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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RE[4]: Pretty good lies
by Alfman on Tue 6th Sep 2016 00:45 UTC in reply to "RE[3]: Pretty good lies"
Member since:


I don't think anyone's denying the benefits for Ireland. Look at the money:

Ireland gets a couple hundred million in jobs that it wouldn't otherwise get in exchange for letting apple off the hook for 15 billion in taxes. It's a great deal from Ireland's point of view and it's a hell of deal for Apple too; both of them have a strong incentive to fight to keep this arrangement. However giving these multinational companies tax breaks violates the EU rules prohibiting state aid to preferred companies.

The reason this is bad is because tax payers who play by the rules end up having to pay higher taxes to offset the amount that these companies are not paying. In other words, everyone's tax obligations have to go up to subsidize tax breaks for some of the most profitable companies in the world. Not to mention how unfair this is for the competition.

Edited 2016-09-06 00:55 UTC

Reply Parent Score: 2

RE[5]: Pretty good lies
by JAlexoid on Tue 6th Sep 2016 18:30 in reply to "RE[4]: Pretty good lies"
JAlexoid Member since:

Apple's employment footprint in Ireland is a joke. ROI taxpayers are hardly benefiting much from the relationship.

Reply Parent Score: 2

RE[6]: Pretty good lies
by Alfman on Wed 7th Sep 2016 00:21 in reply to "RE[5]: Pretty good lies"
Alfman Member since:


Apple's employment footprint in Ireland is a joke. ROI taxpayers are hardly benefiting much from the relationship.

It's no doubt highly detrimental to free markets globally, especially in the long term. However I think it's important to understand the incentives going on, and why Ireland is in favor of the tax avoidance agreements.

From my first link:
Apple employs nearly six thousand people in fairly high-paying jobs. For a country with fewer than five million people, this is extraordinary. ... Toss in Google (another six thousand jobs), Intel (fifty-two hundred), Microsoft (two thousand), Dell (twenty-five hundred), and all the others, and it’s clear that Ireland has done very well with this two-pronged plan, an economy built on the simultaneous provision of competitive work and legalistic, tax-avoiding fantasy.

So maybe collectively these corporate deals to these companies in aggregate lowered unemployment in Ireland by up to 0.5%.

Now it would mostly be US and other countries loosing the real tax dollars through these accounting schemes. Ireland takes a loss of hundreds of billions of tax dollars on paper, but it is for business activities that are taking place entirely outside of Ireland. In fact, only reason these companies come to Ireland is because of the negotiated tax rates enabling them to avoid taxation in foreign countries. In other words, it was never Ireland's money to loose, which is why Ireland is so willing to dismiss it in return for anything else.

Of course, even in Ireland this scheme must harm the local competition. If it's anything like the US, the little voices have no say in anything.

Reply Parent Score: 2