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iEconomy, part 3: The Corporate Tax Dodge
Posted By Barry Ritholtz On April 29, 2012 @ 10:00 am In Financial Press,Taxes and Policy,Technology | Comments Disabled
The third installment in the very insightful and popular NYT iEconomy  series is front page of the Sunday NYT.
Some of the details of Apple’s corporate tax-avoidance maneuvers according to the NYT are:
• Apple’s federal tax bill was $3.3 billion on reported profits of $34.2 billion last year, a tax rate of 9.8%;
• Apple allocates 70% of its profits outside the U.S. note that the value is created in the US, but the low end manufacturing is overseas.
• A Nevada shell company let’s Apple’s U.S. business sidestep California state taxes. California corporate tax rate = 8.84%, while Nevada = 0%.
• California gives tax credits to Apple for conducting R&D in the state worht more $400 million since 1996;
• The “Double Irish With A Dutch Sandwich” routes royalties and profits through Ireland and the Netherlands and the Caribbean. On paper, Ireland “generated” one-third of Apple’s revenue last year.
• Salespeople working in high-tax countries are employed by subsidiaries in low-tax countries.
• iTunes sales “happen” in Luxembourg -- a tax dodge with local incentives. In 2011, iTunes S.à r.l.’s revenue exceeded $1 billion
The full series is Pulitzer bait, and deservedly so.
Click thru for giant graphics
How Apple Sidesteps Billions in Taxes 
CHARLES DUHIGG and DAVID KOCIENIEWSKI
NYT, April 28, 2012
Article printed from The Big Picture: http://www.ritholtz.com/blog
URL to article: http://www.ritholtz.com/blog/2012/04/ieconomy-part-3-the-corporate-tax-dodge/
URLs in this post:
 Image: http://www.ritholtz.com/blog/wp-content/uploads/2012/04/29appletax-hp-graphic-popup-v2.png
 NYT iEconomy: http://www.nytimes.com/interactive/business/ieconomy.html?
 An Empire Built Abroad: How the U.S. Lost Out on iPhone Work: http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html
 A Punishing System: In China, Human Costs Are Built Into an iPad: http://www.nytimes.com/2012/01/26/business/ieconomy-apples-ipad-and-the-human-costs-for-workers-in-china.html
 Image: http://www.nytimes.com/interactive/2012/04/28/business/Double-Irish-With-A-Dutch-Sandwich.html
 Image: http://www.nytimes.com/interactive/2012/04/28/business/Shrinking-Corporate-Tax-Rates.html
 How Apple Sidesteps Billions in Taxes: http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html?emc=eta1&pagewanted=all
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