Linked by Thom Holwerda on Thu 1st Sep 2016 22:42 UTC

Matt Gardner, the director of the Institute on Taxation and Economic Policy, took a look at Tim Cook's terrible letter to EU consumers regarding Apple's tax evasion, and pretty much tears it to shreds.

Apple created a complicated web of subsidiaries to avoid taxes, and the Irish government allowed it. Both the company and the country were complicit in this agreement. The idea that Ireland gave Apple guidance on "how to comply correctly with Irish tax law" makes both parties sound less guilty than they are. A better characterization would be that Apple cooked up a tax-dodging scheme, and Ireland allowed it.

Further along, Gardner actually opens up a major can of worms, arguing that either Apple provided false figures in its annual report, or Tim Cook is lying in his letter to EU consumers:

It doesn't appear to be even remotely truthful based on the numbers they publish in their annual reports. Each year they report that the majority of their profits are earned outside the U.S., with roughly a third (on average, over the past five years) coming from the U.S. When you look at the 10K, the annual report for 2015, you see the company reports earnings of $72 billion worldwide, and just one third of those profits are attributed to the U.S. And yet Cook's statement says that the vast majority of their income is taxed in the U.S.

We think that is a very low estimate. It certainly appears that the company is shifting profits out of the U.S. and into tax havens overseas. So one of these things must not be true: Either the numbers presented to shareholders in their annual report are false, or Tim Cook's new statement that the majority of its profits are taxed in the U.S is false. They both can't be true.

That's a bold claim to make, but it's hard, if not impossible, to argue with Gardner on this one. Since it's incredibly unlikely Apple is falsifying its annual reports, the most logical conclusion is that Tim Cook is lying in the open letter.

Tim - if you find yourself in a hole, stop digging.

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Member since:

Well, Apple was not making less profit in the EU, they were making no profit, they were losing money in the EU before the iPhone.

About the timing: They got a hold of the secret letters between Apple and the Irish government. Those are the critical evidence that the deal was illegal and always had been illegal. Before that the deal had already been abandoned in Ireland due to being bullshit, but only for future tax.

Reply Parent Score: 2

Wondercool Member since:

I thought the books of Apple as a public company are open so everyone could come to the same conclusion.

The Irish government and/or Apple probably thought it was legal or that they could get away with it.

Mind you the Irish government used to sponsor a lot of economic activity. I am Dutch but moved to Ireland for the very first time in 1998. My Dutch company got grants for opening a subsidiary in Ireland and got tax breaks on the amount of people employed from the Ireland Development Authority. This type of practice continues to this day. Other countries do it as well of course. Or do you really think Dell moved its manufacturing to Poland (3000 jobs) from Limerick because Poland is so much cheaper?

Reply Parent Score: 2