Apple of Their Eye -- Review & Outlook, The Wall Street Journal

 An SEC investigation approves the company's overseas tax strategies.

Senate investigations kingpin Carl Levin (D., Mich.) loudly accused Apple in May of being "the Holy Grail of tax avoidance," whatever that means, and the folks at the Securities and Exchange Commission quickly followed orders. The resulting SEC investigation of the tech maker's tax strategies has now cleared Apple of wrongdoing. Could it be that there was never any evidence behind Mr. Levin's smears?

A mere three weeks after Mr. Levin pumped up a three-ring media circus by claiming that Apple exploited supposed corporate tax loopholes such as parking cash overseas, SEC regulators released a letter questioning "the adequacy and accuracy" of Apple's financial disclosure filings. Citing Mr. Levin's so-called investigation, their demands included "a more tailored discussion of any specific risks associated with your current tax structure, including any agreements or arrangements that provide material tax benefits."

Normally the legality of a company's tax strategy and corporate structure would be in the wheelhouse of the Internal Revenue Service, but the SEC found a pretext by conjuring a material risk to investors from trying to minimize the taxes it owes—or something.

The political class is upset that Apple subsidiaries in Ireland pay little or no corporate income tax on profits from international sales, though not upset enough to eliminate the U.S. tax laws that penalize companies like Apple if they repatriate this cash. Apple told the SEC that the $40 billion or so in earnings generated by its Irish holdings—which pay a statutory rate of 12.5%—would be "indefinitely reinvested in operations outside the U.S."

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