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Republicans in Congress want to pass a bill that would sharply lower taxes for U.S. corporations. Over the years, companies have stashed billions of dollars overseas in an effort to avoid paying taxes. NPR's Jim Zarroli looks at what the bill could mean for one company in particular - Apple.
JIM ZARROLI, BYLINE: Apple has made hundreds of billions of dollars around the world, and it has sometimes taken extraordinary measures to avoid paying taxes on it. Last year, the European Union fined Apple $14 billion because of an illegal tax deal it struck with the Irish government. Matt Gardner of the Institute on Taxation and Economic Policy says the deal involved something called the double Irish tax loophole.
MATT GARDNER: The first thing I know about the double Irish is that technically it no longer exists. Ireland got rid of it in 2014 in response to an outcry from the U.S. and other governments.
ZARROLI: But while the loophole existed, it worked like this. Ireland would allow companies such as Apple to set up two subsidiaries. One made a modest profit and paid taxes, but most of the money Apple made in Europe went to a second subsidiary based in the tax haven of Bermuda.
GARDNER: Ireland had a strange set of tax rules that said if you're a company incorporated here but operated from somewhere else, we're not going to tax certain types of income.
ZARROLI: That meant large amounts of Apple's overseas profits weren't taxed at all. And it is said to have as much as $250 billion stashed overseas. Over the weekend, a consortium of news organizations released documents from a Bermuda law firm that showed that once the double Irish deal ended in 2014, Apple went looking for a new tax haven. They settled on Jersey, an island in the English Channel.
GARDNER: What these leaks are telling us about our corporate tax system in general is that the barn door is open. Companies are shifting their profits offshore almost at will. And the sensible response would be to close the barn door.
ZARROLI: The tax plan going through Congress would give a break to companies such as Apple that have spent years dodging taxes. They could bring the money home by paying a nominal tax. The bill would also sharply cut the tax rate companies such as Apple pay, says Jennifer Blouin, professor of accounting at the Wharton School.
JENNIFER BLOUIN: Apple's going to be potentially very affected by this transition or these set of rules because there is not going to be any value to doing these extraordinarily lucrative, bringing-us-to-zero tax games anymore.
ZARROLI: Republicans say they believe companies such as Apple will use the money they've stashed overseas to create jobs for Americans. But economist Kimberly Clausing of Reed College is skeptical about that. She says companies like Apple already have access to plenty of cash and loans.
KIMBERLY CLAUSING: They have no problem finding any worthwhile investment that they might want to fund.
ZARROLI: The tax plan may alter the balance sheet for companies such as Apple, but what that means for the larger economy is a lot less clear. Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.