“After a Tax Crackdown, Apple Found a New Shelter for Its Profits” (nytimes) is a interesting companion to our debate about corporate taxation (which some of us can sort of vote on today, depending on where we live). To me the most interesting part is the scale of the virtual offshoring:
Since the mid-1990s, multinationals based in the United States have increasingly shifted profits into offshore tax havens. Indeed, a tiny handful of jurisdictions — mostly Bermuda, Ireland, Luxembourg and the Netherlands — now account for 63 percent of all profits that American multinational companies claim to earn overseas, according to an analysis by Gabriel Zucman, an assistant professor of economics at the University of California, Berkeley. Those destinations hold far less than 1 percent of the world’s population.
Apple is now generating huge profits in (old) Jersey.
Related:
Interesting that New York Times is taking the side of the President, Donald J Trump, against the tax machinations of Silicon Valley.
Didn’t Microsoft use to be a CD-printing factory in Puerto Rico with a loss-making R&D arm in Seattle?
And recall that most if not all large American companies are incorporated in Delaware (0.3% of US population).
There’s a 2011 CACM article explaining how this works: the company sells its intellectual property to a subsidiary in a low-tax jurisdiction, and then pays licensing fees to the subsidiary. Follow the Intellectual Property, by Gio Wiederhold.