a new plant somewhere besides California and make $10 billion in capital expenditures in building data centers across the U.S.
Apple’s press release states:
Combining new investments and Apple’s current pace of spending with domestic suppliers and manufacturers — an estimated $55 billion for 2018 — Apple’s direct contribution to the US economy will be more than $350 billion over the next five years, not including Apple’s ongoing tax payments, the tax revenues generated from employees’ wages and the sale of Apple products… Planned capital expenditures in the US, investments in American manufacturing over five years and a record tax payment upon repatriation of overseas profits will account for approximately $75 billion of Apple’s direct contribution …Apple, already the largest US taxpayer, anticipates repatriation tax payments of approximately $38 billion as required by recent changes to the tax law. A payment of that size would likely be the largest of its kind ever made.
Following Apple’s announcement, President Trump applauded the company’s decision to return hundreds of billions now held in overseas banks as a “huge win for American workers and the USA!” He tweeted:
I promised that my policies would allow companies like Apple to bring massive amounts of money back to the United States. Great to see Apple follow through as a result of TAX CUTS.
Wired Magazine reports that other big tech companies now plan to pay taxes on revenue currently held offshore. According to calculations by The Wall Street Journal, Microsoft may pay $11.7 billion, Cisco Systems $6.2 billion, IBM $6.1 billion, and Google parent Alphabet $5.2 billion.
The European Union grew tired of companies like Apple sheltering money from taxes from its member countries several years ago. This explains how much of Apple’s money ended up on an island nation known for its tax haven status called Jersey.
Last November, Apple moved much of its money to the tiny Isle of Jersey after Ireland cracked down on collecting its fair share of taxes. The Financial Times reported that Apple has been forced to pay $188 million to the UK after an extensive audit by its equivalent of the IRS.
It 2013, Cook, the chief executive of Apple, appeared before a United States Senate investigative subcommittee. At that time, Apple was being pressured about its avoidance in paying tens of billions of dollars in taxes by shifting profits into Irish subsidiaries deemed “ghost companies.” Cook denied this practice saying, “We pay all the taxes we owe, every single dollar. We don’t depend on tax gimmicks. We don’t stash money on some Caribbean island.”
Cook told the truth. Apple wasn’t hiding its money in the Caribbean but had chosen the Isle of Jersey in the English Channel for that.
The mainstream media has been quick to examine President Trump’s finances, as they should for all public officials. But consider this, Corporations of all kinds have transferred patent rights, trademarks, and other valuable assets into offshore ghost companies to avoid paying billions of dollars in taxes.
The rights to Uber’s taxi-hailing app, Facebook’s social media technology, and Nike’s Swoosh have all resided in shell companies that listed their headquarters in Bermuda and Grand Cayman.
It is great news that Apple will boost the economy, but don’t expect President Trump to get the credit he deserves.
~ American Liberty Report