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Leander Kahney

New York Times bestselling author

Is Apple’s newfound sense of charity anything other than a marketing ploy?

The late Steve Jobs argued that the most charitable thing he could do was increase Apple’s value so that shareholders had more money to give away to the causes of their choice.

Under Jobs, Apple made no significant contributions to charity — at least not publicly. The only exception was selling branded RED products to help U2 frontman Bono’s (PRODUCT)RED charitable effort, which raises money to help fight HIV/AIDS in Africa. Since 2006, Apple has sold half a dozen different RED versions of the iPod and iPhone, raising more than $200 million. 

Since Tim Cook took over as CEO in 2011, Apple has become a lot more charitable. One of Cook’s first big initiatives as CEO was launching a new charitable matching program. Apple would match donations up to $10,000 per employee per year. It was a huge hit. In its first two months, the company and its employees donated $2.6 million.

Apple has since donated several hundred million dollars to various educational and environmental initiatives – to hurricane relief, wildfire recovery efforts, flood relief in China and educational grants for minority students, among many others.

Apple has made large donations to charities focusing on health and human rights. Cook himself personally helped to raise $610,000 for the Robert F. Kennedy Center for Justice and Human Rights, and has pledged to donate his entire fortune to charity, after first paying for his nephew’s education.

But while Apple and its employees have raised millions of dollars for worthy causes, the company has engaged in elaborate tax avoidance schemes that deny governments billions of dollars in tax revenue.

In September 2018, Apple was forced to pay Ireland more than €14bn in back taxes and interest, following a ruling by the European Commission that the company had received unfair tax incentives. Ireland’s huge windfall, which could finance its health care system for an entire year, is being held in escrow while the case is appealed, a process that will likely take years.

Earlier in 2018, Apple was ordered to pay the UK an extra £136m in taxes after an audit by HM Revenue & Customs found irregularities in the way two of Apple’s European subsidiaries paid each other. According to HMRC, a British subsidiary under-billed an Irish subsidiary for various marketing services, which subsequently under-paid its taxes. In 2015, Apple paid €318m to Italy after a long-running tax investigation.

Apple has also been accused of setting up offshore subsidiaries for large portions of its profits to dodge billions of dollars in European and U.S. taxes. The European Commission estimated that in 2014, Apple paid a paltry 0.005 per cent effective corporate tax rate on its European profits.

Cook has denied that Apple is breaking the law, in both letter and spirit.

Apple pays “all the taxes we owe – every single dollar,” he said in front of a 2013 U.S. Senate subcommittee investigating the company’s mammoth cash hoard overseas. At the time, Apple had around $102 billion of cash overseas, mostly in Irish subsidiaries.

“We not only comply with the laws, but we comply with the spirit of the laws,” he added. “We don’t depend on tax gimmicks. We don’t move intellectual property offshore and use it to sell our products back to the United States to avoid taxes. We don’t stash money on some Caribbean island. We don’t move our money from our foreign subsidiaries to fund our U.S. business in order to skirt the repatriation tax.”

But Apple does shuffle money around paper-only companies that are based in tax havens like Jersey in the Channel Islands, and sometimes aren’t based anywhere. The leaked Paradise Papers hinted that after getting dinged by the European Commission, Apple moved some of its Irish subsidiaries to Jersey, a move estimated to save the company $15 billion over 15 years, according to the New York Times.

This is a prime example of what author Anand Giridharadas calls absolution. Wealthy “saviours” make generous donations to charity while at the same time ignoring, or actively undermining, efforts to decrease inequality or disrupt a status quo that keeps them in wealth and power.

Giridharadas, the author of “Winners Take All: The Elite Charade of Changing the World,” argues that a lot of charitable giving is a smokescreen. It allows the rich and powerful to appear to be “changing the world,” a favourite Silicon Valley phrase, while actually doing anything but. “They constantly seek to do more good, but never less harm.”

Take the Sackler family, an American and British family who preside over the Purdue Pharma pharmaceutical empire. The family has donated millions of dollars to museums and universities while simultaneously profiting massively from OxyContin, the painkiller at the heart of America’s opioid crisis.

Giridharadas has called out Tim Cook and his charitable efforts. After Cook announced that Apple would be donating to California wildfire relief efforts, Giridharadas responded: “Tim, instead of just donating to relief efforts and first responders, pay @Apple’s taxes in full, no avoidance. The tricks detailed here keep money out of first responders’ pockets.” 

Apple and Cook may be donating millions to charity, but at the same time they are avoiding paying billions to the public purse.

It is true that Apple has repatriated several billion dollars to the US since Tim Cook took over as CEO, in response to pressure and reduced tax rates from the Trump administration. However Apple has since stopped disclosing how much cash it holds overseas. While things may seem better now than when Jobs was at the helm, it is clear Cook is keen to maintain his legacy of secrecy.

Leander Kahney is a New York Times bestselling author whose biography of Apple CEO Tim Cook is out now