The New York Times lays out legal approaches used by Apple, world’s most profitable technology company, to avoid paying billions of dollars in federal and state taxes.
One method remarked in the report: Although Apple is based in California, the technology giant has set up an office in Reno, Nevada, to collect and invest its profits. The corporate tax rate in California is 8.84%. On another hand, in Nevada, it’s 0%. [1]
As it has in Nevada, Apple uses subsidiaries in the Netherlands, British Virgin Islands, Ireland and other low-tax regions as part of a tactic that allows the company to cut its tax bill by billions every year.
Without such strategy, Apple’s federal tax bill would have been $2.4 billion higher in the last year, according to a study by former treasury department economist Martin A Sullivan.
Certainly, almost all major corporation tries to reduce its taxes. The savings are especially staggering for Apple due to the company’s high profits. Wall Street analysts predict Apple would generate $45.6 billion in revenue in its current fiscal year – which would be potential record for any American business.
However, the question remains, is it unethical for Apple to legally minimize paying state and corporate taxes by exploiting loopholes? Or is it clever to maximize their profit by utilizing the tax laws to their advantage?
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Personally, I believe its a smart move from Apple Inc. Yes, even though its unethical, I believe they earned the right to pay less tax as they were the ones that found the loophole in the tax system. Imagine you a coupon that says you can get $50 worth of free things. Suppose the company forgot to print the exception that you have to spend at least $100 to receive this free $50. If you were to bring that in to the store, the result will be that you get free $50 worth of items. Being smart isn’t a crime, henceforth its is why I believe they earned their right to pay less taxes.