Nobel economist Joseph Stiglitz has dubbed the fruity cargo cult Apple’s attempts to squirrel away cash in Ireland a tax “fraud”.
He said that the US tax law that allows Apple hold a large amount of cash abroad is “obviously deficient” and called the company’s attribution of significant Earnings to a comparatively small overseas unit a “fraud”.
Stiglitz, who advises Hillary Clinton’s presidential campaign, said that the current tax system encourages companies to keep their money abroad and opens up a vast loophole through what is called the transfer-pricing system that allows them not only to keep their money abroad but, effectively, to escape taxation.
He was responding to a question about whether policy makers like Clinton and Senator Elizabeth Warren, a Democrat from Massachusetts, could develop a plan to encourage companies like Apple to bring their accumulated Foreign Earnings back to the US Under current law, companies can defer US income tax on their foreign earnings until they repatriate them, or return them to the US.
About $215 billion of Apple’s total $232 billion in cash is held outside of the country, third-quarter earnings results showed this week.
Jobs’ Mob is making use of existing gaps in the US tax system to shift its U.S. taxable earnings overseas to low-tax Ireland. Stiglitz said that Apple was America’s largest corporation claiming that most of its profits originate from about a few hundred people working in Ireland — that’s a fraud.
Stiglitz said. “A tax law that encourages American firms to keep jobs abroad is wrong, and I think we can get a consensus in America to get that changed.”
Apple has a corporate structure that allows it to transfer money to low-tax jurisdictions, and one of those is Ireland, where the Corporate Tax rate is 12.5 percent — far below the U.S. top statutory rate of 35 percent. The European Commission, the European Union’s executive arm, is probing whether Ireland violated the bloc’s state-aid rules by helping Apple lower its Irish tax liability.
Apple, which declined to comment on Stiglitz’s remarks, has firmly denied using any tax gimmicks, telling an EU tax panel in March that it had paid all of its taxes due in Ireland. Apple employs 5,500 people in Ireland, according to its website.
In Senate testimony in 2013, Apple Chief Executive Officer Tim Cook advocated a change to the corporate tax code which would “eliminate all corporate tax expenditures, lower corporate income-tax rates and implement a reasonable tax on foreign earnings that allows the free flow of capital back to the U.S.,” adding that such legislation would increase Apple’s US taxes. In otherwords if you stop asking us for so much tax money Apple might consider paying its bills. Of course the government could just change the law forcing Apple to pay the same tax as everyone else.