Under Oath, Apple Lies to the World About Paying Taxes

On May 21, 2013, Tim Cook, the chief executive of Apple, appeared before a United States Senate Permanent Subcommittee on Investigations, investigative subcommittee, which had completed an inquiry into how Apple avoided tens of billions of dollars in taxes by shifting profits into Irish subsidiaries that the subcommittee’s chairman called “ghost companies.”

At the hearing, Cook declared under oath and to the world the following statements:

We pay all the taxes we owe, every single dollar, … We do not depend on tax gimmicks … We do not stash money on some Caribbean island.

Of course, Cook was lying.

Introducing the Paradise Papers.

The Paradise Papers is a global investigation into the offshore activities of some of the world’s most powerful people and companies.

The International Consortium of Investigative Journalists (ICIJ) and 95 media partners explored 13.4 million leaked files from a combination of offshore service providers and the company registries of some of the world’s most secretive countries.

The files were obtained by the German newspaper Süddeutsche Zeitung.

The Paradise Papers documents include nearly 7 million loan agreements, financial statements, emails, trust deeds and other paperwork from nearly 50 years at Appleby, a leading offshore law firm with offices in Bermuda and beyond.

You can learn all about the Paradise Papers at the ICIJ.

I wanted to focus on Apple because just under a year after Cook’s public statements on avoiding “tax gimmicks” and stashing money away in “come Caribbean Island”, Apple was found guilty of doing exactly that.

In March 2014, Apple’s legal advisers, Baker McKenzie, sent a questionnaire to Appleby. They [Apple] asked what benefits different offshore jurisdictions – the British Virgin Islands, Bermuda, the Cayman Islands, Mauritius, the Isle of Man, Jersey and Guernsey – could offer Apple.

The BBC published the four burning questions Apple had about the best tax haven for its billions:

  1. What information is publicly visible (e.g., through the companies registry or equivalent) when a company  is registered in your jurisdiction.
  2. Is it possible to obtain an official assurance of tax exemption, and if so, what is involved in obtaining it, including costs? How long does the assurance last?
  3. Are there any development suggesting that the law may change in an unfavorable way in the foreseeable future?
  4. Is there a credible opposition party or movement that may replace the current government?

The fourth question is truly revealing. Apple clearly does not want a government to change and change the friendly tax measures. Apple wants to go somewhere, they are exploring their options, but they want to be assured that their tax benefits are as permanent and secretive as possible.

In short, Apple is looking for the least democratic country they can find. That’s question #4 in a nutshell.

In the end, Apple settled on Jersey, a tiny island in the English Channel that, like many Caribbean havens, charges no tax on corporate profits for most companies.

This is just one of many examples of how corporations lie to the world in order to protect their profits. This is the dark side of free market capitalist system that’s so vehemently protected. Corporations have to lie to stay profitable. Period.

Tobacco companies constantly lie about selling addiction, oil companies lie about climate change, and Apple lies about their taxes.

It’s all just business as usual.

Simple thought experiment: I’m selling umbrellas. My neighbor 2 doors down is also selling umbrellas. His umbrellas are slightly better quality and about the same price. You come to my shop looking to buy an umbrella. I’m I going to tell you that my neighbor has a better umbrella? Of course not. I’d be out of business in no time. I have to keep the truth from my customer in order to sell my product.

This is the free market capitalist model at its core. I don’t have any incentive to be honest. Instead, I have every incentive to be dishonest.

See my Critique on Corporations and List of Bank Fraud and Criminal Activities.

Thanks for reading,

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