Tim Fernholz, writing for Quartz, alerts us to "The seven craziest findings in the US investigation of Apple," referring to the U.S. Senate probe of Apple's byzantine yet entirely legal tax-avoidance structure.
My personal favorites on the Fernholz list are numbers one, three and five:
"1. Almost all of Apple's foreign operations are run through an Irish company with no employees.
The company told investigators that it lost all records concerning why Apple Operations International was originally set up in 1980, and why all of Apple global sales go through it. You might have a few ideas why if you keep reading.
3. Apple Operations International, which provided 30% of Apple's worldwide net profits from 2009 to 2011, doesn't pay taxes anywhere.
This move is devilishly brilliant: The US decides if it can tax you based on where you incorporate your company. Ireland decides if it can tax you based on the location of the people managing the company. So if you incorporate a subsidiary in Ireland, and manage it from the US, you don't (so far) have to pay taxes in either country. And that's exactly what Apple has done, not filing a tax return for AOI anywhere in the world in the last five years.
5. Most of the $102 billion Apple is keeping "overseas" is in US banks.
Just as its Irish companies are managed by US employees, Apple's Irish cash is mostly kept in US financial institutions, largely managed by Braeburn Capital, Apple's financial engineering nexus in Nevada."
That last one is particularly delicious, because of the heedless chutzpah it reflects. Apple keeps those billions right here at home, taking full advantage of this country's expertise, financial structure and stability, while pretending it's all stored overseas out of reach of the taxman.
According to the New York Times, the practice is pretty widespread, with Apple and other companies even investing their "off-shore," untaxable earnings in U.S. Treasury bonds and other government securities.
It's amazing what constitutes a scandal these days, and also what doesn't.
