Jan 9, 2017
Not only do U.S. companies shelter their overseas profits in other countries to avoid paying taxes to the IRS, but we, the tax payers, pay these companies to keep these profits overseas.
For example, Apple has a holding company located in Ireland. Apple’s foreign sales, which account for 60% of Apple’s profits, are not brought to the U.S., but are kept in Ireland through this subsidiary. Otherwise, Apple would have paid a 35% tax on their profits to the IRS. Apple’s Irish holding company pays no taxes to Ireland to keep this money there. This is perfectly legal under U.S. tax laws.
Also, as “icing on the cake,” the U.S. government pays Apple to keep its money in Ireland, according to Bloomberg. To do this, Apple takes advantage of another U.S. tax code, which states companies can repatriate income without paying a penny in taxes—as long as it is used to buy Treasuries or other U.S. securities like stocks and corporate bonds.
According to this additional tax evasion scheme, Apple uses its money kept in Ireland and purchases U.S. government bonds. In return, the Treasury Department pays interest to Apple. This interest amounted to at least $600 million and possibly much more over the past five years. This money comes out of our taxes paid to the IRS each year.
Apple is not alone in taking advantage of U.S. tax payers. Many of the biggest U.S. companies have exploited the same U.S. tax law. The top 10 U.S. companies alone hold more than $100 billion of U.S. government bonds, according to Bloomberg.
So, we pay taxes each year on or before April 15. On the other hand the companies evade paying taxes through various schemes, and we also pay these companies to evade their taxes. After all, the companies control the U.S. government which writes such tax laws beneficial for them.