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Government The Almighty Buck Apple

NY Times Apple Tax Article Flawed 193

bonch writes "Forbes contributer Tim Worstall points out that the NY Times article claiming Apple pays less than 10 percent of its profit in taxes was based on a flawed assumption of the corporate tax system. The 9.8% figure came from Greenlining Institute, who compared Apple's 2011 profits to taxes calculated according to 2010 profits. In the corporate tax system, estimated quarterly tax payments are made based on the previous year's profits until actual profits are calculated at the end of the trading year, when the balance is then paid to the IRS."
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NY Times Apple Tax Article Flawed

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  • Oh (Score:3, Funny)

    by Overly Critical Guy ( 663429 ) * on Thursday May 10, 2012 @04:07PM (#39958787)

    Whoops. Well, I'm sure Slashdot's comments to the previous article were totally reasonable.

    Why does Apple hate America? (Score:5, Insightful)
    by Anonymous Coward on Saturday April 28, @06:23PM (#39834399)

    Good citizens pay their fair share, so it must be asked: why does Apple hate America?


  • When I first read the headline I thought the "Apple tax" was that of common parlance, e.g. the overpriced hardware, the $99 iOS developer fee, etc. I had to reread it once I started to read the summary.
  • Why can't I pay off expenses before taxes are levied? I want to pay my rent, student loans, food, electricity, etc with pre-tax money. Regardless of what Apple pays, it still feels unfair (even if there are good reasons for it being the way it is, it FEELS unfair).
    • by MightyYar ( 622222 ) on Thursday May 10, 2012 @04:31PM (#39959055)

      It's not unfair at all. Anyone can incorporate. Funnel your income through the corporate entity and enjoy what the Apple stockholders do - double taxation. Of course, like Apple, you can write off business expenses prior to being taxed the first time. You can also form a pass-through and only get taxed once, which is what I do as a contractor. But at no point can you deduct personal expenses... so just like Apple, you can deduct business expense rent but not your apartment. You can deduct education that is required to keep your job but not education that benefits only you. You can deduct business lunches but not food that you would have consumed anyway. You can deduct electricity used for your business, but not for your home.

      Mind you, I think it is all BS and they shouldn't tax companies at all. Tax the money as it comes out - no special rates for dividends or capital gains. Not only would it make the US an attractive place to locate a corporation, it would encourage richie-riches to keep their money in their business. It might even improve politics, since it would be harder to hide corporate welfare in the tax code. Not that I have my hopes up there, since corporations have absolute free speech right now - but now we're on another topic.

      • by Quiet_Desperation ( 858215 ) on Thursday May 10, 2012 @04:40PM (#39959133)

        Oh, you! With your silly facts and rational economic concepts. This is Slashdot. You must drink from the Derp-Aide, and call for ALL the taxes to be 100%!

        • Oh, I should add one part that I have run into that is VERY unfair. Retirement plans. As a contractor, I can pack away about $17,000 plus 25% of my net income. If I were an employee I couldn't get anywhere near that unless my employer was extremely generous. As a practical matter, most people can only do the $17,000 if they are in a 401(k) program plus whatever employer matching they get. If they qualify for an IRA, they can pack away an "amazing" (sarcasm alert) $5000.

          There really should be just a blanket

          • Call up Fidelity and ask them about naked annuities.

            401ks are not the only way.

            • By "naked", do you mean a regular tax-deferred annuity that is not wrapped in a trust?

              In general I'm not a big fan of annuities, and in any event they do not have the same up-front tax benefit as a 401(k) or IRA. You can't write off payments to the insurance company (unless I've missed something, I'm by no means an expert on annuities, but I did look into them). Once money is in them, they are similar to an IRA or 401(k) in that you get taxed based on the money you suck back out at regular income tax rates.

              • I read my own comments and it sounds like I insured my kids :)

                My wife and I are insured and our kids are the beneficiaries...

    • Get a good accountant. You'd be surprised with what you can do.

      • There is a fine line between aggressive accounting and tax evasion. Make sure you stay on the good side.

    • Why can't I pay off expenses before taxes are levied? I want to pay my rent, student loans, food, electricity, etc with pre-tax money. Regardless of what Apple pays, it still feels unfair (even if there are good reasons for it being the way it is, it FEELS unfair).

      Because you can't buy enough of congress to get that put in place.

    • On one side, I don't think corporations are people so they shouldn't be taxed. On the other side the Supreme Court thinks they are people so yes they should be taxed. At some point those profits have to be paid out to an individual who will then pay taxes on it...again.

  • According to Wikipedia NY Times is a reputible source and thus is "the truth". Sorry Apple, no original research here.

  • by jbrower ( 775624 ) on Thursday May 10, 2012 @04:44PM (#39959179)
    Tax Accountant Here - Whoever wrote the Forbes article is patently wrong. Large corporations like Apple cannot base all of their current year's estimated tax payments on their prior-year's tax liability (See Section 6655(d)(2) of the Internal Revenue Code), only their first quarter's estimated payment. Apple's 2011 Form 10-K shows that their current tax expense (the amount of cash taxes paid or payable on 2011 profits) was $5,415,000,000. They also have a deferred tax expense (taxes that have economically accrued on 2011 earnings but that aren't due until certain events occur in the future) of $2,868,000,000. Their total tax expense for 2011 was $8,283,000,000 on pre-tax profits of $34,205,000,000, an effective tax rate of 24.2%. They were able to "save" about $3.9 billion in taxes by keeping profits generated in foreign countries parked outside of the USA. Other tax savings came from utilization of the Research & Development tax credit ($167 Million) and the Domestic Production Activities Deduction ($168 Million).
    • by drerwk ( 695572 )
      Can you also comment on the accuracy and sources of uncertainty in the original NYTimes article? thanks.
    • Not a tax accountant here, but didn't Forbes come up with the same 24.2% [] you just came up with for Apple's 2011 effective tax rate?

      I'll be honest, I can't make heads or tails of what you're saying or what the article says, but is it just a case of a bad summary of the Forbes article, rather than Forbes itself being incorrect, or are their other numbers correct, even though they matched you on that one?

  • I'm sticking to pears.

  • At first I assume this was about people having to pay for OSX when they buy a powerbook that they are just going to run Win7 on.

  • is still Enron Accounting, even when the cool kids do it.

Who goeth a-borrowing goeth a-sorrowing. -- Thomas Tusser