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Economy Briefs: Report says Apple Inc. legally sidesteps billions in taxes
Question of the Day
NEW YORK — A published report says Apple Inc. uses subsidiaries in Ireland, the Netherlands and other low-tax nations as part of a strategy that enables the technology giant to cut its global tax bill by billions of dollars every year.
The New York Times on Sunday outlined legal methods used by Cupertino, Calif.-based Apple to avoid paying billions of dollars in federal and state taxes.
One approach highlighted in the report: Even though the company is based in California, Apple has set up a small office in Reno, Nev., to collect and invest its profits. The corporate tax rate in Nevada is zero. In California, it’s 8.84 percent.
While many major corporations try to reduce their tax bills, technology companies such as Apple, Google Inc. and Microsoft Corp. have more options to do so.
That’s because some of their revenue comes from digital products or royalties on patents, which makes it easier for them to move profits to tax-friendly states or countries, the Times said.
In contrast, it’s tougher to shift the collection of profits from the sale of a physical product - such as groceries or a car - to a tax-friendly haven.
The 71 technology companies in the S&P 500, including Apple, Google, Yahoo Inc. and Dell Inc., reported paying global cash taxes over the past two years at a rate that’s, on average, one-third less than other S&P 500 companies, the Times said.
Apple has legally allocated about 70 percent of its profits overseas, where tax rates are often much lower than in the U.S., according to company filings.
Ski goggle pioneer Smith dies at 78
KETCHUM — Robert Earl “Bob” Smith, an orthodontist whose passion for skiing deep powder snow helped turn him into a goggle and sunglasses pioneer, has died of complications related to heart surgery.
Smith’s family confirmed his April 18 death in California. He was 78.
Born in San Carlos, Calif., Mr. Smith went on to graduate from Stanford University and the San Francisco College of Dentistry.
Smith served as a dentist in the U.S. Army in Germany in the late 1950s. While there, he traveled to Kitzbuehel ski area every weekend, stoking his passion for the sport.
After enduring frustrating goggle-fogging experiences while skiing in Utah, Smith in the 1960s began developing prototypes for an advanced pair of goggles to solve the problem. Smith sat at the kitchen table with his wife, Jean, using dental tools and foam to create a double-lensed, vented ski goggle with an inner lens that was protected from the cold.
“The goggle really just came out of his need to see while skiing deep powder,” his son Drew Smith told the Idaho Mountain Express. “Everyone else just got to benefit from it.”
He patented his invention, which is now considered the industry standard.
Smith founded Smith Sport Optics in 1965 and established its headquarters in Ketchum, Idaho, in the early 1970s. Before he struck a deal to manufacture Smith goggles, however, he often would trade his goggles for lift tickets.
He sold the company in 1991.
Staff evacuated after Transocean rig tilts
SAO PAULO — Employees were briefly evacuated from a rig of drilling contractor Transocean in Guanabara Bay near Rio after the platform began tilting and taking water, the company said Sunday.
The official Agencia Brasil said nearly 100 staff of Transocean, the world’s largest offshore drilling company, were taken off the platform following the overnight incident.
But in a statement released from Houston, Transocean said: “The water taken on by the GSF Arctic 1 (rig) has been stopped and is being pumped out. The rig is safe and stable, as are all its personnel.
“Some personnel who had been evacuated as a safety precaution have returned to the rig, as the situation is safe.”
Transocean said the platform was in Guanabara Bay for scheduled maintenance work and added that an investigation into the cause of the incident was under way.
Most of Transocean operations in Brazil are linked with those of U.S. oil giant Chevron.
Brazilian prosecutors have demanded that Chevron and Transocean pay $10.9 billion dollars for a spill off southeastern Brazil in March.
China to loan nation $8 billion, Juba says
JUBA — China has agreed to loan South Sudan $8 billion for infrastructure development, Juba government spokesman Barnaba Mariel Benjamin said Saturday.
“It will fund roads, bridges, hydropower, agriculture and telecommunications projects … within the next two years,” he said, giving details of a visit this week to China by South Sudan’s president, Salva Kiir.
“Details [of the projects] will be defined by the ministers of the two countries and by the Chinese firms in charge of the work.”
China is the largest purchaser of oil from South Sudan and is also a long-standing business partner of Sudan from which it also buys oil.
Beijing, however, has made sure to develop good relations with South Sudan since Juba proclaimed independence last July.
Mr. Kiir had to cut short his visit to China because of the current conflict between his country and Sudan.
As a result of independence, South Sudan took with it about 75 percent of the formerly united Sudan’s oil production worth billions of dollars.
Disagreements over the issue was one of the main reasons for the latest round of hostilities.
• From wire dispatches and staff reports
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