Rotten to the Core? Apple Tax Scandal Further Blights Corporate Image

You may already have heard or read about the alleged poor working conditions for Apple's employees in China. It may not be the only worm in the company's image.

Recently, the interrogation light was shined upon Apple, the country's most profitable technology company. At press time, the investigation continues.

It turns out that Apple created foreign subsidiaries with no employees to avoid paying billions in taxes – both in the United States and throughout the world. In Ireland, Apple has been operating with a specially negotiated rate of less than two percent, which is significantly lower than the country's 12.5% statutory rate.

While the Congressional investigators haven't found that Apple actually broke any laws, it does make people understand why there is such a public outcry that our country (and countries throughout the world) close the type of tax loopholes Apple has exploited, to dissuade so much "creative bookkeeping" in the future.

Experts estimate that Apple's techniques shielded nearly $75 million from the Internal Revenue Service from 2009 to 2012. That's why a bipartisan group of lawmakers and Timothy D. Cook, Apple's CEO, debated the hot topic at a public hearing in May.

"We pay all the taxes we owe, every single dollar," Cook said. "We not only comply with the laws, but we comply with the spirit of the laws."

But most in the bipartisan subcommittee see it differently. Senator John McCain of Arizona, the panel's eldest Republican, said: "Apple claims to be the largest U.S. corporate taxpayer, but by sheer size and scale, it is also among America's largest tax avoiders." Meanwhile, Michigan Democrat Carl Levin, the panel's chairman, called Apple's dealings "the Holy Grail of tax avoidance."

On the other side of the fence - but definitely in the minority - were subcommittee members such as Republican Senator Rand Paul from Kentucky, who blames "the awful tax code" and says Apple is doing "what every company in America does, and that's minimizing their tax. They're doing what their shareholders ask, which is to maximize profit."

(Apple Tax Scandal Sources: New York Times, USA Today)