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."
Did they break any laws? (Score:4, Insightful)
If what they did is legal, so what? I take every tax deduction I can legally find, why shouldn't Apple?
Re:Did they break any laws? (Score:5, Insightful)
If everything legally permissible is deemed morally acceptable then humanity is doomed.
Re: (Score:3, Interesting)
Re: (Score:2, Insightful)
I for one applaud Apple on using the all the help provided by the US government in the way of tax loopholes to minimize its tax liabilities.
If the US government takes issue with any of the legal mechanisms used by Apple they need only change the laws to make them illegal.
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? (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.
Re:Did they break any laws? (Score:4, Insightful)
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.
I wish you ass-clowns would quit obsessing over the US on every fucking story that comes along. Try paying attention. Here, I'll help out:
" In addition, the subcommittee review discovered an unusual tax scheme: Apple’s claim that three key offshore companies are not tax residents of Ireland, where they are incorporated, or of the United States, where Apple executives manage and control the companies. One of those Irish subsidiaries has paid no income taxes to any national tax authority for the past five years."
This isn't just about using loopholes in a country's tax code. They are claiming that the largest part of their core business isn't under the authority of anybody, anywhere on the planet.
Re:Did they break any laws? (Score:5, Insightful)
Well, slashdot *IS* a US centric website, so, you have to expect a good bit of US centric comments and stories.
Re: (Score:3)
That is the tax loophole in Ireland's tax code.
Apple made it famous in the eighties - the double Irish with a Dutch sandwich.
And it's perfectly legal, which is why lots of companies take advantage of it to minimize their taxes.
Re:Did they break any laws? (Score:5, Informative)
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.
We had a one-time tax holiday like that not too many years ago. What they lobbied for was a second "one-time" tax holiday. The promised US investment from the first one never materialized, so even congress didn't get dupped (or bought) for a second one.
Re:Did they break any laws? (Score:4, Insightful)
Just remember, you can't buy what isn't for sale. If companies are able to buy their way into writing legislation that means that there is a deeper problem in play here and attacking each company over each incident is like not seeing the forest for the trees.
No one will get anywhere by attacking Apple (or Google or MS or IBM or GM or Boeing or Lockheed). If there is a deep rooted problem of this nature in the system then the system needs reformed. Going after those who offend loopholes in that system isn't very advanced. It's not much different than a dog chasing his own tail.
Re:Did they break any laws? (Score:5, Insightful)
By “Cash Hording” the OP was not saying (at least I hope) that corporations were strangling America by vacuuming up all of the loose change. America has rock bottom interest rates and companies find it easy to hawk bonds to raise money – even junk bonds. So don’t worry about the Fed.
No, the issue is that big corporations are making large profits and are doing nothing with it. No reinvestment, no dividends, no capital investment – it just sitting in a bank account (well, short term high quality bonds) which, if lucky, might be beating inflation. If I am a shareholder – that is an owner – I can think of better things to do with it then sit in a bank account.
Now yes, corporations need to keep some cash on hand. However, the trend line for the past 5 years is just going up and up – and way above historical levels.
Apple is a really bad case. They are sitting on a huge pile of cash and can’t explain what they need it for. They don’t have large capital expenses such as buying a foundry. They don’t buy out other large companies, preferring to grow organically. (Small companies don’t count – their like a single potato chip to Apple – easily swallowed without having an real effect. )
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:4, Insightful)
Cannot be done, moral is per definition a subjective concept - you can only prove it to yourself, your conclusion is not valid for anyone else. We may arrive at similar conclusions with regard to certain actions, and word them into law, but they remain subjective. Most of us might agree that murder is not acceptable, and thus we write it into law that in order to participate in our society, you cannot murder people.
What the big corporations are doing, to me at least, is morally questionable. Short story is that they buy services and goods from branches located in places where the income tax is lower than where the actual revenue is generated. This shows a blatant disregard for the fact that, to generate the revenue, they make use of infrastructure, labor and the market that buys their shit - not only a disregard for the services offered to the corporation in order to help it create said revenue, but a decision that paying society back for those services is not necessary.
Another side of the story are governments who decide that they would like a bit of the cut in aforementioned revenue, and undercut their neighbors corporate tax (hello Ireland, various piece of shit Island states in the Pacific, and so on), thereby creating the tax havens Apple is raking in the dough from. This to me is equally morally questionable.
Re: (Score:3)
Invoking [politician you don't agree with] for this kind of thing is absurd. This has nothing to do with Obama, Bush or whomever else you guys have been employing as a figurehead recently.
This is about the spirit of the law saying something to the effect of "when you create wealth in our land, you must give the state a portion of this wealth". The word of the law says something like "the portion of your surplus generated wealth must be given to the state". Multinational corporations then use this to circumv
Re:Did they break any laws? (Score:5, Insightful)
Nobody has shown that what Apple has done shouldn't be morally acceptable.
Jobs/Woz grew up in the USA, they were educated there and used the resources/facilities/opportunities of the USA to earn their fortunes. Many of those resources/facilities/opportunities were provided using taxpayer money.
Not giving back to the young people growing up today is morally acceptable to you?
Re: (Score:3)
It's whatever the going rate is, the same rate that other people were paying when Apple was getting wealthy.
Don't hate the player. (Score:3)
Agreed, Companies are legally and ethically responsible to their shareholders to maximize the bottom line. If any company does not do everything they can to minimize their tax liability "legally" then, not only are they are at a distinct disadvantage to other companies, they are also not taking care of their (owners/shareholders). Even if the shareholders don't have the board of directors ousted, in the long run, they will lose out to competition, and eventually go under, or get bought out by a company wi
Re:Don't hate the player. (Score:5, Insightful)
Corporations are in no way legally (nor, in many cases ethically) responsible to maximize their bottom line. Many companies (Ben and Jerry's as a common example) consider themselves ethically bound to take huge swaths of cash from their bottom line and give to the community and good causes, even if there's no possible hope of ROI.
The oft-cited Ford v. Dodge basically says that a company can't go out of its way to screw over the shareholders. There is a huge space of good acts between "legally required to maximize profits at all costs" and "screwing the shareholders." [wikipedia.org]
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, Informative)
You're an ignorant idiot.
Fact (check it on the IRS website, irs.gov): in 1972, 24% of the US federal revenue stream was from corporate taxes, and 16.67% from individual income taxes. Right now, it's barely above 10% for corporate taxes, and 44+% for individual income taxes.
Meaning you, personally, are paying taxes *instead* of Apple. How much of the year are you working to pay those?
mark
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:Did they break any laws? (Score:5, Insightful)
You are missing a very important bit about US taxes in this case, one that invalidates your whole concept and semi-anticdote: as the laws work you only pay the higher of the two systems in total. A couple of examples to illustrate: if you would owe $50 in the other country, and $60 in the US, then you would pay $50 to that other country, and only $10 (the difference) to the US. If you reverse the numbers and the forign tax was higher then all of the money would go to the foreign government, and the US would get none.
There are odd cases where that tax codes in the seperate countries tax totally different ways, so making a hypothetical case where one country has only a value-add tax vs. the US's focus on proffits, in that case it could wind up that you would pay the full brunt of both taxes, but that is not anything like the "$110 for every $100 in profit" that you talked about.
I have personal experience with this, since my wife sold her apartment in Budapest, and we had to pay the difference in the taxes. We got caught a little, because a couple of exemptions that would have applied here did not apply because it was foreign (and thus not under those specific real-estate rules, but rather generic capital gains), but that was minor.
But the bigger concept here is that these multinationals rely on the services that the US provides both explictly and implictly. For example they are backed and defended by the US Military and State Department. Without the latter's constant negotiations (backed by the formers Big Stick) there is little chance that China would be do any inteletual property enforcement of "Western"-owned ideas at all. A somewhat stark example, but when you look into it further you will find more and more.
These companies are the biggest benifiters of the services that those taxes provide. It only makes sense that they pay for them.
Re:Did they break any laws? (Score:5, Insightful)
It's kinda sad to have to spell it out loud... but here it goes: your tax money is used to benefit society; when you don't pay your taxes you are not contributing to society, yet you still benefit from those who contribute - that is immoral. Please, cayenne8, tell me how isn't that obvious?
Furthermore, how can a system where the "I'm gonna get as much as I can (regardless of my needs) and give as little as possible" mentality is the norm be considered moral?
Re:Did they break any laws? (Score:4, Insightful)
People like cayenne8 have a mental problem where they mistakenly believe that :
Legal = RIGHT
Illegal = WRONG
They are severely deluded however.
Re:Did they break any laws? (Score:5, Insightful)
That's just nature at work..survival, I get mine first, etc. Nothing moral or immoral about it, just a fact of life my friend. Human nature since day one.
Except we're far from just barely surviving, while there are people actually struggling. Your indoctrination in individualism does not allow you to see how immoral that is...
A little bit of empathy would do you good.
Re: (Score:3)
Well, what can I say? There are winners and losers in the world, always has been, always will.
[...]
Life is a contest....you have to fight to win. Not everyone gets that.
I realize there are a lot of people that think like you, and that's just sad. It is the kind of mentality that leads to bullying, desperation, and (in the extreme) the mass shootings.
Nothing shy of taking everyones money/wealth, and redistributing so that everyone has an equal share, whether they earned it or not, you are not going to have people that don't 'struggle" as you say.
Really? That's the only way you can imagine? What a black and white world, isn't it?
I certainly hope you aren't proposing that....because at some point, you run out of people willing to work harder and excel, only to have their rewards given to someone that didn't/couldn't do the same work or had the same luck.
Indeed, because that's the direction the industry is taking, right? Oh, wait, actually it is robots that are increasingly taking over people's jobs. So when the bulk of production is automated, where does the economic power to buy it come from?
Re:Did they break any laws? (Score:5, Insightful)
That's just nature at work..survival, I get mine first, etc. Nothing moral or immoral about it, just a fact of life my friend. Human nature since day one.
Ahh yes, just like it's human nature to go pick dollars off the dollar tree and spend them as they see fit.
Wait, what? You say dollars don't grow on trees? You say that dollars are created by the government, and only have value because they're backed by the government that created them? Pfft. That's stupid. Next you'll try to tell me that some of those dollars need to go back into that system to help support it, so that it can continue to back them and give them value.
Idiots. The fed can print money for the government forever, it doesn't need me to give MY hard-earned dollars back. I got mine, and fuck everybody else. I'm an island who doesn't need anyone or anything.
Except the police. Those guys have to protect my dollars. And the justice system, obviously. And roads, too, because they help the police get around and help me get to my job where I earn those dollars. Maybe water and sewage as well. Also, food inspectors and regulations would be good, because who wants to get sick and die from buying tainted food? Maybe also some sort of people who vet drugs to make sure they're safe. I'm sure there are 1 or 2 other really small things that I'm forgetting. But that's it! Anybody who thinks the "government" should do any single thing beyond what I think is correct is a damned socialist out to destroy my freedom and STEAL my hard-earned dollars at GUN POINT! (well, figuratively. And I know I said the police were necessary, and that they should obviously have guns, but when they're used to force me to do something I don't like? Oppression!)
--Jeremy
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.
Re: (Score:3)
Especially considering it's lawyers making the laws they are poad to make by the very people benefitting from the loopholes.
Time to make these corporations pay their fair share.
New law, not paying taxes? No copyright or patent protection for you.
Re: (Score:3, Insightful)
Re: (Score:2)
Re: (Score:3)
Paying for the nice first world infrastructure that allows the company to exist is "throwing money away"?
Re: (Score:3)
Re: (Score:3)
this profit is held overseas, where it was earned. It wasn't made with the US infrastructure, but with the Chinese (predominantly) infrastructure. And they've paid taxes on it overseas already.
Another one who hasn't RTFA'ed, so I'll just have to post this extract from the NYT again:
Congressional investigators found that some of Apple’s subsidiaries had no employees and were largely run by top officials from the company’s headquarters in Cupertino, Calif. But by officially locating them in places like Ireland, Apple was able to, in effect, make them stateless — exempt from taxes, record-keeping laws and the need for the subsidiaries to even file tax returns anywhere in the world.
Re: (Score:2)
Re: (Score:3)
You mean the money that I will pay taxes on when I have access to it?
See how that is different from having access to the money and not paying taxes?
Honestly I wish I could forgo the 401k it is just a scam to move pensions into the stock market so that I can end up with no retirement and make some bankers wealthy. The entire scheme is a scam on working folks.
Re:Did they break any laws? (Score:5, Insightful)
If what they did is legal, so what? I take every tax deduction I can legally find, why shouldn't Apple?
Because the world is changing and it's no longer socially acceptable to just pay what's legal, it's considered inappropriate to pay less than what people would consider to be a fair amount. If you're paying $1 of tax on $1000 of earnings because you've cleverly nested your business assets overseas in a complex web of tax avoidance schemes, then most people would consider that unfair, even if it is legal.
Tax avoidance (NB not the same thing as tax evasion) was once considered socially acceptable. Of late there's been a swing the other way and national governments are now putting pressure on organisations to pay their fair share of tax (as opposed to just their legal obligation). Companies that don't conform get "outed" in the media. This bad publicity can cause the companies involved to suffer a punishment of a loss in revenue - the public are less likely to do business with companies they see as not paying their fare share of tax.
Sort of like an extortion racket, except it's okay because it's the government doing it :p
Re: (Score:2)
Re:Did they break any laws? (Score:5, Insightful)
It isn't just that tax avoidance has lost favor. It's that most people have come to the realization (I think) that big money interests work with legislators, whether obviously or covertly, to see to it such loopholes and 'special perks' exist in the first place. It's like playing poker and stacking the deck in your favor every time. It isn't hard to see how that puts the corporations on the 'wrong side' and how it comes off as unfair in most people's minds.
If the perception was that big money does not have a hand in the creation of laws and receives the same "bad treatment" everyone else does, then I imagine you'd see tax avoidance come back into favor.
Re: (Score:3, Interesting)
Re: (Score:2, Insightful)
Re: Did they break any laws? (Score:2)
If the government really gave a shit about "fair share" for taxes, then they'd charge a flat rate percentage for everyone.
Instead they set up a Byzantine network of policies, tax breaks, and incentives and are shocked, shocked when people and companies actually use them or even modify their behavior to get around them.
I'm getting pretty sick of our government complaining about how poor it is and how everything would be better if us taxpayers, Apple included, would just give them a "fair share" of our money.
Re: (Score:2)
Sort of like an extortion racket, except it's okay because it's the government doing it :p
That's funny, I've always called it "peer pressure". What's the difference?
Did they break any laws that they wrote? (Score:5, Insightful)
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.
For example, I had a big problem with Mitt Romney's tax rate, but not necessarily because it was low. The rate was so low because there is a preferential tax rate for carried interest [wikipedia.org]. I had a problem with it because he was on owner of Bain Capital and they had spent millions of dollars lobbying Washington to keep "carried interest" at a preferential rate. When you have bought and paid for a law, then you become responsible for whether it is fair or not.
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: (Score:2)
Because the world is changing and it's no longer socially acceptable to just pay what's legal, it's considered inappropriate to pay less than what people would consider to be a fair amount. If you're paying $1 of tax on $1000 of earnings because you've cleverly nested your business assets overseas in a complex web of tax avoidance schemes, then most people would consider that unfair, even if it is legal.
I'm curious; how do you define "fair", and how would you go about forcing companies to "be fair" when the
Re: (Score:3)
They are a symptom of the underlying problem; government doesn't know how to make tax law.
Do you suppose they might be making a fuss about the loopholes so that people get upset enough that they will be allowed to close them? Remember, Grover Norquist [wikipedia.org] opposes closing tax loopholes unless the base rate of taxes is lowered to compensate for the increased revenue and he owns the balls of the entire Republican party [atr.org].
Re: (Score:2)
Or cutback on the custom that you give that corporation
Re:Did they break any laws? (Score:5, Insightful)
A company is doing its shareholders a dis-service if they pay more tax than legally required.
If you don't like the amount of tax a corporation pays, due to their corporate structure, petition your government to close the loophole.
No one is challenging that, you just keep restating the obvious. The point of the scrutiny is to shine enough light on the loophole that there will be political will to close it without just the usual one-sided "they are raising taxes!!!".
Re:Did they break any laws? (Score:5, Insightful)
The point of the scrutiny is to shine enough light on the loophole that there will be political will to close it without just the usual one-sided "they are raising taxes!!!".
Last I checked, Apple doesn't write the laws. They don't even spend that much money lobbying. In fact, it is Congress that writes the laws.
Apple is huge, highly profitable, highly visible, and probably the US company with the single highest net favorable opinion among voters... If you want to make a splash, you start at the top. In case it's not obvious, the point of these hearings is not to actually find out how/why Apple or any other company does what they do (congress has no problem knowing all of that), it is to raise visibility so that there is political will that can be capitalized upon to change the tax code.
Comment removed (Score:5, Insightful)
Re: (Score:3)
A company is doing its shareholders a dis-service if they pay more tax than legally required.
If you don't like the amount of tax a corporation pays, due to their corporate structure, petition your government to close the loophole.
Too bad we don't have millions and billions to bribe the lawmakers with, because to maximize profits, the corporate scum are cutting wages and jobs, leaving the bulk of the population barely able to afford food, housing, and the clothes on their backs.
Re: (Score:3)
Re:Did they break any laws? (Score:5, Insightful)
What seems unfair is the US government attempting to lay a claim to revenues that were generated by Apple's related entity in another country.
You're not an accountant, are you? Ask a decent accountant what profits were made and what expenses were incurred by your operations in country X, and he'll ask what you want them to be. There are endless games that can be played, like transfer pricing. And what about the profits that Apple claims were generated outside of any country. Does Apple have significant operations on ships in international waters? From the NYT article:
Congressional investigators found that some of Apple’s subsidiaries had no employees and were largely run by top officials from the company’s headquarters in Cupertino, Calif. But by officially locating them in places like Ireland, Apple was able to, in effect, make them stateless — exempt from taxes, record-keeping laws and the need for the subsidiaries to even file tax returns anywhere in the world.
Re: (Score:3)
Re: (Score:3, Insightful)
I actually don't understand what the issue is... It seems to be "wha wha wha, apple leaves the money it makes in other countries in those countries, rather than bringing it into the US"... It seems to me that apple is perfectly entitled to do that.
It's certainly nothing compared to google's "We don't sell anything in the UK, it's all in Ireland, honest" bullshit.
Exactly the same (Score:3)
I actually don't understand what the issue is... It seems to be "wha wha wha, apple leaves the money it makes in other countries in those countries, rather than bringing it into the US"... It seems to me that apple is perfectly entitled to do that.
It's certainly nothing compared to google's "We don't sell anything in the UK, it's all in Ireland, honest" bullshit.
Apple's subsidiaries, located in Ireland, paid a mere 0.05 per cent in tax on $22bn in revenues.
You get 5 and insightful...there is nothing worth discussing here.
The real news is... (Score:5, Insightful)
...Apple isn't the only one that does this.
Taxes are for little people. They aren't for the rich or corporations. Taxes are for you and small-business, not for people and corporations that can hire the best people who know the best methods of tax avoidance (legal) and tax evasion (it's only illegal if you get caught).
--
BMO
Re:The real news is... (Score:5, Insightful)
>But... I applaud Apple for not paying into our tax system.
So instead of the load being distributed properly, you want the government to shift most of the load to your back?
Good to know.
--
BMO
Re:The real news is... (Score:5, Informative)
Whilst Apple Inc may be a US company it has subsidiary companies in the other countries/regions that it operates. Apple's earnings place 2/3rds of its income outside the US. Why should that income be subject to US tax when tax has already been paid in the region it was earned?
RTFA (NYT):
Congressional investigators found that some of Apple’s subsidiaries had no employees and were largely run by top officials from the company’s headquarters in Cupertino, Calif. But by officially locating them in places like Ireland, Apple was able to, in effect, make them stateless — exempt from taxes, record-keeping laws and the need for the subsidiaries to even file tax returns anywhere in the world.
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...
Re: (Score:3)
It's odd how Apple's tax evasion is somehow so awful, even though they pay an effective tax rate of 30% and $6 BILLION dollars, when other companies get away with paying zero without fuss.
But was it illegal? (Score:2, Troll)
Ok, so Apple took advantage of tax loopholes and routed income offshore. The real question is: was it illegal?
How many other companies do the same thing? Is Apple being targeted just because they're Apple? Did they not make the right p
When other international companies do the same thing?
Re: But was it illegal? (Score:2)
Darned mobile entry, posted before I was done...
That fragment should read:
Did Apple not make the right political donations?
Re:But was it illegal? (Score:5, Insightful)
Yes, apple are being targeted. In australia, we have a term for this. It is called "tall poppy syndrome".
Yes, other companies do it. Any company that does NOT do everything within the law to minimize their tax burden is both not doing the right thing by their shareholders, and handing their competitors a competitive advantage.
If apple have been avoiding tax like this, and you disagree with it, petition your government to get the loopholes tightened. If it is possible to structure their business to minimize the amount of tax they pay, then why shouldn't they?
If Tim Cook or whoever wants to donate their own money to charity or pay more tax than they need to that is their decision. However the money apple makes isn't owned by apple. It is owned by the company shareholders - who will pay tax on any dividends or capital gains from sold shares in any case.
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?
Taxes (Score:4, Insightful)
Apple’s side: (Score:5, Informative)
Why not link to their answer as well?
http://images.apple.com/pr/pdf/Apple_Testimony_to_PSI.pdf [apple.com]
“Apple does not move its intellectual property into offshore tax havens and use it to sell products back into the US in order to avoid US tax; it does not use revolving loans from foreign subsidiaries to fund its domestic operations; it does not hold money on a Caribbean island; and it does not have a bank account in the Cayman Islands. Apple has substantial foreign cash because it sells the majority of its products outside the US. International operations accounted for 61% of Apple’s revenue last year and two-thirds of its revenue last quarter. These foreign earnings are taxed in the jurisdiction where they are earned (“foreign, post-tax income”).”
Re:Apple’s side: (Score:4, Informative)
From TFA: " It has created offshore entities holding tens of billions of dollars, while claiming to be tax resident nowhere."
Everything you quoted fails to account for the above, from TFA. If it's true, then Apple is evading tax and breaking the law. Everyone (person or corporation) is resident somewhere.
Actually only one "loophole" matters. (Score:5, Informative)
All the foreign "loopholes" actually only help Apple avoid paying foreign taxes, those aren't about US taxes at all. These seem more about adding to the political theater of the government going after tax dodgers.
The entirety of Apples foreign cash horde earned on foreign sales, is subject to US taxation. Not one of those foreign shell games protects those earnings from US taxation. In fact they make the cash horde larger, making it potentially sweeter for US taxation.
But here is the one "loophole" that really counts. US Taxation doesn't come into effect until Apple repatriates the cash, which there is no requirement that Apple (or any other US corporation) ever actually do.
This is why US corporations have 1.45 Trillion dollars parked outside the USA.
http://www.forbes.com/sites/afontevecchia/2013/03/19/u-s-companies-stashing-more-cash-abroad-as-stock-piles-hit-record-1-45t/ [forbes.com]
Re:Actually only one "loophole" matters. (Score:4, Insightful)
The most significant quote of the article: "we expect overseas cash balances will continue to grow unless tax laws encourage U.S. companies to repatriate money".
The corporate tax rate for what Apple is doing is around 35%; that is, Apple would have to pay 35% of their cash pile in taxes if they repatriated it. Which would be generally reasonable if not for the fact that it was already taxed once in the originating country on the original sale. As a result the 35% tax rate is essentially a kind of 35% tariff on exports and foreign sales. You only need to pay it once if you sell within the US, but you pay it along with a second set of local taxes on anything you sell outside of the US, regardless of whether it was even made here. The ultimate effect is that if every dollar were immediately repatriated, foreign sales would either be immensely less profitable than domestic sales, or American companies would be at a significant competitive disadvantage against foreign companies that aren't getting taxed twice (e.g. Samsung).
Congress needs to give up on this pipe dream that they can have 35% of the profits made off of all foreign sales. When no one else is double-taxing like this, it makes the American tax system look foolish and antiquated.
Outrage! (Score:5, Funny)
They aren't alone (Score:3)
What's really missing in the discussion here is that all large multinational corporations use tax avoidance strategies. GE for example has a team of lawyers and accountants just focused on minimizing their tax liabilities globally. http://www.huffingtonpost.com/2013/03/11/general-electric-taxes_n_2852094.html [huffingtonpost.com] . This Tax avoidance problem has been discussed for the past few years especially with deficits running as high as they have been. It's the old "we're not taking in enough revenue, so where can we get more." The administration plays that message up, the spin doctors on the Sunday morning news programs echo it because it keeps the discussion in the public eye. Even the news in the UK about the same avoidance strategies being questioned just echos the same problem. What's missing from the discussion is how much money is being pissed away by bad ideas, red tape and boondoggles like studying the sex life of squirrels. Fraud and waste alone cost us billions in the US each year and for every billion we save, that's a billion that could be put to towards other programs (like offsetting the sequester) or simply put back into the taxpayer's pockets by not taking it in the first place. http://www.businessinsider.com/government-waste-spending-sequestration-sequester-2013-3?op=1 [businessinsider.com]
So, Apple in this case isn't alone and it's just business. What needs to happen in the US is that the crappy tax code and the IRS need to be changed. We need to get rid of the loopholes that allow companies to shelter billions in profits overseas and allow them to move money from place to place without being taxed. That requires changes to the law and specifically to the tax code, I for one am in favor of abolishing it and going to consumption taxes or a flat tax. Think of it: no April 15th hassles. No audits.. That will put thousands of bureaucrats out of work and H&R block and Quicken to boot! Does that mean a smaller government too? Yes, and that is a good thing.
Best analogy I've heard (Score:4, Funny)
Google, Amazon and Apple are like those people who turn up to a "bring a bottle" party with a litre of supermarket own brand cola and then proceed to drink the Wyborowa vodka and Hendricks gin all night. They may upset a lot of people, but they've not technically broken any rules.
If governments feel that companies (that follow their rules) still manage to pay too little tax - then the onus should be on the government to change them. Anything else they do is just blowing hot air.
I applaud Apple for its actions... (Score:3)
It has shown our government where the loopholes are and now they can close them. ( Yeah, right, that might happen! )
Oh, by the way, Apple, since you don't pay, what is in my opinion, your fair share of US taxes, then I do not feel that the US should use taxpayer money to go after people that steal your IP, patents or trade secrets. And those H1Bs you have? We will be paying very close attention to them.
The headline is made up (Score:4, Interesting)
Lower Taxes (Score:3)
So if California would lower their tax rate they could get at least a piece of the money instead of none of it.
Re: (Score:3)
All that does is reduce the tax revenue from smaller and more responsible companies who can't afford to/don't want to avoid paying the taxes they're expected to pay.
So sure you may get a $10bn tax windfall from the large companies, but you'll lose $30bn from all the other companies that pay the normal corporation tax rate without a fuss as they're only then expected to pay less.
Even then you assume companies like Apple, Google, Amazon etc. wont just then find other excuses not to pay that lower amount which
From a former Tax Software Developer (Score:4, Insightful)
The tax law is written WITH THE ASSUMPTION that taxpayers will include all income, take all credits, use all deductions, and make all payments that the law requires. This is the only working definition of "fairness". When you're talking taxes, fairness has nothing to do with paying back society, it has to do with following the rules as written. Fairness is what happens when the IRS treats all taxpayers the same, and doesn't apply special rules and handling to some but not others. That's what is fair.
Which is what brings the latest scandal into such sharp focus. It is absolutely unfair for the IRS to target one group of taxpayers for special focus based just on their names. It is absolutely unfair for the IRS to ask these organizations to list the books they read, the content of the prayers they pray, the names and addresses of their major donors, and the content of their blog posts. Those things have nothing to do with following the tax rules fairly.
If anyone has a beef with Apple paying foreign taxes instead of US taxes, any fault would lie with Congress, either for too-lax laws that permit the tax to be legally avoided, for too-generous tax credits that reward major corporations for "investing" in the US, or for too-stupid economic policies that raise the cost of doing business in the US to astronomical heights, making almost any foreign country a cheaper place in which to do business.
Re:A win for me (Score:5, Insightful)
So all government is evil?
There are plenty of places on the planet with ineffective/nonexistent government. They are all hellholes.
Please move to one of them.
--
BMO
Re: (Score:2)
Government is a necessary evil. Much of it is more evil than necessary.
Re: (Score:2, Flamebait)
Re: (Score:3)
Re: (Score:3)
But it only controls a compound in the capital. The rest is practically ungoverned.
Re: (Score:3)
Re: (Score:2)
So all government is evil?
1. No government is terrible.
2. A little limited government is good.
3. A little more government than a tiny limited government is extremely good
4. A little bit more government is a tiny bit better
5. A lot of government is really no better -- there are diminishing benefits at this point.
6. A big government is a bit worse than (4) -- too costly, too controlling, few advantages over (5).
7. A huge government is much worse than (3) -- massive cost, drain.
8. A massive tyrann
Re: (Score:2)
This is FUD and the general response if someone suggest government is evil.
However, those hellholes which you suggest are basically governed. So, they have government because the definition of government 'is an organization exerting centralized control over a community' (from wikipedia). It is an entirely different issue that those governments wages war against each other and if they are recognized by other governments or not.
Re:A win for me (Score:5, Insightful)
Re:A win for me (Score:5, Insightful)
You understand that the government offsets lost or unavailable corporate tax revenue by increasing the taxes it does collect, i.e. yours, right?
Re: (Score:2)
Re: (Score:2)
You understand that corporations don't pay taxes, people do. Either in the form of higher prices on products, reduced income from investments or a combination of these. Government like corporate taxes since this obscures the tax burden from the voters and the popular politics of envy.
All taxes are evil, but they are a necessary evil in that governments do things that make life better (provide for the common defense, establish courts, etc.). However, it is very common for governments to overspend (i.e., in t
Re:A win for me (Score:5, Insightful)
Judging by the deficit... I'm gonna go ahead and disagree with you.
Re: (Score:3)
I pay my taxes in full, not because I believe it's morally right, but because I understand the consequences of disobeying coercive authority.
You must be religious. You know, one of those people whose brain works along the lines of "It's good that we have God to send us to hell if we murdered someone; imagine how many people would go on a killing rampage if there were no God - I know I would!".
Re: (Score:2)
lol. Why are poor people always so delusional?
I think it's a contributing factor to why they're poor in the first place.
Re: (Score:2)
Why do we bother? It wins votes. The little guy (i.e., the masses) likes that the government is seemingly "taxing the big boys".
Re:Why do we still bother with corporate taxes? (Score:5, Insightful)
I'm hoping someone with some econ knowledge can enlighten me, although I fear since this is the Internet and Slashdot comments it's probably not going to happen ;-) I've never heard of a situation where companies tried to pay taxes because they like them and if they're publicly traded they had a fiduciary responsibility to avoid them in order to maximize returns to the shareholders, and when forced to pay them they just try to find ways to force the cost down to the customer.
So why do we bother at all? Personally, I'd rather pay higher property/income taxes and abandon corporate taxes so that money comes back into the country for reinvestment and so that the companies don't leave the country and expand their business elsewhere.
If a corporation's income were tax free (or if the base rate were significantly lower) you would simply see everyone in the country start their own one-owner corporation and proceed to funnel all of their income in and out, tax free. See the problem? Then you need *another* rule to stop that from happening. The tax code looks as ugly as it does due to the vicious cycle of constituents rallying for less complex taxes, and corporations using political clout to make only everyone elses' taxes "less complex" (i.e. preserving the loopholes they cherish). Sadly, the political system as it stands is not well equipped to actually do the will of the people, and instead creates token efforts to appease the masses, while for the most part doing whatever it is that large corporations want.
Re: (Score:3)
Personally, I'd rather pay higher property/income taxes and abandon corporate taxes so that money comes back into the country for reinvestment and so that the companies don't leave the country and expand their business elsewhere.
Sucker.
You're buying the line that companies will hold their breath until they turn blue if we enforce some of our corporate tax laws. It's like the "we'll offshore if you don't increase the H-1B quota" line. If they could move to a country with lower taxes or cheaper labor without endangering their business, then they would have already. In fact they've already done it as much as possible, so there are important business reasons to keep some of their operations in the US.
Additionally, "money comes back
Re: (Score:3)
Re:Good (Score:5, Insightful)
If this is the case, the root cause of the problem is your government, not Apple/Google/GM/whoever.
If you suspect the government is doing this (from the outside, it's pretty clear actually) why the fuck haven't you guys had another revolution yet?
Too much time on Xbox? Complaining about it on the internet is more attractive?