Slashdot Mirror
Apple Pays Only 2% Corporate Tax Outside US
New submitter dryriver writes with this snippet from the BBC: "Apple paid only $713m (£445m) Tax in the year to 29 September on foreign pre-tax profits of $36.8bn (£23.0bn), a remarkably low rate of 1.9%. Apple channels much of its business in Europe through a subsidiary in the Republic of Ireland, which has lower corporation tax than Britain. But even Ireland charges 12.5%, compared with Britain's 24%. Apple is the latest company to be identified as paying low rates of overseas tax, following Starbucks, Facebook and Google in recent weeks. It has not been suggested that any of their tax avoidance schemes are illegal. Many multinational companies manage to pay substantially below the official corporation tax rates by using tax havens such as the Caribbean islands."
Why would anybody have a personal income when they can just register a company to buy them what they want?
Rod Taylor
The problem is it has become like the days of the old west, remember the old westerns how the bandits would head for the Mexican border and once they were across not worry about shit because all the border mess kept the rangers from giving chase?
Well now with electronic banking you can do that on a planetary scale in seconds. NO country can "close the loopholes" as another suggested because we are not talking about the laws of ONE country, we are talking about the laws of ALL countries as they can bounce a billion dollars through a dozen nation s in less than a second.
Never forget the words of Thomas Jefferson, who tried to warn us of the dangers of mercantilism: "Merchants have no country. The mere spot they stand on does not constitute so strong an attachment as that from which they draw their gains." In the end they don't care if the economy of their "home" country collapses, they can have their funds moved in seconds and have offices in dozens of countries. There is no loyalty or patriotism to country, just profits.
ACs don't waste your time replying, your posts are never seen by me.
As an accountant myself, I think it's important to point out that a number of countries (and US states - including my home state of Texas) offer significant tax incentives for businesses that will move more of their operations to their location and create jobs. TFA does not say whether or not this was the case, but an article from Forbes this past March pointed out that Ireland lured significant Apple business to the country through creative tax reduction incentives: http://www.forbes.com/sites/kellyphillipserb/2012/03/18/ireland-continues-to-flex-tax-haven-muscles-will-their-luck-run-out/
The article points out that Microsoft, Dell, Pfizer, and Wyeth have also taken advantage of Irish corporate tax incentives. So, a lot of this isn't "beancounter magic" at all - its a carefully negotiated corporate strategy that benefits the company as well as the host country.
Of course there is something they can do. Its even in the constitution a Letter of Marque. We simply indicate a list of countries that follow a multi national tax treaty. Money kept anywhere else is considered fair game. That is we will not enforce property rights from that countries banks, so anyone working for a Cayman islands bank can rip off their customers, legally deposit the money in the US, pay about 1/3rd in taxes and keep the rest forever.
Companies will find it mighty uncomfortable once the people who work in the tax havens have such lucrative options.
The Fair Tax would be an interesting way to handle these issues and it wouldn't require foreign cooperation.
I like to point out that I was in the top 10% of wage earners in the US (the very bottom of that range), and I paid 10% in federal income tax. Between property tax on multiple properties, mortgage interest (it's financially beneficial if you can buy a house outright to take out the longest term loan possible at the lowest possible rate and invest your money in stocks, because the tax breaks on the interest make the cost of the loan lower than face-value), health and education deductions, my taxable income was significantly lowered. Anyone who makes enough can afford to "mask" income in untaxed or lower-taxed schemes.
It isn't tax evasion. It isn't really even tax avoidance. The rules are generally not "loopholes" but deliberate social grooming, detailed by Congress, to encourage certain behaviors (marriage, kids, home ownership). It isn't gaming the system, but being gamed by the system. We'd be better off if all deductions were eliminated. All the artificial pressures would be gone.
Learn to love Alaska
Except this money was never IN the USA. Apple sent blueprints to Foxconn, then Foxconn bought the parts in Asia and assembled iThings. Apple then has the products delivered directly from China to each country wher they are sold via "Apple of here".
So where did the USA have any jurisdiction to collect taxes? The parent Apple USA only collects the profits. While on paper they get to claim them all, they don't actually move the money to any one bank account. Corporations are a type of fealty where they have independant accounts that are "sworn" but not owned by the parent. This is necessary to navigate all the local laws, but the profit issues are a secondary issue.
An insurance company keeps two sets of books, one on insurance operations and one on investments. most of their tax liability comes out of operations which is why they typically show a loss on paper on their operations and then use that credit as a carry across to the investment side of the house. when I worked for Equitable we paid ZERO tax for many years.
I disagree - if more corporations were playing the game honestly, and actually shouldering their share of the tax burden, the overall tax rates could be lower, and regular citizens who can't escape tax as easily, could pay less. Therefore, with lower tax rates, there would be a lower marginal reward per tax payer for dodging the system.
The problem is, right now, the biggest and richest corporations and individuals can escape a large chunk of the tax that they are supposed to be paying, so more has to be paid by middle and lower level tax payers to make up the shortfall.
As pointed out by tragedy above, the IRS holds that any earnings by an American citizen are taxable, regardless of where they were made.
There is a mechanism provided to account for taxes paid to the government of the country you are working in, but (there is always a but) that country has to have signed a tax treaty with U.S.
I know of two people (one spent 20 years in the U.S. Air Force, the other 20 years in the U.S. Navy) who have renounced their U.S. citizenship over taxes, because after retiring they decided to move to a country that doesn't have a tax treaty with the U.S.
You see, individuals have a hard time over money earned outside the U.S., corporations get to keep it.
Be very, very careful what you put into that head, because you will never, ever get it out. - Cardinal Wolsey
The US used them for more than that. Here is one authorizing the attack of any British vessel, public or private.