Tax Evasion by Corporations including Apple – TIME

Apple’s Tax Troubles Are Just the Beginning – TIME. This is an article from Time magazine, June 3, 2013 issue, written by Rana Foroohar. The title is “The Coming Corporate Crackdown – Apple is facing tough questions over its skill at avoiding taxes – and that’s only the beginning”. Since the publicity storm of Apple’s avoidance of taxes (saving $44 billion of otherwise taxable income), Congress is looking at closing the loopholes that have let Corporations “Legally” avoid taxes. In the United States, Corporate taxes accounted for nearly 32% (Nearly a third) of federal tax revenue in 1952. Today, the amount has shrunk to 8.9% in 2012. Not only is the United States looking into this, but so is the European Union.

The Coming Corporate Crackdown by Rana Foroohar

The Coming Corporate Crackdown by Rana Foroohar

Editor’s Comment

I recommend reading Ms. Foroohar’s article. It is well written and concise (like always). I have one point to contend with though. On item 3, Ms. Foroohar said that Walmart’s response to the Bangladesh Garment factory fire and devastating factory collapse is to “fund” Bangladeshi government efforts to improve labor standards. She may have more information than I do, but Walmart has not signed the pact to improve or finance Bangladesh safety standards as of May 28, 2013. Walmart has said that they would make a better effort to inspect the factories that they do own. They own 279 factories in Bangladesh.

The reason I thought this article was important is because it is actually one of the major reasons why companies outsource. Many people think companies simply outsource because labor is cheaper, but labor is only 5% to 8% of the total costs. Other factors are actually more important as to why companies outsource. Certainly, tax avoidance is close to the top. First, companies pick a country where the corporate tax is much lower, and if it is not low enough, many times (if they are large enough) will work out a deal with special tax “exemptions”. And, by being a multi-national corporation, it is much easier to shift money from country to country to shield money from taxes. Add to that: companies get tax breaks for moving their companies from the United States to other countries; and then add: they do not have to deal with regulations on clean air or water (A-feel-free-to-pollute-all-you-want card) or safety, then you have a near perfect storm for countries to outsource.

Final Quote

From author, Rana Foroohar, on the issue if there will be new corporate rules enacted: “That’s why it will be crucial for Big Tech to prove it’s enriching the 99% as well as the 1%.”


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