Should Congress Take a Bigger Tax Bite Out of Apple? A Case on Apple's International Tax Minimization and Reporting Strategies

• In Event: Taxation

Abstract

This case discusses the international tax minimization and reporting strategies of Apple Inc. as well as the related U.S. congressional investigations into “Offshore Profit Shifting and the U.S. Tax Code.” The profits of Apple have experienced exceptional growth due to its successful sales of the iPhone, iPad, and related digital products and services. However, Apple Inc. has been able to minimize its overall tax bill and especially its foreign tax bill by utilizing numerous techniques to shift income to lower tax jurisdictions.

Apple, Inc. serves as a good example of how multinational technology companies have taken advantage of tax codes written for an industrial age and ill-suited for today’s digital economy. The growing digital economy presents a conundrum for lawmakers overseeing corporate taxation; although technology is now one of the nation’s largest and most valued industries, many tech companies are among the least taxed.

This case is designed to be used in graduate and undergraduate level Taxation and International Accounting courses. We have created an accompanying website for this case entitled AccountingCase.com (http://www.accountingcase.com/taxation ). This site contains original source documents and recent video news reports related to both Apple’s tax strategies and the U.S. Senate investigations. This information complements the case material by facilitating assignment of in-depth student research questions and enlivening the case for students.

Authors

• Mark A Holtzblatt, Cleveland State University

• John Geekie, Cleveland State University

• Norbert Tschakert, Salem State University