This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Why Apple's Overseas Tax Probe Is a Black Eye on U.S. Lawmakers

Stocks in this article: AAPL SBUX

NEW YORK (TheStreet) -- The European Commission Union is preparing to launch a formal investigation against Apple (AAPL) and Starbucks (SBUX), among other U.S. companies, to determine the extent of their exploitation of overseas tax breaks.  

It's a "global crackdown" on corporate "tax evasion." The U.S. has long been looking into companies who evade taxes. Now it's the EU's turn. 

But "exploit" and "evade"? Those terms should not be used to describe legal options that are available to U.S. corporations. Besides, rather than eye on Apple and Starbucks, real energy needs to be invested into making U.S. corporate tax law more attractive. High corporate tax rates are what's driving trillions of untaxed earnings offshore in the first place.

So Wednesday it was announced that the EU will be looking at the tax laws in Ireland, which is where Apple's cash is held.  The Commission plans to extend its investigation to other European areas like the Netherlands and Luxembourg as well. 

The United States' corporate tax laws have always been the subject of much debate. Regulators and politicians rarely agree on what a "fair" percentage should be for companies to pay on their billions in annual earnings. Federal tax rates on corporate taxable income vary from 15% to 35%. Some states, as well as local governments disagree on how these monies are to be used.

Making matters worse, these disagreements go beyond the money and are often turned into moral and political issues.

CEOs are not going to wait for a consensus. They have a business to run and shareholders to please. With their hands tied and earnings to preserve, they've had to stash large sums of their profits in their overseas subsidiaries. The alternative is to bring that cash home and pay a significant ransom to the U.S. Treasury, as those safe havens shrink.

"We paid all the taxes we owe, every single dollar," Apple CEO Tim Cook said to defend his company's reputation when accusations flared last year. Cook told U.S. lawmakers that reforms in how the government taxes multinational companies is the real issue.

The U.S. Congress should adjust its tax laws to allow corporations the freedom and flexibility to bring home the corporate earnings currently held overseas. It is believed that more than $2 trillion in corporate untaxed profits are being held overseas. Until big biz has some incentive to repatriate this cash, the U.S. will see very little of it.

That's the real travesty.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs