Money

How Google, Microsoft, Apple Avoid Paying Taxes

| by Michael Allen

For years, multibillion-dollar corporations such as Microsoft, Apple, Google and Hewlett-Packard have avoided paying billions of dollars by keeping much of their profits off U.S. shores in foreign tax havens, a Senate subcommittee report said on Thursday.

Sen. Carl Levin (D-Mich.), chairman of the Senate Permanent Subcommittee On Investigations, said: "Some multinationals use our current tax system to engage in gimmicks to avoid paying taxes they owe... a system used to shift billions of dollars of profit offshore and avoid billions in taxes."

Most multinational companies pay a tax rate way below the 35 percent tax rate, avoid paying taxes completely or even get the government to pay them money in subsidies and other types of corporate welfare, reports Huffingtonpost.com

These loopholes for the very wealthy cost the U.S. government billions of dollars in tax revenue each year, but there is little outrage from "fiscally conservative" Republicans.

When he was running for president, Mitt Romney supported a "tax holiday" which would have allowed corporations, who keep much of their profits offshore, to bring that money into the U.S., tax-free. Republicans claimed this tax holiday would somehow "create jobs" in the U.S.

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According to the subcommittee report, Microsoft avoided paying $4.5 billion in taxes on $21 billion between 2009 and 2011, Apple avoided taxes on $34.5 billion between 2009 and 2011 and search-engine giant Google has dodged taxes on $24 billion.

Hewlett-Packard, used a series of revolving short-term loans between itself and its subsidiaries to avoid paying billions of dollars in taxes since at least 2008, according to Sen. Levin.

Hewlett-Packard defended its tax loopholes by quoting a non-government organization, tax-preparers Ernst & Young, to HuffingtonPost.com: "HP has complied fully with all applicable provisions of the U.S. Internal Revenue Code and auditor Ernst & Young has consistently reviewed and approved the accuracy of HP’s financials."

Microsoft said in a statement: "In conducting our business at home and abroad, we abide by U.S. and foreign tax laws. That is not to say that the rules cannot be improved, to the contrary, we believe they can and should be. U.S. international tax rules are outdated and not competitive with the tax systems of our major trading partners."

Tom Coburn (R-Okla.), defended the companies, saying:"This is perfectly legal tax avoidance. They take advantage of every loophole we have created in the tax system. There is nothing heinous in that. Nothing illegal in that."

Sen. Levin said that it was "highly dubious" that Hewlett-Packard's revolving loan program "complies with current tax law."