A trove of leaked documents relating to offshore investments raised questions early this week about Apple’s (NASDAQ: AAPL) use of an Irish tax haven, a tactic that allowed the tech giant to avoid paying income taxes, saving billions of dollars in profit.
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For years, Apple stashed its money on the tiny island of Jersey located in the English Channel in between France and the United Kingdom. While controversial, and derided by Republicans who tend to view Silicon Valley as an antithesis to their party, Apple’s use of a tax haven is not unique, and it is not illegal.
“They’re doing exactly what the shareholders want them to do,” Art Laffer, a former economic advisor for President Ronald Reagan told FOX Business’ Liz MacDonald. “I mean if you owned shares in Apple, would you want them to pay extra taxes and hurt your stock? No.”
The papers, which included nearly 13.4 million financial documents, contained the names of 120,000 people and companies and showed the ties between the elite and offshore tax havens. Nearly 80% of the world’s wealth stored in offshore accounts belongs to the top 0.1% richest households, according to the documents.
Apple is reportedly holding more than $252 billion in cash overseas, but so long as the company is avoiding taxes but not evading them, the use of a tax haven not illegal, Laffer said during an interview on “Risk & Reward” on Tuesday.
Donald Trump made bringing corporations back to the U.S. a pinnacle of his 2016 presidential campaign. Now, the Republican-controlled Congress is trying to deliver on that: The House’s tax reform plan, unfurled in its entirety last week, reduces the corporate tax rate from 35% to 20% and would impose a 10% tax on some of the profits that Americans businesses earn offshore.
Another rate proposed would allow multinationals to bring home more than $2.6 trillion stashed offshore back to the U.S. at a dramatically reduced tax rate. Whether or not these efforts, if passed, would incentivize companies to return to the U.S. remains to be seen.
“I don’t think they’ll bring it back,” Laffer said, “unless they can get it back very, very cheaply and use it to create jobs."