Does Apple really pay its fair share of U.S. taxes?
In a Nov. 3 report, Citizens for Tax Justice estimated that Apple paid an average effective U.S. tax rate of 31% between 2008 and 2010. That is close to the ostensible corporate income tax rate of 35%. Out of 280 companies in the study, only 49 had a higher effective tax rate than Apple.
Various bloggers and columnists seized on the report to put Apple on another pedestal, praising it as one of the few tech giants paying its fair share of U.S. taxes.
But in an overlooked report published in the journal Tax Notes in August, economist Martin Sullivan said Apple is no better than other multinationals that have been "painted as corporate tax dodgers by major media outlets."
He said that "despite outward appearances, Apple enjoys enormous foreign tax benefits, just as GE and Google do. By taking advantage of lax U.S. and foreign tax laws, Apple has been able to book a large share of its foreign profits in low-tax jurisdictions and greatly reduce its tax liability in the United States and other major countries where it conducts most of its real business activity."
He estimated that by shifting profits overseas, Apple is costing the U.S. government more than $1 billion a year.