Apple allegedly avoided paying over $65 billion in U.S. taxes by funneling money through offshore arrangements, a new report said.
Cupertino reportedly kept $218.55 billion in offshore tax havens, making them the biggest avoider of corporate taxes in the United States, according to a study by Citizens for Tax Justice and the Institute on Taxation and Economic Policy. Both groups admitted that over three quarters of Fortune 500 companies used similar offshore accounts to funnel a collective $2.42 trillion in profits and dodge over $700 billion in taxes — usually in places like the Cayman Islands, Bermuda, Luxembourg, Ireland, and the Netherlands, the report said.
But the New York Times points out that, according to US law, this type of tax evasion is technically legal.
“The hard fact is that the US tax code incentivizes tax haven abuse by allowing companies to indefinitely defer taxes on offshore profits until they are repatriated,” said Matthew Gardner, executive director of the Institute on Taxation and Economic Policy.
If all of these companies paid their taxes all at once, they’d have to pay $717.8 billion in federal taxes — that’s over six times the annual cost of Obamacare, 30 percent of all funding toward US elementary and secondary schools, and 20 percent of the US defense budget, according to Quartz.
Apple has, for years, reportedly funneled billions in profits to its Irish subsidiary companies. In Ireland, the company allegedly exploited various loopholes to pay an extremely low tax rate. But Ireland’s tax policies have not gone unnoticed. Last month, the European Union ordered Apple to pay $14.5 billion in back taxes, according to the New York Times. Both Ireland and Apple vowed to fight the decision — although the Irish government has been working to close some of its tax loopholes.
Cupertino, for their part, has kept most of their revenue and cash reserves overseas — even though the US is the company’s home and largest market. The tech giant has refused to repatriate its cash reserves unless it is granted a “tax holiday,” which would reduce the amount of money it owes.