The headline may be a little more provocative than the actual story, but not by much. Bloomberg followed the breadcrumbs behind Apple‘s complicated method of keeping its profits away from the tax man, and came up with more of the whole truth than we’ve heard before. Apple has become the poster child for corporations artfully dodging tax obligations by parking profits overseas. But the new report adds to the mix Apple’s strategy of hiding its profits by investing them in U.S. government bonds, then reaping the rewards of the interest payments. Here’s how Bloomberg’s Andrea Wong puts it:
Taking advantage of an exemption tucked into America’s Byzantine tax code, Apple stashed much of its foreign earnings—tax-free—right here in the U.S., in part by purchasing government bonds, according to people with direct knowledge of the matter. In return, the Treasury Department paid Apple at least $600 million and possibly much more over the past five years in the form of interest, a Bloomberg review of its regulatory filings shows.
Earlier this year, the European Commission ordered Ireland to collect $14.5 billion in back taxes from Apple. Ireland chose to side with Apple and forgo the revenue. President-elect Trump is said to support the idea of holding a one-time tax amnesty where companies like Apple could bring their overseas profits home and have them taxed at a reduced rate. Amnesty plans are nothing new. Obama proposed the idea, but saw it blocked by Republicans. And, critics say, they’re a short-term solution to a costly problem.