Government Should Thank Apple
Just a few years ago, Tim Cook and other Apple executives were dragged into Congress to explain why they were minimizing taxes. Huh? Isn’t that what all companies should do? Apple wasn’t doing anything illegal. It was legally dodging corporate taxes on much of its income by exploiting loopholes in Irish and American tax laws.
Tuesday, after the market closed, Apple announced record profits of just over $18 billion for its first fiscal quarter, which ended in December. This wasn’t just a record for Apple. It was an all-time record for any corporation in any quarter. What went largely unreported, however, is that the $18 billion figure is after taxes. In fact, if you look at the statement of operations, you will see that Apple’s provision for income taxes was $6.4 billion! That comes out to 26.2% of pre-tax profits.
Let’s put this into perspective. In 2013, the U.S. government collected approximately $2.8 trillion in tax revenues. Approximately 10% of that figure, or $280 billion, came from corporate tax receipts. That was for the entire year! So at an annual run rate Apple’s tax bill represents almost 10% of the government’s annual tax receipts from all corporations. You can bet government officials are trying to figure out ways to make Apple pay even more. Instead, they should get on their hands and knees and thank Apple!
Read Vahan’s blog at Janjig.com.
Vahan Janjigian is Chief Investment Officer at Greenwich Wealth Management, LLC, a SEC Registered Investment Adviser, where he manages portfolios for clients in separate accounts. Dr. Janjigian is a former Forbes magazine columnist and former Editor of the Forbes Special Situation Survey. According to Hulbert Interactive, his stock picks returned more than 18% annually during one of the market’s worst 10-year periods.
Dr. Janjigian holds the Chartered Financial Analyst designation and has earned degrees in general sciences and finance from Villanova University and Virginia Polytechnic Institute and State University (Virginia Tech). He previously served on the faculties of several universities, including the University of Delaware, Northeastern University, the American University of Armenia, and Boston College, where he taught courses in corporate finance, financial theory, investments, accounting, and economics; and he currently teaches a seminar on equity investment management to business executives in Singapore through Baruch College’s Zicklin School of Business. Dr. Janjigian has served as an expert witness on matters involving portfolio management, churning, suitability, and hedge fund manager compensation.
Dr. Janjigian has published his research in numerous scholarly and professional journals; and has been quoted in many leading newspapers and magazines, including Barron’s, Forbes, The Wall Street Journal, and USA Today. He appears as a guest commentator on various television and radio networks, including Fox, CNBC, MSNBC, and CBS Radio. Dr. Janjigian is the author of Even Buffett Isn’t Perfect (published by Penguin) and co-author of The Forbes/CFA Institute Investment Course (published by Wiley).