Apple gets more than half a billion in U.S. taxpayers’ money while skirting U.S. taxes: report

Apple has reaped more than half a billion dollars from American taxpayers by investing its “overseas” cash hoard at home in U.S. government bonds.

That’s according to a new report suggesting that the Cupertino tech behemoth’s tax scheming costs taxpayers far more than missed corporate tax revenue.

Apple keeps more than 90 percent of its $238 billion cash reserves “overseas,” according to its financial statements, most of it in Ireland, Bloomberg reported.

But a sizable chunk of those holdings are actually kept at home, in U.S. Treasury bonds, Bloomberg said. Since 2012, Apple has more than doubled its holdings in Treasury bonds to $42 billion, according to Bloomberg, which based its report on the firm’s financial disclosures and unnamed sources said to have knowledge of the matter.

That investment has delivered to Apple “at least $600 million and possibly much more” in taxpayers’ money, Bloomberg reported.

Apple’s shifty tax maneuvering is “perfectly legal” and the interest it earns on government bonds is taxable, according to the report. The firm did not respond immediately to a request for comment.

This taxation game is played by many major multinationals, with the top 10 holding more than $100 billion in Treasury bonds, according to Bloomberg.

“That, in effect, enables the companies to turn billions of dollars in potential tax liabilities into millions of dollars in taxpayer subsidies—all while they publicly bemoan the sky-high taxes that make it impossible for them to bring the money home,” the Bloomberg article said.

Google’s parent firm Alphabet has received about $160 million and Cisco $430 million in interest from Treasuries since 2012, according to the report.

American companies, led by the technology industry, hold an estimated $2.6 trillion “overseas,” where they typically pay far lower corporate tax rates than at home. Alphabet parks about $43 billion ostensibly outside the country; Microsoft has $96 billion; Oracle has $45.5 billion; and Cisco has $57 billion, according to Moody’s.

President-elect Donald Trump plans to offer a one-time “tax holiday” that would let U.S. firms bring home money stashed overseas at a 10 percent corporate tax rate instead of the mandated 35 percent.

 

Photo: Apple CEO Tim Cook introduces the iPhone 7 at the product launch held at the Bill Graham Civic Auditorium in San Francisco in September 2016. (Photo by Gary Reyes/Bay Area News Group)

 

 

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  • ScotNot

    Misleading headline. Apple is loaning money to the USA, which is trying to raise it. This headline makes it sound like it’s a giveaway to Apple, like the billions of dollars the energy companies, agricultural companies, insurance companies, and banks get pretty much for free.

    The paltry returns on these financial instruments are certainly something Apple could beat.

    If this offends you, lobby for revising the tax codes to prevent ALL companies from overseas profit storage. Singling out Apple for a common practice is click bait, and you are guilty of it. It’s called sensationalist bullsht.

  • DaveN

    Or you could turn it around to say “Apple gives US government $42 billion for only $600 million in return”

  • Gary Doan

    It’s not taxpayers money, it’s Apple”s money. Apple is the largest taxpayer in the USA, stop hating them. Check out how much GE doesn’t pay in taxes, before criticizing Apple.

  • Stray Trader

    This article utterly twists the facts into phony anti-Apple nonsense. The U.S. Government needs to sell Treasury bonds to raise the capital it requires to function. Apple, like any investor with cash, needs to invest its cash to get a return on it. Investors such as Apple (or anyone else) who buy U.S. Treasury bonds are loaning their capital to the U.S. In exchange they receive interest. The interest is not a taxpayer subsidy. We should be thankful that companies like Apple are able to use their overseas capital to buy U.S. Treasury bonds, which benefits the U.S. If instead they invested their capital elsewhere, the U.S. would have no benefit from it. Of course the whole scenario is nonsense because the U.S. tax structure is f***ed up, leading companies to keep trillions overseas instead of bringing it back to the U.S. where it could do much more good. Apple is not doing anything wrong; you are twisting the facts to demonized them.

  • spaceage

    Sad, pathetic reporting. Author has no idea what he is talking about.

  • tonyblunt

    Apple did US taxpayers a favor by buying US bonds. That means we have to borrow less from China.

    • Abolish the income tax, the payroll tax, 16th Amendment and IRS, stop the self-imposed insanity.

  • Grab_a_root

    Would this igmo author prefer that Apple bought Japanese or Zimbabwe bonds? What kind of editor lets this kind of ignorance get published?

    • CWE

      Exactly right. The US government issued those bonds and was looking for investors. This story would make me think even less of the Mercury News, but I’m not sure that is even possible.

  • althink

    re: “American companies, led by the technology industry, hold an estimated $2.6 trillion “overseas””

    Of course the reason for technology companies leading on this is they move their intellectual property off-shore. Royalties are then earned by those patents effectively exporting profits. That is the real scam with Apple frequently accused of being the worst offender. State corporate income taxes do not allow the profits to be exported and other countries are cracking down on the scam. Corporate tax reform in the U.S. should disallow the practice. Perhaps with Democrats and Bay Area politicians out-of-power carrying water for Silicon Valley in Washington this now has a chance of happening.

    • tonyblunt

      It is not a scam, it is legitimate business planning in the face of punitive government taxes.

  • Thinkman

    If Trump did declare a Tax Holiday of 10% vs the current rate of 35%, it would be a tremendous boon for America. 10% of $235 billion is $23.5 billion – an amazing windfall versus the $0 coming home with our current system. This is so long overdue – it might even get me to stop calling him a Clown!

    • aamericannovice

      You the original clown.

  • aamericannovice

    Apple employs millions around the world in retail sales staffing.

 
 
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