iTax Dodger | Citizens for Tax Justice

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iTax Dodger | Citizens for Tax Justice

What to do with a cash mountain, Apple ponders, when investment is too risky. Well, one thing you certainly DON’T DO is pay tax on it.

On Monday, Apple Corp announced that it will distribute tens of billions of its cash holdings as dividends to shareholders, ending speculation over how the company will use the large pile of cash it has been sitting on. CFO Peter Oppenheimer went out of his way to point out that the dividends would be paid entirely from Apple’s U.S. cash, which means the $54 billion Apple has stashed in foreign countries will stay there.Oppenheimer explained that “repatriating cash from overseas would result in significant tax consequences under U.S. law.”

He’s not kidding! CTJ has estimated that Apple has paid a tax rate of just over three percent on this stash of “foreign” earnings, a clear indicator that much of this cash is likely parked in offshore tax havens and has never been taxed by any government. If Apple brought this cash back to the U.S., they’d likely pay something close to the 35 percent corporate tax rate that the law prescribes. The resulting $17 billion tax payment would be more than double the $8.3 billion in federal taxes that Apple has paid on its $83 billion in worldwide profits – over the last 11 years.

Apple is part of the Win America Coalition that’s been lobbying hard for a repatriation holiday (a.k.a. tax amnesty) which would allow them to bring back those unrepatriated profits at a super-low tax rate. But that would only encourage U.S. multinational corporations to shift even more profits offshore in anticipation of the next holiday.

Via @soundmigration

Of course, Apple is just the biggest of the cash kings

Apple alone represents $64 billion or 36% of the total $179 billion increase in corporate cash since 2009. And in 2011, overall corporate cash would have actually declined by $6 billion had it not been for Apple’s $46 billion increase.

Apple alone could represent 12% of total corporate cash, about three times more than the next cash king.

But highly profitable corporations not investing and sitting on cash piles is trending…….

By the time a [internet] company can go public, it no longer needs the cash. Take Google. It had already been profitable for three years before raising $1.2 billion in its 2004 public offering. And Google never spent the money it raised that year. Instead, it put the cash straight into the bank, where the funds have been sitting ever since. Today, Google’s cash pile has grown to more than $44 billion.

And as we know, by using Google Ireland as a holding company which buys the rights to Google copyrights (the Double Irish allows Google through Bermuda and the Netherlands to have an  effective  global tax rate of  2.4%) from other Google subsidiaries, the internet company can channel over 92% of its sales outside the USA through Ireland according to latest accounts.

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Donagh is the editor of Irish Left Review. Contact Donagh through email: dublinopinionAtgmail.com