Opens in a new tab

Apple on corporate tax hot seat

April 28, 2012

Just as the 99 Percent movement is springing back to life with protests against companies that finagle very low or no tax rates comes another potential target: Apple.

A New York Times special report looks at how the technology giant’s careful selection of corporate subsidiary locations has saved it millions in federal and state taxes.

People look at Apple products inside the newest Apple Store during opening on the East Balcony in the main lobby of New York City’s Grand Central Station December 9, 2011. REUTERS/Eduardo Munoz (UNITED STATES – Tags: BUSINESS SCIENCE TECHNOLOGY TRAVEL)

Take, for example, Apple’s branch in Reno, Nev.

By opening a small office with just a handful of employees in this Silver State city, Apple has avoided millions of dollars in taxes in California and 20 other states, says the Times.

“Apple’s headquarters are in Cupertino, Calif. By putting an office in Reno, just 200 miles away, to collect and invest the company’s profits, Apple sidesteps state income taxes on some of those gains.

California’s corporate tax rate is 8.84 percent. Nevada’s? Zero.”

Apple employs a similar tactic beyond U.S. borders.

“As it has in Nevada, Apple has created subsidiaries in low-tax places like Ireland, the Netherlands, Luxembourg and the British Virgin Islands — some little more than a letterbox or an anonymous office — that help cut the taxes it pays around the world.”

The outlying Apple offices all are, of course, legal.

Some, however, have raised the issue of civic responsibility, especially when governments at all levels are facing tough choices on which programs to eliminate because they are bringing in less tax revenue.

Apple, in a statement issued in response to the Times‘ piece, addressed that question:

“In the first half of fiscal year 2012 our U.S. operations have generated almost $5 billion in federal and state income taxes, including income taxes withheld on employee stock gains, making us among the top payers of U.S. income tax.”

But the tax strategies of Apple and GE and other corporate giants, not to mention the relatively low tax rates paid by wealthy individuals such as Warren Buffett and Republican presidential candidate Mitt Romney, spotlight the increasingly asked question of exactly what should be done about legal loopholes for both for corporate and individual taxpayers?

What to you think? Should most or all loopholes be closed? For all taxpayers or only those who earn more than a certain amount, say $1 million.

What about business taxes? The U.S. corporate tax rate is now the highest in the world, but that’s not a problem for many companies thanks to careful tax maneuvering. Should these options also be ended?

You also might find these items of interest:

Share:

The More Tax Posts tab at the top of this page will take you to, well, more tax posts. You also can search below for a tax topic. 

Latest Posts
How to avoid being haunted by ghost tax return preparers

October 28, 2026

Some ghosts this Halloween are cool trick-or-treaters. But when it comes to taxes, beware of…

Read More
TAX-SAVVY WAYS 
TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

Comments
Leave the first comment