Sources: Congressional inquiry into tech giant taxes closing
Friday, January 4, 2013 @ 5:40pm
According to a report at the New York Times, and confirmed by our own sources, the Congressional investigation in to the accounting practices of technology companies with offshore properties used as tax havens is drawing to a close. The year-old investigation involves a minimum of seven large technology companies, including Apple, Google, HP, Microsoft, and Yahoo.
The situation with the US deficit and worldwide economy has stoked the fire about technology companies taking advantage of existing tax laws more intended for material production that digital distribution, patent licensing, and media sales. Sources close to the investigation said that Apple had become a focus of the inquiry, and was fully cooperating with the subcommittee. The committee will likely issue large-scale recommendations that will be given significant weight in any Congressional tax code restructuring.
"Apple went out of its way to try and ensure that its tax savings didn’t attract too much public attention, because tax avoidance of that magnitude -- even though it’s legal and permissible -- isn’t in keeping with the image of a socially progressive company" said former Treasury Department economist Martin A. Sullivan.
A statement on Thursday by Apple claimed that the company is "one of the top corporate income taxpayers in the country, if not the largest." Apple has allegedly "conducted all of its business with the highest of ethical standards, complying with applicable laws and accounting rules." The statement lays out some numbers on taxes it has paid at the local, state and federal level -- "in fiscal 2012 we paid $6 billion in federal corporate income taxes, which is one out of every 40 dollars in corporate income taxes collected by the US government."
The 71 technology companies in the Standard & Poor’s 500-stock index reported paying worldwide cash taxes at a rate that, on the average, was a third less than other non-technology companies' over the last two years. Among the 71 companies on the index are Apple. Google, Yahoo, and Dell. The fact that Apple's tax liability is one of the largest in the US, however, suggests that the problem of tax avoidance through offshore havens is a massive one that has many US companies ducking their full tax responsibility -- albeit again through legal means enabled by the very Congress that is investigating the companies now.
Senator Carl Levin (D-MI) declares that the subcommittee "has demonstrated in hearings and comprehensive reports how various schemes have helped shift income to offshore tax havens and avoid US taxes. The resulting loss of revenue is one significant cause of the budget deficit, and adds to the tax burden that ordinary Americans bear." At a September hearing, Levin claimed that Apple had deferred taxes on $35.4 billion in income sheltered overseas between 2009 and 2011.