Over the weekend, the New York Times published an extensive report on Apple’s use of creative strategies to reduce the taxes it pays on the sale of digital goods.
Apple’s giant profits were the peg for the story, but as the reporters noted, the company is far from the only one that engages in these practices. An excerpt from the piece …
“Apple serves as a window on how technology giants have taken advantage of tax codes written for an industrial age and ill suited to today’s digital economy. Some profits at companies like Apple, Google, Amazon, Hewlett-Packard and Microsoft derive not from physical goods but from royalties on intellectual property, like the patents on software that makes devices work. Other times, the products themselves are digital, like downloaded songs. It is much easier for businesses with royalties and digital products to move profits to low-tax countries than it is, say, for grocery stores or automakers.”
Jeff Reifman, a former Microsoft employee who has been campaigning for years against the company’s use of its Nevada licensing office, says in a blog post that the New York Times piece has resulted in a new wave of interest in his site, Microsoft Tax Dodge.
He’s written up a primer for people new to the issue, making the case that Microsoft has improperly sidestepped billions in Washington state taxes, a contention that Microsoft disputes.
Whatever the case, it’s clear that this is not just an Apple story. Roger Kay, a longtime industry analyst, writes on Forbes about the NYT piece …
“Of note in the piece is that a number of former Apple executives spoke on the record — using their actual names. This unusual behavior must be the result of one or both of the following circumstances: either they’re “airborne” or, now that Steve Jobs has passed on, they’re no longer afraid of the Apple vendetta machine. … Behind the article’s facade, though, is a cheap trick, which is even somewhat sheepishly revealed soon after the lead. The writers used Apple at the top of the story for the same reason we all do: to sell newspapers.”