Apple Inc. (NASDAQ:AAPL)’s tax strategy received the official OK from the Securities and Exchange Commission this week. But after all the nasty things that were set by Sen. Carl Levin and others at the Senate Permanent Investigations Subcommittee, why is it that the company passed the SEC’s inspection?
Forbes contributor Robert W. Wood offers a few ideas.
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Apple’s not as aggressive as others
The SEC sent a letter stating that it wouldn’t take any action against Apple Inc. (NASDAQ:AAPL) in connection with its tax strategies. Wood claims that the company’s strategies are “less aggressive than others.” He notes that when CEO Tim Cook testified before the Senate subcommittee, he tried to put some distance between Apple and well-known tax dodging techniques.
According to Wood, Apple’s income sourcing is “probably fine,” even though lawmakers had plenty to say about it. One of the biggest problems for the company is Apple Operations International, a subsidiary located in Ireland. Another issue that was raised was whether the company “fairly attributes income” through what is, basically, corporate forum shopping.
Can anyone blame Apple?
Wood believes that tax laws need a big overhaul because companies like Apple Inc. (NASDAQ:AAPL) are able to get away with the things that it does. Everything the company does is legal, even though Sen. Levin and Sen. John McCain claim that it dodged taxes on $44 billion over the course of the last four years.
And with the 35 percent corporate tax on repatriating cash, it’s far cheaper for Apple to borrow money for whatever it wants to do rather than bring that cash home. So he thinks the company’s strategies just make sense since they’re legal.
Apple just joined the club
And then there’s the fact that Apple Inc. (NASDAQ:AAPL) isn’t the only major corporation to use such strategies. Microsoft Corporation (NASDAQ:MSFT) and Hewlett-Packard Company (NYSE:HPQ) faced investigations of their own about a year ago.
So will U.S. officials be changing tax laws any time soon? He doesn’t think so, and he’s probably right. The government can’t even agree on funding to keep itself open, so when would it have time to revise tax laws?