Every fall the internet and its resident tech mumblers congregate for The Apple Event, a quasi-pagan streaming-video rite in which Tim Cook boasts of just how much money his company is making (a lot) and just how much good it’s introducing to the world (this typically involves a new iPhone). This is merely annoying most years; but in 2016, when Apple is loudly, publicly denying its tax obligations around the world, it’s just gross.
Today’s iteration of the ritual, which spanned roughly two hours and included about five minutes of news, began with a rundown of some very large numbers: Apple’s streaming music service has over 17 million paying subscribers, its App Store has topped 140 billion downloads, and that store’s revenue is double that of its Google counterpart. After a brief preview of an upcoming Super Mario game for the iPhone, sure to be a revenue blockbuster, Cook segued into a spiel about the importance of education and the necessity of providing proper resources to students. His solution: a new version of iWork, Apple’s productivity software suite, that allows for multiple kids to edit the same document at the same time. It seems unlikely this will make a substantial difference in the quality of education for children around the world — particularly in countries where public schools are underfunded because companies like Apple deliberately avoid paying taxes.
Apple, despite (or more likely, because of) its recurring status as the most valuable company in the history of capitalism, funnels a huge portion of its profits overseas, particularly to Ireland, in order to avoid paying its fair share at home in the United States. This year, the company has come under fire from the EU for failing to pay what it should even in the zone where it’s stashing its profits — the European Commission has demanded a $15 billion payment from Apple over unpaid Irish taxes, a sum Ireland is actually refusing to accept for fear it will lose its coveted status as Apple’s unscrupulously convenient money dump. Meanwhile, the United States is condemning the EU’s ruling because it’s also battling Apple for unpaid taxes — it has apparently not occurred to either party that Apple is so unfathomably cash-rich that it could satisfy its tax obligations on two continents at once.
Apple CEO Tim Cook speaks on stage during a launch event on Sept. 7, 2016, in San Francisco, California.
Photo: Stephen Lam/Getty Images
The official corporate position is now effectively We’ll pay what we want, and you’ll deal with it; Tim Cook himself has said Apple will only repatriate its vast billions to the U.S. if it’s at a rate he considers “fair.” Cook simultaneously claims Apple is already paying more in taxes than anyone else in the world, which as Bloomberg’s Shira Ovide puts it, “has the benefit of possibly being true and impossible to verify.”
Apple’s tax schemes cannot be dismissed as merely matching the competition for reasons of corporate pragmatism. Yes, Google and Facebook engage in aggressive tax avoidance too. But Cook appears to be pushing for permanently lower corporate taxes. That’s the best explanation for why he has helped raise money for Republican legislators despite sharp differences on social issues (Cook is the world’s most prominent gay executive). This seems like as good a point as any to mention that Cook today boasted that Apple has sold over a billion iPhones around the world — the iPhone 7 will retail for $649.
And so it’s hard to swallow Apple’s use of the word “courage” to describe the corporate ethos that pushed the company to remove the headphone plug from the newest iPhone while offering a new pair of jack-free earbuds that will run you $160. Removing a headphone jack or adding 20 headphone jacks does not require courage; engineers are very smart, but their job does not typically require much bravery. Courage is more often found in, say, running into a burning school to rescue the students and class rodent. Or, maybe, you could call courageous the act of paying the many billions you owe around the world into the system that ensures those students have all of the resources they need in order to learn and grow. Just a hint: Collaborative spreadsheet software doesn’t count.
All the people on here defending Apple because Ireland isn’t asking them for more tax, because they want to attract corporations, are missing the point that the mercenary, tax ‘minimising’ (read: avoiding) corporations create a race to the bottom amongst countries that are desperate for at least -some- tax revenue, until they’re paying almost no tax anywhere while raking in the dough.
So it’s a bit on the nose to then wank on about what a great difference they’re making to the world by selling barely useful productivity software to kids,
Blah blah. Removing the headphone jack on a brand new product and breaking decades of tradition *does* demonstrate a form of courage – and nothing is forcing anybody to buy the $170 AirPods – in the same way that nothing forces you to buy Apple’s leather iPhone cases. There are plenty of alternatives out there, including your *old* headphones which will work just fine with an adapter, thank you very much.
Kids these days… not old enough to remember when Apple pulled the floppy drives from their machines… or when all stereos had 1/4″ jacks instead of 1/8″. You know what people used to listen to their music on their 1/4″ headphones? An adapter.
lol what a joke, they make shitty products for retarded hipsters, they are not too big to fail
The US has an extremely high corporate tax rate compared to other first-world countries. Maybe if we lowered it to stay competitive we wouldn’t have all these problems.
That’s actually not true: https://en.wikipedia.org/wiki/Corporate_tax_in_the_United_States#/media/File:Effective_Corporate_Tax_Rate_OECD_Countries,_2000-2005_Average.jpg
Correction, please: It’s the headphone jack, not the headphone “plug.” (Also, every iPhone 7 comes with an adapter so people can still use all existing earphones, headphones, headsets, and other devices with the 3.5mm plug.)
Mr. Biddle,
1) Apple pays the tax bill that the Irish government sends them.
2) Any extra taxes that would be paid as a result of the EC decision would be credited on Apple’s U.S. tax bill.
3) Ireland was in deep economic troubles before it lowered its corporate tax rate to attract lead foreign corporations such as Google, HP, Apple, IBM, Facebook, Linkedin, Twitter and Pizer just to name a few. As a result, it has now become a global technology and pharmaceutical hub as a result.
You should really stick to writing articles about things you know and understand and stop with the click-baiting headlines. It throws any credibility you may have had right out the window.
By the way, when you do your taxes this year, don’t forget to throw in an extra $1,000 if you feel that taxpayers should pay more than what the tax department asks from them.
Well said Jaybee. The Intercept should focus on real investigative journalism. “Apple’s use of the word “courage” to describe the corporate ethos that pushed the company to remove the headphone plug from the newest iPhone while offering a new pair of jack-free earbuds that will run you $160.”
The iPhone 7 comes with the EarPods with Lightning Connector for FREE, so to suggest everyone must buy the optional AirPods is the authors interpretation. Any real software and hardware engineers knows it takes courage to innovate. Apple improved their products by removing the antiquated floppy drive in 1998 with the iMac G3, they removed dial-up phone jacks in 2006. They removed CD/DVD drives with the MacBook Air in 2008.
The Intercept’s attempt to connect a product release with the tax debate is ridicules. Just a hint: both Ireland & U.S. Treasury support Apple on this case, so why haven’t you discussed those points in this article? Scared to explore the truth?
RTFA: “Meanwhile, the United States is condemning the EU’s ruling because it’s also battling Apple for unpaid taxes ”
FYI Ireland is against it because it wants to keep its tax heaven status. http://www.irishtimes.com/opinion/we-should-collect-apple-s-13-billion-and-change-ireland-1.2773136
Jaybee, go screw yourself. The point is that Apple, Amazon, Starbucks and numerous other large US corporations have been exploiting the taxation system to pay tiny amounts of tax on multi million profits. It is disgusting that they are being allowed to avoid paying a proper and fair level of taxation, merely by allocating profits to countries with low taxation rates, to avoid paying the appropriate taxes in the countries that the revenues were really earnt.Apple and the rest of these rogue corporations should be made to cough up or face a huge social media campaign encouraging people to boycott their products and services. Governments need to also be pressured to close these tax loopholes that these greedy and selfish corporations are exploiting.
Apple blackmailed Ireland into having to pay a lot less than the already very low Irish corporate tax rates, which is illegal according to the EU rules (it discriminates against other companies). Those $15bln Apple has to pay now is the difference between the legal corporate tax rate in Ireland and what the Irish government allowed them to get away with.
ALL Taxation is theft- No Exceptions.
All forms of government protection including government-based incorporation, government subsidy, government patent-trademark, government monopoly, cartelization, and government regulation, and any other government interference with business is against the Free Market.
In a Free Market, Apple would need to compete with other companies who make better products, without patent protection, without government favors, prices would trend lower instead of artificial propping up new iPhones. Without the burden of taxes, regulation, spectrum controls, anyone could enter the market with better products. Then, the best performers would have the best reputations and worst would not. Standards would be based on market demand, not one manufacturers force change to the market. If a company hurts its customers in a free market, it goes out of business. With government, it is protected from lawsuits and damages.
Someone who obviously doesn’t get it. Given your name I know it’s useless to explain the basic truth, but I suppose it’s good practice. Here goes.
Taxation is not theft. It’s payment of what’s owed for services already rendered.
By the time any person or corporation becomes productive enough to pay taxes, they’ve spent time using public services–making use of roads and street lights, having their trash picked up, living on (hopefully) cleanish water and disease-free food, getting medical attention when needed, and overall benefiting from the effects of a halfway decently educated populace.
Services rendered. Anyone who refuses to pay their share in taxes becomes a parasite leeching off the rest of society that’s actually productive.
Nah. Children’s parents pay for trash pickup and most of the rest. Governments are letting private profiteers in on all kinds of public contracts. Private business (especially corporations) should be limited (maybe even end corporations as we know them). The greatest tax burden should be from corporate profits (invert it off peoples backs, and bend the corporate mission to serve the public).
Citizens can pay taxes, but 1st: Start single payer health care (I think Kuwait instated it in 1912, and most/all developed countries got it or 2-tier plans since). Then, provide education and all the humane services that civilization demands. And finally, start taxing progressively at no less than a living wage (in fact, we need to ensure a living wage for all that fall out of that; beats ignorance, starvation, crime, acceleration of disease…). It makes no sense to start taxing people at a $5-10k income and turn our backs on people in schools, in the street, at the grocery, at the doctor, and … There is nothing wrong with a 100% tax bracket at the top. Maybe a million or two (?). Life would be different for the few, but they could just plain get over it, while 7 billion plus take their turn with those formerly ill-gotten gains. Which brings us back to the topic of theft
Dear Phil,
where does the Constitution say the federal govt. is permitted to do all the things you list? Nowhere, is where. Those are all State duties. And don’t give us the “Fair Share” canard. The Constitution was designed to limit the taxes flowing to the federal govt. in order to restrict its growth (its tyranny). Today’s tax law is for an excise (privilege) tax that is directed at activities for which the govt. has ownership interest. IT IS NOT A DIRECT TAX, as most believe. The apportionment requirement for a direct tax has not been repealed! My “fair share” is whatever the tax law requires and no more, even if that amount is zero! Your remarks remind me of the statement by Mark Twain, ” it ain’t what you don’t know that puts a hurtin’ on you, it what you know for sure, that just ain’t true! See Losthorizons.com and get free the scam of the income tax.
But in your vision for a tax-free world, who would pay for the roads used to get to work, the police who protect the workers, the water used to flush their toilets?
You obviously have no idea what you’re talking about. Businesses don’t hurt consumers until they have crushed their competiton and put them out of business. Classic example is Budweiser beer. They used money from other market areas to undercut prices from local breweries until they went out of business then raised prices once there was no competition. Wells Fargo Bank was just fined $180m because they broke a regulation that says you can’t steal money from you depositors. Should we get rid of that regulation? What about Celestial Season Tea? They weren’t paying attention to what “Herbs” they were putting in their product and introduced Fox Glove to their tea sending thousands of customers to the hospital with heart attacks. Fox Glove is used for heart conditions in a medicine called Digitalis. What regulations would you repeal? How should free market competition work when large companies game the system? You name isn’t Trump is it?
There is no such thing as the Free Market. There never will be such a thing as the Free Market, because nobody who has a scintilla of common sense realizes that it is neither desirable nor practical.
Well, iPhone 6 cost Apple $216 produced in China/Taiwan and $256 if produced entirely in the US. It is a scandal.
Parasitic Cook and other oligarchs should be in jail for robbing Americans blind and taxed 35% as anybody else.
When people will understand that the oligarchs’ profit is what needs to be cut together with their greed.
“… entirely in the US.” That should include “if” it could be produced in the US which is an impossibility because of the current scale of manufacturing capability for the components and parts down to the screws, the human resources in STEM talent (mostly engineers) and the human labor to assemble them. The few Apple devices that are “made” in the US are assembled with parts manufactured in China and other countries because they cannot be made here.
“But Cook appears to be pushing for permanently lower corporate taxes.”
And if he gets it, he’ll find ways to avoid paying even that lower amount.
Isn’t it ironic that Valleywag now lives again on a site funded with PayPal dollars?
I love the way you write.
He’s a brilliant writer. If you like this, read his old stuff on valleywag.
The author missed an important part of this how conversation. If Apple and similar companies do end up paying the supposed Irish backtaxes, not only will the US loose the actual revenue in terms of real dollars, but more importantly, multinationals AND lawmakers loose all the leverage to change the tax structure. After all, any tax holiday or tax reform resulting in a rate comparable to 12.5% would be useless in terms of re-patronization, since Apple will be able to credit taxes already paid in Ireland. Only a new tax rate of 20-25% would be meaningful leverage on the repatriated monies.
Of course, a permanent tax rate of 12.5%-ish would be useful for revenues going forward, until Apple and the likes “legally” finds another tax haven with even lower tax rate.
Alright, here’s an idea: how about we take a look at the inflated, bogus values that companies claim for copyright infringement. For example, they routinely say that each and every paper in a scientific journal is worth $35 or so, even though literally nobody, as far as I know, pays that price. They make ridiculous claims about the cost to them of sharing movies on Pirate Bay and so forth. It is all just make believe money, and sometimes a court is dumb enough to believe it.
But how about a different way? The court makes any liability dependent on some multiple of the actual tax paid on the product, on average. So if a company only sells their games over the counter at a game store and the state takes 6% and they dutifully pay 21% to the federal government of the U.S., the liability is N times 27% of the sticker price. But if the company pays 0.01% to the King of Monaco, the liability is N times 0.01% of the sticker price. And only if the U.S. has some kind of treaty with Monaco (I’m not sure which).
It kind of makes sense that a government’s interest in deterring piracy would be proportional to the actual cash take they get for their general revenue. They could still be international, but international in the sense that *somebody* actually has to get paid if they want the courts to care about this make-believe civil liability that arises when nothing was stolen but (supposedly) an opportunity for them to sell a product.
I don’ t think this would be enough to change Apple’s mind, but it would at least amusingly impinge on their attention.
Ireland doesn’t have a “right” to higher back taxes – the reason Apple is doing more in Ireland than selling merchandise and running a few stores is that Ireland’s taxes were lower than the rest of the EU, and Ireland was using that to bid for corporate legal headquarters business.
we need to invoke our redress of grievances as our constitution states and replace all elected politicians from from state to federal with new people who will do the bidding of the american people not corporations , we desperately need term limits and more accountability. the majority of my taxes go to war which i hate instead of education but i still consider myself a patriot and pay taxes. if the apple corp were patriotic it would pay more instead it pays less taxes than it should and employees almost no americans , how unpatriotic and i think possibly treasonous , hell NAFTA and TPP are unpatriotic and treasonous.
This was a very interesting read…but I think I’m lost.. where do I find Kristin Cavallari updates? Halp.. I’ve made a wrong turn somewhere.
Dear Sam Biddle,
The ENTIRE Raison d’etre of the United State of America is so that corporations like Apple DO NOT pay tax. The US and its flunky sidekick states are Vampiric Monopolocracies where everything exists to ensure uber-big corporations can suck the life blood of the world for the benefit of their shareholders. That’s it. That’s all there is. Governments empower them; armies, lawyers and law enforcers protect them; universities educate, research and develop for them; the Earth’s resources are consumed by them. YOU go to work in THEIR corporations. YOU take their crappy pay on THEIR terms. YOU pay the taxes. YOU sponsor their corporations. YOU buy their products. YOU borrow THEIR money. YOU pay THEIR interest rates. YOU get into debt. YOU get sick from stress. Then YOU wake up the next day and start all over again until you drop fucking dead. Got it? WAKE UP TIME!
Getting pissed at biddle truth screed is killing you from choking on self serving minions of Apple-
Power has been inverted. Corporations are now more powerful than governments. Apple and other Globalist corporations believe that government monies should by right, flow to corporations not the other way around.
It could be argued that America is in the middle of a leveraged corporate buyout. Failing that, we may end up with a Mafia style bust-out.
Actually, governments are far more powerful. Apple operates at the behest of government. That is precisely why it chose to park its assets overseas: to escape US tax law. If the US chose to change it’s laws tomorrow, it would be game over for Apple. What power Apple has, resides in it’s checking account. It uses that resource to psychologically strong arm government officials through its paid lobbyists–all in private. Additionally, it exerts pressure more generally through public statements, which we hear about in the media. Apple is at the mercy of government, which happens to be run by weak-minded, materialist, ideologues, with a few exceptions.
The lesson in this: this entire mess is in the hands of the people. Government, in turn, runs at the behest of the people. To the extent that the people are moral, aware and active, so too will government be. If a majority of people are uninformed, apathetic, and lethargic, that’s the perfect recipe for the kind of behavior we see in Apple and other extremely wealthy corporations.
The good news is that the world is changing for the better in that a significant number of people are aware, informed and have the right ethics to match. Paul Hawken and others speak of that group as a global movement, a global phenomenon. The question is not if their activities will influence eventually governments, but when and how much.
Where’s your MBA from, Mr. Biddle? Or your JD?
You advocate that companies ignore the law and pay in excess of what they owe? Do you every year throw in a few extra thousand bux to pay down the national debt?
Change the law. Don’t whine when people follow it and you disagree.
And for the record, what Apple does in tech is different than what Apple might do in finance and management. You see, these are different things. Sometimes, different things seem to conflict, but really, it’s just because they are different things.
We should target lawmakers instead of targeting CEOs; Apple is acting under the law.
Seems obvious enough. Apple is, predictably, acting in their own self-interest. Isn’t the federal government’s job to act as a check against such behavior?
No, it isn’t. Because such behavior is legal.
It’s the same problem with pharmaceutical companies raising the prices of their medications.
Focusing on CEOs is a waste of time.
Apple has paid all the taxes they are legally obligated to pay.
Get your facts right. Whatever you think of the US tax rate, Apple has actually NOT paid the taxes they are obligated to pay, they have DEFERRED payment, specifically until they bring it back to the US. Indeed, their special rate in Ireland is because they INSIST the money is earmarked for the US, and they intended pay the taxes in the US and so Ireland has no right to tax it at their normal rate of 12.5%. In the meantime, they are “virtually” keeping in on a boat forever at sea, until the government changes the tax law. If it weren’t so risky (pirates, ARGGGGG!), doing literally that would be nearly the equivalent.
It may be technically legal but hardly consistent with the intention of the US tax laws.
Fair? Steve Jobs grew up from the 1950 when Corporations paid $1.50 for every $1.00 of Individual tax paid, and he benefitted, but in 2016 B$CEOs Corps pay only 25cents to the $1.00 Individual.
You got that from Richard Wolff, I gather. I heard that also. He also made the point that these corporations benefit from our taxes, ie roads, police, education. To force them to pay their share is a complicated endeavor, I think. Not only do we need to change the laws here, but we need to take ISDS clauses out of our trade agreements, and probably also amend the Constitution to eliminate corporate Constitutional rights. We need to get big money out of our politics, and get rid of crony capitalism and the so-called revolving door.
Good stuff, Biddle. I am enjoying seeing the real grown-up news reporting you are doing over here at The Intercept.
Gawker was getting really tired the last couple of years, altho I did enjoy your all-day watchathon of the spring break cam at the hotel in Panama City Beach.
Nice to see you grow into your talents. Also, Galaxy is way better than iPhone anyways.
Great article! Reading articles like this one makes you realize that multinational corporations are, along with climate change and terrorism, the biggest threat to mankind.
Presumably the author means the United Sates. However, the federal government doesn’t provide that much direct funding to schools, preferring to leave that job to local governments. Their role is more to ensure that educational standards are kept uniformly low, so that graduates will be more suitable to menial jobs serving the elite.
When The Intercept describes what the federal government does, it covers wars in the Middle East, financial bail-outs, pointless surveillance and military aid to Pakistan. But apparently what the government really yearns to do, is spend more money on education. However, while all those other activities can be financed by massive deficit spending, education has to wait until Apple pays its tax bill.
It’s time for Apple to get its priorities straight.
Does anyone know who hold the controlling stock votes in Apple? No one seems to know who the controlling interest belongs to.
What is certain is that it is only a very few maybe 3 or 4 or possibly only one person.
We know Microsoft – Gates, Google – Pabe & Brin, Orical, Dell what about Apple????
Who controls the richest corporation the world has ever known??
Carl Icahn, maybe?
No one. And none of the people you mention hold controlling interests in those companies. Check their SEC documents.
A Profound Capitalist pretending to use social justice as an excuse not to pay his company taxes.
We see that “share holders” are more important.
Screw your begging for war donations. Apple should NOT donate to the slaughter of more children overseas. Be ashamed, fascist scum.
Precisely. Apple has done far more with it’s money to improve our lives than Gov’t has bombing the shit with it’s military industrial complex, paid for on the backs of no one else but taxpayers.
Don’t like Apple? Use your real vote, your earned dollar and choice of whom to labor for, to dictate what businesses succeed in society. Stop supporting theft for an archaic system of violence that suppresses, violates, and voids Rights upon the masses.
Sick of huge US corporations getting away with not paying their taxes.
Amazon and Starbucks pay less tax than sausage atall, says Austria BBC News :
http://www.bbc.co.uk/news/business-37259278
Paying taxes to your government for the maintenance of common property is a good thing – if it is done fairly and good. But in the US, that is not the case.
1. the people no longer own their governement
2. collection of taxes does not just pay for common property upkeep, it funds all sorts of private and nasty stuff
3. payments of taxes is absolutley not fair in the US
4. taxation in the US is not done goodly because it amounts to a form of coercion bordering on extortion, threats, and temprorary arrest, and has actually become a trap.
What if everyone stopped paying taxes? bankrupt the government and start over – a better system from the ground up?
There is little more fair than keeping your money for which you labored and deciding whom shall earn it in trade. Taxation is theft; nothing good or fair about it. You want the choice to stop paying taxes when you believe it’s not of “good” or “fair” benefit. There’s a system for that. It’s called free market trade.
Don’t buy the new IPhone 7 until Apple pays its taxes
https://www.theguardian.com/commentisfree/2016/sep/07/dont-buy-new-iphone-apple-eu-taxes-controversy
Right to the point. Thank you.
Great piece Sam and thanks – I’m Irish and like many am disgusted at the low tax being paid here – when (Irish) citizens and businesses have to pay high taxes. Our (minority) government and Revenue are guilty of tax evasion and we badly need this 13bn for housing, health, schools – as you say in your article. We have kids, families and so many poor single people, rejected, living on our streets and health and education badly need help – never mind the small to medium home grown businesses which could benefit from business growth funding. The stupidity and arrogance of the corpgov is incredible – Paul Murphy TD, Brid Smith TD and Richard Boyd Barrett were excellent in our parliament today, however they (gov) have already decided to appeal so the only good it did was to encourage people to mobilise and start marching on the streets, which I believe will happen (next one againest water tax Sept 17th Dublin) Thanks again. #AppleTax #Sept17 #IrishWater
I love it! Great article. I hate having to use Apple at my job, where I forced to. The Apple cult has long claimed that macs are better than pcs but this is ludicrous: Macs are full of counter-intuitive nitwittery.
When I am “left to my own devices” so to speak I go straight for the Samsa mp3 player which allows me to manage files like a grown-up instead of having i-Tunes lord it over me like an incompetent middle-school teacher with authority issues.
robber barons gonna rob bare
i miss the labeling
it feels less pure
economic fascists
rogue non state actors
fucking bitchezzzzzzzzz