(Chip Somodevilla/Getty Images)

A U.S. Senate subcommittee this week accused Apple of exploiting loopholes and creating stateless foreign subsidiaries to avoid paying $9 billion in U.S. taxes last year. Yet the panel stopped short of alleging the company did anything illegal. We examine Apple’s actions, the ethics of corporate tax dodging and whether the system should be reformed.

Interview Highlights

Guests:
Jesse Drucker, investigative reporter for Bloomberg News
Joseph Grundfest, William A. Franke Professor of Law and Business, and Senior Faculty, Rock Center on Corporate Governance, Stanford Law School

  • Conny Lingus

    Increasingly America is organized like a plantation: You’ve got the owners who live by their own rules and can’t be held responsible for actual crimes. You’ve go the overseers (today’s corporate workers) who are well paid and receive special treatment, because they maintain the plantation. And then there is the rest of us, the 99%, who are the subject of suspicion in every context and if we dare complain, they try to beat us down. We the multitude generally pay our taxes, but the 1% largely does not.

    • neb

      The company today has more power than US government. Note that US provides the environment for big powerful to grow and prosper but they refuses to shoulder the social responsibility.

      1. The power should be balanced.

      2. Company shouldn’t has immunity to violation of human right, tax obligation

      3. Facebook takes ~450 millions tax rebate from US with 1.2 billion revenue (using tax loophole tax deductible execution option). Google avoid British tax 0n 9billion EU.

      4. Big company will exploit foreign humane resource instead investing education and future of young generation.

      Neb

  • Bob Fry

    Of course everything Apple does to avoid taxes is legal…I suppose that’s the point of these hearings. So what’s next? When you have Presidential candidates receiving wide support for doing the same offshore scams, it’s unlikely anything will change.

  • cooper29

    This is just more of the same. Well paid corporate lobbyists write the laws to make the “illegal” and immoral perfectly legal. Welcome to the Corporate States of America. If the 95% want a government responsive to their needs (1% + 4% to oversee and enforce the rules of law for the rest of us), then they need to buy back their government with publicly funded campaigns and must end the two party dictatorship.

  • Bill_Woods

    “Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.”
    — Judge Learned Hand

  • Karen Ivy

    It infuriates me to watch Congress posturing at Apple on a tax situation which was CREATED by Congress. If they don’t like the way big corporations pay taxes they are the ONLY ones who have the right to change it! Not only is it their right to change it, it is their RESPONSIBILITY to change it if they think it’s wrong. But they’d rather yell at Tim Cook. Disgusting.

    • Chris OConnell

      Poor, poor Apple. Corporations are people and I feel sorry for Apple’s feelings.

    • Chris OConnell

      Apple fan? Obviously you did not watch the hearings as most Senators were fawning over Cook. But don’t feel so sorry for Apple. They are a Corporation. They are not a person. Oh, never mind.

  • Cal M

    If we have problems w/ Apple making these moves, we need to change the laws. PERIOD. The management of Apple is obliged, measured, & compensated on ONE thing: doing what’s best for the shareholders.

  • Saravanakumar Tiruthani

    Why do even have to tax the corporations? We anyway tax the individuals (i.e., shareholders, employees), when the corporation distributes the money..We need to become competitive in a global place, and ensure more global corporations want to locate their business in US (instead of making the tax code onerous)

  • johnqeniac

    Apple is not an American corporation any more than Toyota. Corporations constantly tell us that they serve their investors, not the people of any given nation. Why do we insist on considering them as ‘part’ of American society?

    There is no reason for us to invest our emotions in pride about Apple or Toyota or any corporation. They are essentially mindless non-human entities designed to pursue profits for their investors. They are totally amoral. Any useful discussion of how to deal with them must recognize this.

    Second, we have a fully corrupt government which is fully owned by corporate and big private money. Because it is designed to be that way. It is inevitable that our system of government will not be a democracy but a corporate run one. It is not use hating the individuals in government. The system is designed to be owned by big money, and it functions exactly as designed.

    – greg slater

  • John

    There was an analogy made by Joseph Grundfest on the program of individuals relocating to Florida from NY to take advantage of lower taxes. This analogy is not equivalent to what Apple is doing. The correct comparison would be those that remain in NY, send their kids to the public schools there, use the subway, roads, etc. but put a P.O. box in Florida and claim that therefore they should pay Florida rates. There is a word for that … its called cheating. It amazes me that there isn’t a recognition of all of the resources that companies like Apple take advantage of by being located here in the US and yet when it comes time to pay their fair share they decide to just hire teams of lawyers to make a mockery of the laws. Fool-proof laws can’t be created (and we shouldn’t waste time on that), but we can give regulators greater power, resources and leeway when it comes to enforcing the clear intent of the law. If you aren’t a US company tax-wise then why is all your IP filed in the US, why is all of your executive management in the US, why is the core of your R&D located in the heart of Silicon Valley? If you want to pay the tax rate in Ireland then by all means feel free to relocate your entire company over there. But if you want all of the infrastructure and benefits that come with being in the heart of Silicon Valley, then you should pay the same share that all the rest of us do. Period.

  • Good for Apple. I only regret one thing: those same strategies aren’t available to me. That would be a good thing though. I hope Congress does the right thing and opens more tax avoidance to individuals.

  • Kwestphal

    Apple doesn’t engage in tax evasion. They follow the tax laws Congress established and pay per those rules. Congress has enacted the laws that have permitted offshore tax reductions

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