About two-thirds of Apple’s cash — about $102 billion — sits overseas in lower-tax jurisdictions. If it returned some of that cash to the United States to reward its investors, the company could have significant tax consequences.
As a private tax payer - the IRS would have no problem calling this a tax-aviodance "scheme" - and hit me with a big tax bill and penalties.
That's not actually true. If you could figure out a way to make your salary accrue overseas, you could shift it to a low-tax jurisdiction too. The IRS is actually very anal-retentive about following the letter of the law, and doesn't just capriciously decide to treat the same situation differently depending on who is on the other side of the table.
The difference is not that the law is designed to benefit big corporations, or that big corporations don't follow the law, it's that big corporations with international presences have a more complex tax situation than you do, which they can leverage to minimize their tax liability (in the face of tax haven jurisdictions).
There is pretty much no doubt that everything you earn as a salaried employee in California ought to be taxed by California and the U.S. But if you're a multi-national corporation, why should the U.S. collect taxes on all of your income when part of it may be due to, say, a product made in China being sold to someone living in the UK?
As an individual US resident, however, you are taxed globally. The equivalent action to Apple here would be having your corporation take a loan out to pay your salary for work performed (products sold) in Germany (for example). The profits stay in Germany; the corp avoids taxes (hopefully more than the loan interest), but you still pay your individual rate.
(IANAL, just my experience as a consultant with a few foreign corps)
Now, Apple's cash takes quite a (currently legal) trip around the world, but the basic principal is the same.
You can receive a credit for foreign taxes paid but its not always 100%. US There is an exemption if you actually reside overseas for a period (aka. Foreign Earned Income Credit) but the cap is small, maybe $100k or so.
Apple is dealing with a different area, that of foreign subsidiary corporate profits. Repatriating that money to the parent means the parent is recognizing the earnings of the foreign subsidiary for tax purposes.
The worry recently (as the IRS has been cracking down as of late) is any re-entry to the US with a US passport would lead to a massive tax bill for all foreign income over the past 40 years. Or for Canadians living in Florida who never declared their Canadian retirement funds. Fortunately the IRS offered amnesty in 2008-2010 to most to "come clean and get no penalties".
You paid more tax than Facebook this year!