January 9, 2018

Salon: Apple’s Biggest Innovation Isn’t Gadgets. It’s Dodging Taxes

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Why would so many American companies register themselves in the Caymans? Elementary. American tax law allows corporations to defer paying taxes on profits earned overseas, until those profits are repatriated back home. So here’s what you do, if you’re a major corporation. You set up a subsidiary in a tax haven. You hide your domestic profit by having your subsidiary make foreign profit. To quote from a report by the Institute on Taxation and Economic Policy:

In reality, much of these “offshore profits” are often U.S. profits that companies have disguised as foreign profits to avoid taxes. [A more accurate description would be] “profits booked offshore for tax purposes.”

It’s all the same money, of course, but the legal system conveniently pretends otherwise. Read more