No one “likes” paying taxes. No one likes traffic rules either. But we still follow them for the overall safety of ourselves and our fellow drivers. How would other drivers feel, though, if the police suddenly decided not to issue tickets to violators who drive luxury cars? Rightfully, there would be a riot. Now imagine: the richest, most profitable company in the world — one that made 120 billion dollars in profits in 2022 alone — paid practically zero dollars in taxes to Uncle Sam and hid behind “legal” chicanery and loopholes. That is what Apple has been doing for decades, and we need to urgently act to stop this profit-offshoring pandemic. It is time to write Tim Cook a ticket.
All companies utilize several legal avenues to avoid or minimize their taxes. It is their fiduciary duty to do so. Equally, it is the duty of the U.S. government to ensure that the services American society provides are not taken advantage of. Sometimes, some companies even receive net “rebates.” For example, in 2020, rather than paying taxes on a total of 8.5 billion dollars in net income, 55 companies in the S&P 500 paid zero dollars in taxes. And, ironically, they actually received 3.5 billion dollars in rebates. While this number may not seem high, bear in mind that this data is from the peak of the Covid-19 pandemic. So imagine the amount of money these companies saved before the pandemic. Apple has strategically spread its fortune around the United States and the world to avoid taxes everywhere. It pays little to no taxes in its actual work headquarters in California nor where its “bank” is in Ireland and remote islands in Europe, such as Jersey.
According to tax analysts, Apple does most of its research in the United States. Most of its key employees are in the United States. The company’s long-lived assets, retail stores, and sales are also based in the United States. Therefore, they must pay the costs of manufacturing, marketing, and selling in this country.
A critical part of this issue is that if any individual or small corporations were to utilize the land and create (relative) revenues that Apple makes in the American economy, in addition to the revenue that Apple generates through the sale, marketing, and production of their devices, the federal government would receive a proportional amount of tax based on the size of the individual or group that Apple does not provide the federal government with.
Congress explored this issue in 2012 following the Senate hearing where the then newly-minted Apple CEO, Tim Cook, was questioned about the company’s offshore tax avoidance strategies. Former Senator Carl Levin, the Michigan Democrat who led the inquiry, stated that offshore tax avoidance by corporations is a “significant cause of the budget deficit, and adds to the tax burden that ordinary Americans bear.” As the chairman of the Subcommittee on Investigations, he and his team were expected to form Congressional changes to the tax code. Unfortunately, with his retirement in 2015, this was unable to see completion and that is where the deep investigation into crooked companies such as Apple faded. There are still senators such as Elizabeth Warren, Bernie Sanders, Chris Van Hollen, and Sheldon Whitehouse who sent letters in March 2023 regarding the tax avoidance issue of the uber-rich. With this law being a connected theme and a high precedent for their pushes to the Treasury, it is almost certain that they will sponsor this case. They will bring it to the current members of the Subcommittee on Investigations, who have investigated Apple’s tax avoidance in the past.
Corporations, led by Apple, will challenge these proposals. Apple will peddle the strawman that, because its shares are widely held by mutual funds, increasing Apple’s taxes is essentially increasing taxes on the middle class. That is false. No one is asking for Apple’s taxes to be increased. The request is to pay the fair share for using the benefits that America provides including roads, energy, schools, etc. The impact of offshore tax avoidance by corporations such as Apple extends beyond the budget deficit and tax burden on ordinary Americans. It also affects high school students by limiting the funding available for education. When corporations avoid paying their fair share of taxes, it reduces the resources that can be allocated to schools, resulting in decreased funding for essential programs, resources, and opportunities for students. This perpetuates educational inequality and hampers the ability of high school students to receive a quality education. Apple is in California because it wants to be in California. Apple is in America because it wants to be in America. No one is preventing Apple from moving its actual headquarters to Ireland or the Philippines. A teacher in high-tax Illinois, for example, can not suddenly claim she is “incorporated” in the Bahamas and refuse to pay federal and/or state taxes.
Congress needs to pass a Tax Equality Act — which has been in the works for decades. The supporting senators should craft a bipartisan bill and present it to the Investigations Subcommittee for review and, eventually, to the House and the Senate. The Minority Ranking Leader, Senator Ron Johnson, has been accused of tax avoidance in the past with his business but with the public backlash, he has been encouraged by his team to support the cause of enforcing taxes in large companies and it is likely he will be advised to support this bill, even if it is just to better his public and political appearances. Simultaneously, public voices should be raised at the White House as well. Presented with context and clarity, the American public will almost certainly support this policy change as it benefits all taxpayers and gives everyone “their money’s worth.”
If a Tax Equality Act is passed, then larger companies, including Apple, can pay their rightfully due taxes to the U.S. Additionally, this act will likely encourage lawmakers to use this case as a precedent for all types of organizations and companies, along with the rich that benefit from this idea of “tax avoidance.” It is time America gets its justly deserved slice of this Apple.
