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Businesses The Almighty Buck Apple Technology

Apple CEO Calls For Global Corporate Tax System Overhaul (venturebeat.com) 130

Posted by msmash from the how-about-that dept.
Everyone knows that the global corporate tax system needs to be overhauled, Apple Chief Executive Tim Cook said on Monday, backing changes to global rules that are currently under consideration. From a report: The growth of internet giants such as Apple has pushed international tax rules to the limit, prompting the Organization for Economic Cooperation and Development (OECD) to pursue global reforms over where multinational firms should be taxed. The reforms being examined center around the booking of profits by multinational firms in low-tax countries such as Ireland where they have bases -- and where Cook was speaking on Monday -- rather than where most of their customers are.

"I think logically everybody knows it needs to be rehauled, I would certainly be the last person to say that the current system or the past system was the perfect system. I'm hopeful and optimistic that they (the OECD) will find something," Cook said. "It's very complex to know how to tax a multinational... We desperately want it to be fair," the Apple CEO added after receiving an inaugural award from the Irish state agency responsible for attracting foreign companies recognizing the contribution of multinationals in the country.
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Apple CEO Calls For Global Corporate Tax System Overhaul

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  • Just make it honest (Score:3)

    by rickb928 ( 945187 ) on Monday January 20, 2020 @11:02AM (#59637382) Homepage Journal

    "The reforms being examined center around the booking of profits by multinational firms in low-tax countries such as Ireland where they have bases -- and where Cook was speaking on Monday -- rather than where most of their customers are."

    Look, corporations don't pay taxes, because taxes are a cost of doing business. Disparity in taxes can influence pricing, and accounting rules/abuse can further influence pricing, but bottom line is, consumers pay. Letting corporations play legal games and choose where to pay taxes is an accounting abuse.

    Keep it simple and honest. Oh, wait...

    • I'd be fine removing corporate taxes, as long as people who have 51% of their income as capital gains are taxed as regular income. Move the tax burden to the ones who benefit from the laws, economy, etc.

    • Look, corporations don't pay taxes, because taxes are a cost of doing business. Disparity in taxes can influence pricing, and accounting rules/abuse can further influence pricing, but bottom line is, consumers pay.

      Good point. I think it's helpful to trace taxes back to the individuals because it's only individual humans who have to give up something they want because they must pay a tax.

      However, it isn't always consumers that wind up paying. A corporation might respond to a tax by raising prices (thus the incidence falls on consumers). They might also reduce profits (incidence on investors and owners), reduce or hold flat wages and benefits (employees), or maybe even reduce cost of inputs (suppliers). How it all play

    • "The reforms being examined center around the booking of profits by multinational firms in low-tax countries such as Ireland where they have bases -- and where Cook was speaking on Monday -- rather than where most of their customers are."

      Look, corporations don't pay taxes, because taxes are a cost of doing business. Disparity in taxes can influence pricing, and accounting rules/abuse can further influence pricing, but bottom line is, consumers pay. Letting corporations play legal games and choose where to pay taxes is an accounting abuse.

      Keep it simple and honest. Oh, wait...

      Better idea: don't tax corporations. I don't say this because I'm interested in protecting corporations, I say it because I'm interested in protecting individual consumers and employees, which are who ultimately bears the cost of corporate taxation. Granted that individual taxpayers are going to bear the cost if the corporate tax rates were zero, but as you say, this would keep it simple and honest... and would better enable legislative bodies to allocate the tax burden progressively. When you tax busin

      • Re: (Score:2)

        by rtb61 ( 674572 )

        All taxes should be paid at the point of income. Want to declare an offshore cost, than that cost must be substantiated, what were it's costs and what were it's profits and those profits should be taxes at the point of income. At any stage should a cost not be properly substantiated it should be excluded as a tax deductions and treated as income and taxed, really quite simple.

        Any country that refuses to comply with appropriate tax records to substantiate any costs (and the profit margins in that cost), sho

  • so disingenuous (Score:5, Insightful)

    by argStyopa ( 232550 ) on Monday January 20, 2020 @11:03AM (#59637386) Journal

    Ah, Apple, you know that famously charitable, generous corporate giant?

    Look Tim, if you GENUINELY feel the current international corporate tax structures are not 'allowing' your to 'pay your fair share'...then go right ahead and tell your accountants NOT to use the corporate tax dodges you've been availing yourself of for decades to the tune of HUNDREDS of billions of dollars.

    Simple as that.

    I mean, it seems a little odd that we're supposed to take at face value that you have 'Come to Jesus' about Apple's corporate tax responsibility ...and then promptly turned around and hid your revenues in a nakedly-obvious tax shelter of Jersey (https://www.nytimes.com/2017/11/06/world/apple-taxes-jersey.html).

    AFAIK you didn't even bother to build a sham corporate office in Jersey?

    • False Choice (Score:5, Insightful)

      by SuperKendall ( 25149 ) on Monday January 20, 2020 @11:12AM (#59637416)

      go right ahead and tell your accountants NOT to use the corporate tax dodges you've been availing yourself

      Then Apple would be at a severe disadvantage compared to other companies.

      What he is saying is, he wouldn't mind paying more but make it fair. Right now Apple and other companies are all using the same techniques to adjust how much tax they are paying, so it's fair to the point that you can afford to figure out how to use the system as all the larger companies do.

      Why do you have a problem with Apple wanting a fair system?

      • Then Apple would be at a severe disadvantage compared to other companies.

        You do know that a company pays taxes on profits, not revenue? Those profits are what's left after expenses like R n' D, administration, manufacturing, marketing, facilities, write-offs on assets, acquisitions, various business and finance expenses, etc. The only "disadvantage" caused by actually paying taxes is in the amount of money left over to be paid out as dividends is going to be lower. Higher dividends means higher stock prices, satisfied stockholders and better stock option payouts for upper manage

      • Re:False Choice (Score:5, Insightful)

        by Kitkoan ( 1719118 ) on Monday January 20, 2020 @01:13PM (#59638026)

        Sure, of course Tim Cook wouldn't mind paying his fair share....

        That's why he's in court against the EU which has stated he needs to pay his fair share? The government has literally told them that this is their fair share they have to pay. It's not putting Apple at a "severe disadvantage compared to other companies", it's them literally being told to pay their fair share. Which Apple is fighting against...

        If Apple really did care about paying their fair share, they would drop the lawsuit against the EU and pay up, the literally court stated fair amount.

        • Except that the EU is operating in bad faith. If they had any interest in good-faith legitimacy, they'd close the loopholes that make tax avoidance possible in the first place; not invent new laws and court actions specifically and only to attack US tech companies such as Apple, Google, Amazon, and the like.

          But they won't do that. And neither will the US. Those loopholes are there are on purpose. They were bought and paid for by the likes of EADS/Airbus, Royal Dutch Shell, Total SA, and Dassault; and he

        • Re:False Choice (Score:4, Insightful)

          by Solandri ( 704621 ) on Monday January 20, 2020 @03:57PM (#59638686)

          That's why he's in court against the EU which has stated he needs to pay his fair share? The government has literally told them that this is their fair share they have to pay. It's not putting Apple at a "severe disadvantage compared to other companies", it's them literally being told to pay their fair share. Which Apple is fighting against...

          He's fighting it because the EU way leads to madness. I'm normally against Apple, but I'm with them on this one. The problem is the EU is proposing individual countries assess tax on the entirety of a company's global revenue. Ostensibly a country's tax is supposed to be a percentage of how much money the company made in that country. But tricks like licensing technology from an offshore division allow companies to decrease the amount of money made in a particular country. So a tax based on in-country profits can fail by not charging the company enough tax.

          But if you do it the EU way, there's no way to guarantee each country isn't collecting more than their fair share. If enough countries did it this way, a company's tax bill could conceivably exceed 100% of a company's revenue. A few percent here, a few percent there, multiplied by ~100 countries the company operates in and it all adds up, potentially to more than 100%. So the EU's proposed method can fail by charging the company too much tax.

          There's two ways to fix the problem fairly that I've figured out.

          • Apple's proposed fix - a global tax. The company makes $x worldwide. y% of that is assessed as a tax. The countries can squabble over what their individual share of that y% is, but the company can never be liable for more than y%.
          • Stop taxing companies. Hear me out. People have this misplaced notion that you're taxing an entity. You're not. You're taxing transactions. Every financial transaction has two sides - every buyer needs a seller, a transfer of money out of one location equals a transfer of money into another location. Once you realize this, you realize that a tax on an individual entity is equivalent to a tax on whomever that entity has financial dealings with. e.g.
            • A company makes $100 million profit. It gets charged a 20% corporate tax. It sends $20 million to the government as a tax payment. It distributes the remaining $80 million to its shareholders as dividends.
            • A company makes $100 million profit. You got rid of the corporate tax so it pays nothing. It distributes the $100 million to its shareholders as dividends. The shareholders pay a 20% dividend tax. They pay $20 million to the government, and keep $80 million for themselves.

            The net result of both cases is identical, even though you're taxing different entities. In both cases the corporation ends up giving away $100 million, the government gets $20 million of it, shareholders get $80 million. Because we're talking about the same financial transaction, and it doesn't matter which side of the transaction you tax.

            Once you realize this, the solution to taxing multi-national corporations becomes obvious. Instead of trying to figure out how much money a company made in a country (which can be difficult due to all sorts of accounting tricks) and tax that, just tax it while they're making it. Get rid of corporate taxes, and replace it with sales taxes. Your instinct may be to argue that that's a terrible regressive tax (although sales taxes are flat - another argument). But remember, this is the same transaction between the company and the buyer we're talking about. All we're doing is shifting the taxation from the company side of that transaction to the buyer's side. And since you're taxing the sale - before the company has control over the money - it can't dodge the tax. And since all the buyers you're authorized to tax are by definition in your country, there's no way for any country to collect more than its fair share of taxes.

          • Re: (Score:2)

            by jabuzz ( 182671 )

            Nope EU does not lead to madness. Apple negotiated a special tax rate with the Irish government that only applied to it. The EU eventually got around to investigating that and determined that this was not compliant with state aid rules that have existed since Ireland joined the EU back in 1974. As such the special tax deal that Apple negotiated was illegal, should never have applied and Apple must pay the taxes that it illegally dodged starting at the point when the EU launched the investigation.

            It's the mu

      • Not even close Potsy. He is in no one advocating for paying more. Just check his statement on taxes owed Ireland.
    • If Tim tried that the shareholders would revolt. They’re the ones that own Apple. They just pay Tim to ensure that they get nice dividends and that their stock remains valuable.

      At best Cook is posturing to get a seat at the table when new rules are drafted up. Otherwise it’s likely someone will make a really idiotic plan that isn’t any better and takes even more lawyers and accountants to figure out how to end around.
      • Another ass-hole who doesn't know what they are talking about. No, shareholders do not OWN Apple. They were given and IOU against the value of the company. It's a promissory note that another investor MIGHT honor but not Apple. They can't go to Apple and force them to pay them. Period.

        • I think they can force Apple to pay them. The shareholders control the board of directors so at any time they could direct the company to liquidate assets and provide the proceeds as dividends (or use as part of a stock buy-back). If the share holders all decide to scuttle the company like that, then there's nothing the CEO or other employees of the company can do.

    • Re: (Score:3)

      by geek ( 5680 )

      Its all BS anyway. Corporations don't pay taxes. They bundle them into the cost of doing business. Raise taxes and all that happens is suddenly you pay more for goods and services. It's all a big fucking lie. Idiot socialists see the big bank accounts of these companies and think by taxing them suddenly all their Utopian bullshit will suddenly be possible.

      Remove corporate taxes all together and watch the economy explode with new entries into the field that previously couldn't afford to compete.

      • Re: (Score:3, Interesting)

        by alvinrod ( 889928 )
        High corporate taxes mainly serve to discourage investment into starting new businesses or expanding existing ones. The so-called socialist Nordic countries have some of the lowest corporate tax rates on the planet, and Trump cutting the US corporate tax rates to similar levels is largely what’s driven the economic growth during his presidency.

        As you say the costs ultimately get passed on to consumers no matter what, but if it were that simple it wouldn’t really matter where you pegged the ra

        • Re: (Score:2)

          by gtall ( 79522 )

          No, what's driven "growth" during Trumps alleged presidency is the eye popping deficits. Pumping nearly $1 Trillion dollars of deficit spending into the economy will do that. Remove that and watch economic growth shrivel. And sooner or later those chickens are coming home to roost.

          • Re: (Score:2)

            by dgatwood ( 11270 )

            You're both right. The eye-popping deficits paid for those tax cuts. The tax cuts for the wealthy were bad. The tax cuts for corporations were at least ostensibly good.

            However, in practice, it isn't that simple, because lowering taxes on multinational corporations does encourage growth, but it doesn't necessarily encourage growth in the United States. There are probably ways to do so, such as a tax rate reduction for companies in which the total percentage of employees or direct or indirect contractors

        • you pay them on profits. So go ahead and start all the businesses you want. You won't pay a dime in corporate tax until you're making a profit for the business. That doesn't even count any Salary you pay yourself (though you'll pay income tax on that).

      • Wait, if corporate taxes just get passed on to the consumer...how is it that corporate taxes somehow make it unaffordable to compete or exist? If those costs are paid by the consumer then any company doing anything worthwhile is having their tax bill paid.

        Corporate taxes are paid on profits which means a business can't really be taxed so onerously it can't operate. That includes money spent reinvesting in the business to expand. In terms of competing in the market, taxes are the least of any company's probl

        • Re: (Score:2)

          by geek ( 5680 )

          Foolish. Corporations forcaste sales and profits. Its why they report to the SEC what their expected profits will be every quarter. They know exactly what they will be paying so they pass that cost on to the consumers.

          Its unaffordable to the small business because they dont have armies of tax lawyers and lobbyists to get the best deal. Knock the rate to 0 and they all compete on the same grounds, or did you think Tim Cook was saying these things out of the goodness of his heart? He knows just like all the o

          • Small businesses don't report earnings to the SEC and the SEC has nothing to do with taxes. That's the IRS. Small businesses also only pay taxes on profits so like large multinationals they only pay taxes on the money left after all their expenses. Taxes can't somehow make them insolvent.

            It's also downright stupid to suggest taxes on profits are the X factor keeping small businesses from competing with large ones. Joe's Smartphone Shack will never be able to compete with Apple or Samsung in selling their ow

    • You and the presumably four idiots who wasted mod points on this have no idea how the world works.

      If Cook gives in, he loses a competitive advantage while facing being thrown out by the board. Who then put in place someone who goes back to following guidance to minimize taxes.

      Warren Buffett points out his tax imbalance all the time. People tell him to just pay more. That's just one person, and he loses his best talking point.

      Please try to understand these things *sigh*

      • Exactly this. This is a "don't hate the player, hate the game" type of scenario. Public companies have their success measured by external standards: they're compared to their competitors to see how well they're doing. If a rising tide floats all boats, they don't get any credit if their gains match everyone else's. If a sinking tide drops all boats, they don't take a hit if their losses match everyone else's. As such, laws that are uniformly applied are—all things being equal—viewed by these com

  • It boggles the mind that governments can't see the obvious. If you have a lower tax rate than other nations then this will bring in more international corporations to open operations in your nation.

    This correlates to other cases of taxing too much to drive out wealth. People with a lot of money tend to leave nations with high taxes. They aren't bound to any nation, especially world popular entertainers that can produce music, movies, TV shows, or whatever most anywhere in the world. The product might en

    • Re:So lower the tax rate to get more taxes then. (Score:5, Insightful)

      by SomeoneFromBelgium ( 3420851 ) on Monday January 20, 2020 @11:34AM (#59637506)

      This isn't that hard to figure out.

      Problem is: people have figured it out. Countries ARE lowering their taxes to lure more business into putting some kind of presence there.
      What you get is essentially a race to the bottom: the one with the lowest taxes wins... nothing. Since there is no taxation left.
      If you take the example of Apple: they had received a tax rate of 0,05% in Ireland only to subsequently lower it to 0,005%. And then subsequently posted all sales in the whole of the EU onto the books of that distribution center. Which means that all sales for the total EU market were effectively exempted from taxes in exchange for a some distribution centre in Ireland (I don't know how many people worked there exactly).

      It is to this practice that the EU put an end in 2016 and which Apple is now fighting in court (so much for "...desperately want it to be fair.").
      So, in order to defend themselves countries are creating elaborate tax laws that will protect themselves from this kind of scenario's with very complex regulations as a consequence (I imagine that the US has also some rules in place that limits how much tax you can evade by putting distribution centers in low tax countries or states...).

      • If those companies have workers there, then the country stands to make a lot of money off of taxing those employees. Those employees all need the usual goods and services which supports other industries that exist to provide those, creating further tax revenue on those workers. Also if some company only exists on paper (or as near as the case is possible) then what do they cost a country if they have no land, use no infrastructure, etc.?

        The complaint here is that with existing laws it was possible for Ir

        • The complaint here is that with existing laws it was possible for Ireland to get disproportionately more taxes with very little utilization of infrastructure or anything that would cost the government money. So while Apple and many others were taking advantage of the lower rates, it was really Ireland (and Irish taxpayers) getting a sweetheart deal.

          No and yes. No the complaint was that Ireland was using a sophisticated system of tax rulings to selectively apply lower taxes in exchange for a presence in their country, robbing other EU countries of any incomes link [techcrunch.com].

          FTA: "If you’ve been following European tax reforms, you know that France, Germany, Spain and Italy were discussing a reform to tax big tech companies based on actual revenue in each European country. This way, tech companies wouldn’t be able to report profit in just one country w

      • What you get is essentially a race to the bottom: the one with the lowest taxes wins... nothing. Since there is no taxation left.

        Let's say Somalia had zero corporate taxes, would corporations move their operations there? Not likely, it's a nation that's been torn by war for a long time an what government and infrastructure that exists it is quite fragile.

        It's not going to be a race to zero because there will still be income from things like property taxes, municipal services, the benefits of a safe and stable community, and so many other things that are paid by taxes. Also, as pointed out in a sibling post, there's income from taxe

    • In cases like Ireland and other low tax nations, is that businesses aren't really moving significant operations there, just shifting paper work around. While you get to collect some that that lower tax rate, you don't get the other benefits of having businesses operate there.

      • Re: (Score:2)

        by Muros ( 1167213 )
        That is nonsense. 25% of the entire Irish workforce is employed directly by multinational corporations. About 8% of all pharmaceuticals in the world are manufactured in Ireland. Microsoft, Facebook, Google, Dell & Amazon between them account for about 1% of all jobs in the country. If you insist on comparing it to US numbers, fair enough, the US workforce is about 56 times the size of the Irish workforce. But the operations based here are substantial from our perspective.

  • Not so fast... (Score:1)

    by Anonymous Coward

    The problem is that the EU nations want to tax global corporations even if they don't do any business in Europe, and they want to tax them even more if they do.

    The EU demands taxes on the income derived from iPhones no matter where those iPhones are sold, simply because Apple does business in the EU.

  • So Apple parks these profits in tax havens like Ireland.

    Beyond the nominal office presence in these places, does Ireland economically benefit?

    I'm wondering if this practice is a side benefit to Irish banks and their lending/investing ability. Are they able to leverage billions in Apple deposits as lending capital?

    Overall, I think this basically has no solution. The corporations will continue to pit national governments against each other, even if its from some transitory benefit, like a short-term boost t

    • "So Apple parks these profits in tax havens like Ireland.

      Beyond the nominal office presence in these places, does Ireland economically benefit?"

      They don't even have 5 million people, if Apple pays 5 billion in taxes, it's a thousand bucks per capita.
      If they paid that in Germany it would be 60$ per capita.

      So a little goes a long way.

  • With this man Apple became a greedy firm only wanting to heighten its profits and does not care about choice ,freedom and think different anymore. Sad to see what greed does with people. It is all about profits and numbers. Anything else is unimportant. Apple has become the monster it once fought. But where to go? Linux is a disaster on the desktop, Windows i really do not like to use. On Topic: Tax is theft. .

  • Comment removed (Score:3, Insightful)

    by account_deleted ( 4530225 ) on Monday January 20, 2020 @11:39AM (#59637528)
    Comment removed based on user account deletion

  • I have to pay tax in my income, why doesn't Apple?

  • And the text starts with "Everyone knows (...)": I can't read something like that...

  • Switching our insane tax "code" (US) to the FairTax would simplify this issue.

    No corporate tax - since they aren't paying any now, that wouldn't be a real change. They also would not pay any hidden tax for employees, since employee income it not taxed.

    Federal tax on goods and services - no way they can get out of paying these then for items purchased in the US. Not ideal, but at least it's better than 0.

    • Switching our insane tax "code" (US) to the FairTax would simplify this issue.

      Better yet, how about European countries ditching the VAT and income taxes while adopting a national retail sales tax.

  • "Oooh!" says the politician. "Another round of donations from concerned citizens looking to have input on laws that hurt them, to make them hurt less!"

    No, not your country, whose politicians are all Mr. Smiths Goes to Washington. I mean the other countries' politicians.

  • I give Tim Cook credit for this. He realizes the benefits of taxes and a properly funded government, but he is bound by shareholders not to pay any more than his competitors. I think most non-psychopaths realize this. We all want a properly functioning government. Classical liberals and conservatives (that term no longer means what it used to 20 years ago as conservatives today seem comfortable with unlimited spending, subsidies and war) debate the size, but everyone wants it to be effective at what we think it should do.

    We all know our gov is in perpetual deficit since the Bush tax cuts in 2001 and neither political party is capable of cutting spending, so raising taxes is the only option. If I were Tim Cook, I'd want to set a reasonable amount and regulations before someone like AOC, who has not run a company and is rewarded for making headlines more than meaningful policy comes up with something that is very destructive. Tim can spend his time "pre-lobbying" and proposing useful solutions now...or spend lots of money doing actual lobbying correcting the bill that gets passed by congress.

    It is sad that I trust Tim Cook to write a fair tax policy more than I trust my Congress?

    On a parting note, I am not even sure corporate taxes make sense. They are forced by investors and boards to cheat...I'd rather pay more in personal income taxes and tax corporations nothing if they are operating ethically (make the tax proportional to the CEO to worker pay ratio, for example)....then the government is beholden to the people alone, not the corporations. Corporate taxes could be used as leverage to keep corporations behaving ethically....and really they are barriers to creating jobs. If a millionaire's tax rate is cut 20%, almost no jobs are created...if a corporation's tax rate is cut the same total dollar amount, you do see more jobs created.

    If so called "conservatives" were serious about conservative principles, such as limiting government size, I'd think they'd pursue such a strategy....let the corporations create jobs, let the people pay taxes...stop trying to cut taxes on wealthy individuals...I think the mess we see today is very much a result of the Citizens United case....and why John McCain had he wisdom to push campaign finance reform. Wealthy donors lobby for individual tax cuts and with each tax cut, they get more money to lobby and ensure they pay no taxes while everyone else suffers. It was bad before Citizens United, but never nearly as bad as it is today.
  • How is Apple an internet giant? I know they sell some media, but the bulk of their money is made with iPhones, ear phones, Macbooks, iPods etc. ..?

  • "We desperately want it to be fair"

    Right, because you are currently being forced to use a low tax country to receive the money, then you have to transfer to a low transfer country and then to a low profit country, just to be fair to all the countries and users where you do sell the goods. And when a government or even court says that you must tpay millions of taxes because you are abusing the loops holes, you are again forced to fight in court for as long as possible or even try to blackmail with future pr

  • It's passed onto the consumers...DUH

  • Every country is looking to collect money from its citizens. Taxes, after all, are one of the two great constants of life. Why would Zambia care what the residents of Namibia are paying in taxes? They only care about what *they* can take in.

    Are we now going to say that all countries have to have equal tax rates? Good luck with that!

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