Two senators serving on a subcommittee that Tuesday grilled Apple executives over the company's offshore tax practices are themselves owners of Apple stock, either directly or through a spouse, according to interviews and a review of federal disclosure documents by the Center for Public Integrity.
Sen. Heidi Heitkamp, D-N.D., owns the most Apple stock among the 14 members of the Homeland Security and Governmental Affairs Committee's Permanent Subcommittee on Investigations, with her holdings worth at least $250,001 and up to $500,000, according to personal financial disclosure documents released today that cover calendar year 2012.
Heitkamp was one of six committee members to not attend Tuesday's hours-long hearing, during which Apple Chief Executive Officer Tim Cook defended his company against accusations of tax dodging. Regardless, the senator's stock holdings do not pose a conflict, a spokeswoman said.
“Senator Heitkamp was selected to serve on the Homeland Security and Governmental Affairs Committee because of her unique position being from a border state and her past experience as a state attorney general working along aside law enforcement," spokeswoman Whitney Phillips said. "Her position on this committee is in no way impacted by her personal financial holdings.”
Sen. Tom Carper, D-Del., chairman of the Homeland Security and Governmental Affairs Committeean and an ex officio member on the Permanent Subcommittee on Investigations who attended the hearing and asked questions, reported that his wife, Martha Ann, owned up to $100,000 worth of Apple stock during 2012.
Carper's committee office confirmed the senator's wife currently owns Apple equities, but committee spokeswoman Jennie Westbrook declined to answer specific questions about the stock holding.
The Center for Public Integrity is a non-profit, independent investigative news outlet. For more of its stories on this topic go to publicintegrity.org.
Domestic Manufacturing Activities
Big fan: Starbucks Starbucks is <a href="http://www.huffingtonpost.com/2013/02/15/obama-corporate-tax-reform_n_2680880.html" target="_blank">among the companies</a> that have successfully lobbied to qualify for a tax break that rewards U.S. manufacturing. As a result, activities like roasting coffee beans count as domestic manufacturing and are eligible for tax breaks.
Excess Stock Options
Big fan: Facebook About 280 Fortune 500 companies have taken home a total of <a href="http://www.huffingtonpost.com/2013/04/24/mcdonalds-starbucks-apple-tax-break_n_3147875.html?utm_hp_ref=business" target="_blank">$27.3 billion over the past three years</a> thanks to a tax break that allows corporations to treat executive stock awards like cash compensation -- meaning the money can be written off like a business expense -- according to a recent report from the Citizens for Tax Justice. Critics argue that this defies "common sense," given stock options aren't a cost to the company like cash compensation is. Facebook <a href="http://www.businessweek.com/articles/2013-02-15/facebook-gets-a-multi-billion-dollar-tax-break" target="_blank">used this single loophole</a> to wipe out its entire tax liability last year.
Big fan: Duke Energy Accelerated depreciation <a href="http://www.huffingtonpost.com/2013/04/15/corporate-tax-breaks-cost_n_3087972.html" target="_blank">accounted for $76 billion</a> in revenue loss in 2011, the most of any corporate tax break, according to the Government Accountability Office. The tax break allows businesses to write off the costs of ostensibly deteriorating machinery before the equipment even wears out. A Citizens for Tax Justice study <a href="http://www.reuters.com/article/2012/04/10/us-usa-tax-corporations-idUSBRE8380TJ20120410" target="_blank">found that Duke Energy</a> managed to reduce its tax liability largely by using this tax break. Duke called the study misleading.
Deferral On Overseas Profits
Big fan: Apple Fortune 500 companies, including Apple, have <a href="http://www.huffingtonpost.com/2012/12/14/fortune-500-overseas-profits_n_2301223.html" target="_blank">more than $1.6 trillion in profits</a> parked offshore, according to multiple recent studies. By keeping that money overseas, companies are able to avoid paying U.S. taxes on the profits.
Exclusion Of Interest On State And Municipal Bonds
Big fan: Goldman Sachs When companies invest in state and municipal bonds, they are <a href="http://www.thefiscaltimes.com/Articles/2011/02/09/10-Big-Corporate-Tax-Breaks.aspx#page2" target="_blank">exempt from taxes</a> on the interest they earn from those bonds. This is one corporate tax break that individuals can take advantage of as well, though it largely benefits the wealthy. As a result of the loophole, the <a href="http://www.thefiscaltimes.com/Articles/2011/02/09/10-Big-Corporate-Tax-Breaks.aspx#page2" target="_blank">government has lost $58 billion</a> over the past five years, according to the Fiscal Times. Companies including Goldman Sachs have benefitted from the exemption by using the tax exempt bonds to build new offices, <a href="http://www.nytimes.com/2013/03/05/business/qualified-private-activity-bonds-come-under-new-scrutiny.html?pagewanted=all" target="_blank">according to The New York Times</a>.
Fossil Fuel Subsidies
Big fan: Continental Resources Oil and gas companies currently benefit from tax breaks that they say encourage innovation by subsidizing hunts for oil and gas that may not turn out to be fruitful. The result: Continental Resources <a href="http://www.huffingtonpost.com/2012/09/14/harold-hamm-tax-break_n_1884327.html" target="_blank">paid an effective tax rate of 2.2 percent</a> over the past 5 years. Chevron and Exxon Mobil paid tax rates at 4 percent and 2 percent, respectively. Pictured is Harold Hamm, Continental Resources' CEO.
Big fan: Google Those famous free lunches in the Google cafeteria are <a href="http://online.wsj.com/article/SB10001424127887324050304578408461566171752.html" target="_hplink">currently offered tax-free</a>, according to the Wall Street Journal. Right now, the lunches aren't treated as taxable compensation, so employees are benefitting from the free food, but don't have to pay taxes on it.
Corporate Jet Owners Tax Break
Big fan: The aviation industry, <a href="http://www.huffingtonpost.com/2013/03/20/obama-corporate-jet_n_2912781.html" target="_hplink">specifically companies like Cessna</a>, Beechcraft and Learjet This tax break, which allows companies to deduct the cost of a corporate jet from their tax bill like they would any other business expense, got its moment in the spotlight when President Barack Obama <a href="http://www.huffingtonpost.com/2013/03/20/obama-corporate-jet_n_2912781.html" target="_blank">highlighted it as an unfair perk for the rich</a>. The president's 2011 budget<a href="http://www.huffingtonpost.com/2011/09/19/obama-corporate-jet-taxes_n_970384.html" target="_blank"> pushed for an increase in the per-flight fee</a> for private jets from $60 to $100, yet the break remains in effect today. Companies that make jets, like Cessna, Beechcraft and Learjet, benefit from the subsidy as it supports the aviation industry, <a href="http://www.huffingtonpost.com/2013/03/20/obama-corporate-jet_n_2912781.html" target="_blank">according to proponents of the subsidy</a>.