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How Apple Sidesteps Billions In Global Taxes
An anonymous reader writes "An article at the NY Times explains the how the most profitable tech company in the world becomes even more profitable by finding ways to avoid or minimize taxes. Quoting: 'Apple's headquarters are in Cupertino, Calif. By putting an office in Reno, just 200 miles away, to collect and invest the company's profits, Apple sidesteps state income taxes on some of those gains. California's corporate tax rate is 8.84 percent. Nevada's? Zero. ... As it has in Nevada, Apple has created subsidiaries in low-tax places like Ireland, the Netherlands, Luxembourg and the British Virgin Islands — some little more than a letterbox or an anonymous office — that help cut the taxes it pays around the world. ... Without such tactics, Apple's federal tax bill in the United States most likely would have been $2.4 billion higher last year, according to a recent study (PDF) by a former Treasury Department economist, Martin A. Sullivan. As it stands, the company paid cash taxes of $3.3 billion around the world on its reported profits of $34.2 billion last year, a tax rate of 9.8 percent."
Let me explain why that isn't a good idea. Corporations are given rights under the law, not as entities themselves, but as an extension of the collective rights of the individuals that it is composed of. A corporation is formed by a group of individuals agreeing to pool resources to achieve a goal. So let's take a look at how that can play out.
You have a right to say "Screw the Government." So does your best friend. If you pool resources to say it (e.g. you make a sign, he drives you to city hall), you both still have that right. If you agree formally to do the same, you still have the same rights. 1,000,000 people signing an agreement that they have joined the "Screw Government Organization" to send 1,000 of them to DC to protest doesn't diminish the right. Forming a group to sell "Screw Government" bumper stickers doesn't reduce the group's rights to less than that of any individual. Forming a group that sells indy band bumpers stickers, and the occasional political bumper sticker, doesn't diminish the collective rights. Calling the group a corporation doesn't change things either. The name, size, profit motivation, etc do not change anything.
An so on. The basic rule is the rights of individuals can be exercised collectively. One name for this phenomena is "Corporations are people." Not a person. Though for simplicity, it's treated like a person. Because the rights of a person and the rights of a group are the same. For example, a person can own property and so can a group.
Ok, there are some exceptions. For instance, while a person can hold office, a group cannot. Same with a vote. Some rights do not scale and can't be collective. But most can.
So now look at your suggestion. How much can you restrict the rights of a collection of people without restricting the rights of individuals? Pretty difficult. Not something to be done lightly.