The public relations spin doctors are working overtime at Apple this week.
The tech giant just announced that it will pay $38 billion to the U.S. Treasury in taxes brought home from overseas—and “create” some 20,000 new jobs. It pledged to invest $350 billion in the U.S. over the next five years and give employees $2,500 in restricted stock units.
That’s all spin.
What Apple really unveiled were plans to collect a massive windfall from the GOP’s corporate tax handout. This was a pay-to-play political scam at its ugliest—and the rest of us are the chumps.
Let’s start with the dollars. Apple currently holds about $252 billion in profits offshore, where it can avoid paying U.S. taxes. That’s over 90% of the company’s total cash on hand. This profit is subject to the corporate income tax as soon as it’s “repatriated” back to the U.S.
Before the recent tax code overhaul, the company would’ve paid $78.6 billion in taxes if it brought the money home, according to the Institute on Taxation and Economic Policy. Apple didn’t want to pay this tax, so it let the cash sit offshore for years.
In the meantime, Apple and its peers have been working furiously to tilt the tax code in their favor. Apple spent $2.3 million in the third quarter of 2017 alone lobbying. The other four big tech companies—Microsoft, Facebook, Alphabet (which owns Google), and Amazon—chipped in another $14 million.
For their efforts, these titans of Silicon Valley are being rewarded handsomely. Now their offshore profits will be taxed at a one-time, 15.5% repatriation rate, also called a tax holiday. And all other corporate profits will be taxed at 21%, down from a previous nominal rate of 35%.
So that $38 billion Apple’s going to pay in taxes now? It means the company effectively dodged more than $40 billion it would’ve otherwise paid.
For context, this difference is more than double the annual cost of the federal Children’s Health Insurance Program (CHIP), which covers the health care costs of nine million children from low-income families. CHIP is currently in crisis, with Congress debating whether it will be included in a spending bill to avoid a government shutdown.
Maybe if we spent less on massive handouts to the wealthiest companies in the world, we’d have more to spend on sick children.
Yet not content to simply gloat, Apple wants to be celebrated for its heist. The company announced it would be “creating” 20,000 new jobs as a result of the tax changes. But that runs directly counter to how tax holidays actually work. A comprehensive study by the Senate Homeland Security and Government Affairs Committee reviewed the last time the U.S. allowed firms to bring back overseas cash at a discounted rate—in 2004. It found that the top 15 repatriating corporations actually reduced their overall U.S. workforce by 21,000 jobs.
Indeed, major corporations said over and over throughout the latest tax debate that if given a big tax cut, they would reward shareholders, not workers. True to form, they did just that—with major layoffs recently announced at Walmart, Comcast, and AT&T.
Even in Apple’s case, the job benefits aren’t so clear. As many have pointed out, the company routinely claims credit for “creating” jobs for people they don’t even employ. And as MarketWatch reports, there’s no evidence to show any of the new jobs they’re proposing now actually result from their tax windfall.
“We have a deep sense of responsibility to give back to our country,” Apple CEO Tim Cook said in a press release, “and the people who help make our success possible.”
With respect, Tim, no you don’t.
Spending millions in lobbying dollars to save tens of billions of dollars in taxes isn’t really a display of “responsibility” to a country or its people. It’s a greedy act done for shareholders, who have been rewarded handsomely.
The rest of us have been had.
Josh Hoxie is director of the Project on Opportunity and Taxation at the Institute for Policy Studies and co-editor of Inequality.org.