Web of Tax Shelters Saved Apple Billions, Inquiry Finds 716
mspohr writes with news that Apple might be in a bit of hot water over its policy of offshoring revenues to favorable tax jurisdictions. Only they take it a step further, from the article: "Apple relied on a 'complex web of offshore entities' and U.S. tax loopholes to avoid paying billions of dollars in U.S. taxes on $44 billion in offshore income over the past four years ... The maker of iPhones and iPads used at least three foreign subsidiaries that it claims are not 'tax resident in any nation' to help it avoid paying billions in 'otherwise taxable offshore income,' the Senate Permanent Subcommittee on Investigations said in a statement yesterday."
A win for me (Score:0, Interesting)
My relationship with government is a net loss. Therefore, anything that impedes government on its natural course of continuous expansion is a win in my book -- and that includes both legal and illegal tax avoidance.
Before you get your accusations on, I make less than the national average salary and don't have anything of value to hide in the first place. Regardless, I pay my taxes in full, not because I believe it's morally right, but because I understand the consequences of disobeying coercive authority.
In any event, when others do it -- especially big corporations -- I will be right there cheering them on.
Re:Did they break any laws? (Score:3, Interesting)
No tax, no law? (Score:5, Interesting)
If these foreign subsidiaries aren't "tax resident in any nation", are they protected by the laws of any nation? It seems odd that a company can exist and be recognized as an entity that can hold property without being incorporated in a recognized nation. Can't we just take their stuff and see who they turn to for the protection of law?
Re:Did they break any laws? (Score:3, Interesting)
Re:Did they break any laws? (Score:5, Interesting)
Define morally acceptable. I find that companies literally sucking money out of the economy, then letting it sit, thereby starving the economy of capital, thereby adding to high unemployment, lower wages, less benefits, less job security, less public services, etc... is pretty bad for society. But maybe things that are bad for the overall society are still considered morally acceptable. ... But I digress, they're re not breaking any laws... Then again, I'm sure they spent loads of money to lobby to make our current system of laws beneficial to them. They used their huge pocketbook to game the system to make their pocketbook massive!
Re:Did they break any laws that they wrote? (Score:4, Interesting)
I do not have a problem with them not paying more than they are legally required to, but only to a certain extent. And that extent is when they start pumping money into lobbyists and political donations to KEEP those laws unfairly in their favor. If businesses stay out of politics, then they cannot be blamed when they get advantages from it. But, when they essentially buy our politicians and laws, I have a lot less tolerance for the "I was just following the law" excuse.
Apple spends comparatively little on lobbying, even by tech standards. And even if they did lobby extensively (which they don't) perhaps we should be faulting our Congresscritters for maintaining a status quo where corporate money buys influence? Don't you think that maybe the fault lies there?
Re:Did they break any laws? (Score:1, Interesting)
2 points: first, companies, just like individuals, may justifiably want to hold cash in order to deal with unexpected contingencies. In tough times, they want to hold more cash, and make less investments, despite the fact that it makes everybody worse off. That's Keynes 101. Now, Apple is probably taking it to an extreme, but given the rocky road they have gone through over their lifespan, maybe it is understandable that they want to have lots and lots of cash. Like how my grandmother who grew up during the Great Depression keeps a ball of aluminum foil so she can reuse the stuff - you know, just in case.
Second, when there is cash hoarding going on, it is the responsibility of the central bank (in the US, the Federal Reserve) to ensure that there is sufficient cash being spent. There are different schools of thought here regarding the power or impotence of the central bank when rates are already near zero, but to assign moral responsibility to a company that is doing what it thinks it needs to do for the long-term benefit of its employees and customers during the slowest post-war recovery seems misguided. Better to assign blame to the few members of the Fed who have the power to loosen the money supply but refuse to do more, or blame the hard money crowd on the right that see hyperinflation right around the corner and create an atmosphere where the Fed has to walk carefully, or blame the president for not putting loose money advocates on the FRB earlier than he did.
Re:Did they break any laws? (Score:5, Interesting)
Actually Steve Jobs and Eric Schmidt lobbied for a one-time tax holiday so they could repatriate their income earned overseas without losing a large portion of it in taxes. Congress didn't like the idea. Congress is putting on a dog-and-pony show to chastise Apple but doesn't seem to mind giving extremely profitable corporations like Exxon tax subsidies.
The headline is made up (Score:4, Interesting)
Re:Did they break any laws? (Score:5, Interesting)
Yes, there are real reasons for this. It a standards and compatibility issue.
Most of the world works on a country of source for corporate tax. You make a profit in country Y, you pay Y’s taxes. Now, when you are doing business in X and Y it can be hard to determine how to split the profit – and thus the taxes – between X or Y. It is subjective even under the best conditions. But there is still a compatibility issue between different countries tax codes which smart tax lawyers can figure out how to exploit.
The US works on a country of domical approach. If you make a profit in Y, you will pay US taxes. IIRC, back in the 70s when corporate taxes were high in both Europe and America, companies could be taxed $110 for every $100 in profit – because both America and the European country was demanding full taxes paid.
The US could have fixed this by moving the world standard. But that would have been rational – like going to metric. So instead we put in a lot of dodgy loopholes and tax credits so it would not look like we were giving big corps a tax break.
The answer is that America should move to the world standard of taxation by source.
Re:The real news is... (Score:4, Interesting)
Put it another way, if you were to spend 8 months working overseas and paid local income tax on that income, would you be happy for the IRS to take its cut as well?
The sad thing is, that's exactly how it is for US citizens today. We're the only developed nation (1st/2nd world) that does this - taxes our citizens on a dollar they make anywhere in the world... Kind of blows the whole "but teh infrastructurz" argument away...
No, it's not that... (Score:0, Interesting)
Why else wouldn't they help to support it? Share dividends, please, they've had record profits.
Re:Did they break any laws? (Score:1, Interesting)
Most of the people that argue with anti-tax individuals think them morally corrupt and conflate not wanting to pay taxes with some sort of selfish drive. It's not true for most of the ones I've spoken to. Tell me, what is wrong with having a more direct/visible say in how/where our taxes are used? Because clumping it into one giant pool and giving it to a huge bureaucracy is most certainly not moral in any way.
Re:Don't hate the player. (Score:4, Interesting)
It's strange that Japanese companies don't do all these tax-avoidance shenanigans, manufacture stuff in their home country, pay good wages and yet somehow manage to survive in this cut-throat corporate world. Japan has the largest number of large 75+ year old companies in the world, and it's because they don't go in for every douchbag scheme some accountant invents and play for the long term win.
Re:Did they break any laws? (Score:5, Interesting)
I'm surprised a few of these companies, or even just one, haven't simply bought a small island nation. They could install one of their employees as supreme leader and set all tax rates at zero. Their only contribution would then be whatever it costs to fortify and defend the island.
Re:Did they break any laws? (Score:5, Interesting)
It's not a question of altruism. You can be selfish in the Ayn Rand sense and still arrive at the logical conclusion that paying taxes is good. Since I wasn't born rich and i'm not that lucky, then I have to find good work to become successful. In order to find this work, I need to live in a healthy economy, which comes from consumer spending, which comes from a more even distribution of wealth than what we have now. Taxes are a way of redistributing wealth and propping up the economy for the future. QED, unless your already wealthy or you're old, then you should want to pay taxes. The anti-tax people are just short-sighted.