The NYT’s “Apple pays less than 10 percent of its profit in taxes” controversy broke while I was traveling home from Ireland, and I missed this refutation by Tim Worstall at Forbes:
So, what the NYT/Greenlining calculation has done is compared the
profits in 2011 not with the taxes paid on profits from 2011. It
has compared profits in 2011 with the taxes calculated on the
basis of 2010′s profits.
I.e., Apple makes estimated quarterly tax payments based on the previous year’s profit, and because Apple’s profits are growing at an absurd rate, their estimated payments for this year were low compared to their actual profit. This piece by Worstall from two weeks prior has more details, including this from Apple’s own 10K filing:
The Company’s effective tax rates were approximately 24.2%, 24.4%
and 31.8% for 2011, 2010 and 2009, respectively. The Company’s
effective rates for these periods differ from the statutory
federal income tax rate of 35% due primarily to certain
undistributed foreign earnings for which no U.S. taxes are
provided because such earnings are intended to be indefinitely
reinvested outside the U.S.
So far as I can find, the Times has not issued any sort of correction or defense of its reporting on Apple’s tax rate.
★ Wednesday, 9 May 2012