BizTech Law Blog

Are Large High-Tech Companies Shirking Tax Responsibilities? A Recent Study Suggests Just That

A recent report, "Tech Untaxed," published by The Greenlining Institute, shows that some of the nation's largest high-tech companies (Apple, Microsoft, and Google, to name a few) are paying significantly lower effective tax rates even as their yearly profits rise.

According to the report: "The 30 high-tech companies in our study saw their tax rates decrease from 23.6 percent in 2009 to 19.9 percent in 2010 and just 16 percent in 2011. Collectively, these corporations had a healthy year in 2011, posting $181 billion in profits, yet they paid less as a percentage of income than households making $91,100 a year."

The report goes on to point out that Apple, currently the world's most valuable company, saw its tax rate fall precipitously "from 24.8 percent in 2009 to 14.7 percent in 2010 and 9.8 percent in 2011," all while its profits grew to beyond $34 billion annually.  As a result, Apple's 2011 tax rate "was lower than the 10.6 percent rate paid by American households making an average of $42,500 per year."

What has spurred this significant reduction in tax liability?  An increase in offshore holdings and ownership in foreign subsidiaries, according to the report.  To read the full report, click here.

Categories: E-Commerce, Tax