The Daily Show’s Jon Stewart poked quite a bit of fun at Apple last night. The show featured a skit showing the American government trying to figure out how to make Apple happy, which is confusing, since Apple should just do what everyone else does and pay their taxes.
Here’s Apple’s current situation in a nutshell: Like every other American company, they setup holding companies in countries where the taxes are more favorable. So say for example Apple needs to buy some boxes. A lot of boxes. They open Apple Incorporated in a country where sales tax is next to nothing, buys a whole bunch of boxes, and then ships them to where they’re needed. It’s obviously a little bit more nuanced than that, and I’m not even going to pretend to understand how a multinational corporation the size of Apple gets taxed, but they, like every other company, uses loopholes to minimize what they have to pay.
You’ve probably heard about Apple’s recent debt offering. Apple, a company with over $100 billion in the bank, borrowed money so they could pay shareholders a nice fat dividend. Why didn’t Apple just pay them with money from their own bank accounts? Because those bank accounts are in other countries, and bringing that money into America would cause it to be taxed at some absurd rate. In other words, it’s cheaper for Apple to pay people with cash they’ve borrowed than their own money due to how the laws are setup.
Pretty crazy, eh?