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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."
As long as it's tax avoidance, rather than tax evasion, nothing illegal in this. Everyone (corporations included) want to pay as little tax as possible. It's the governments job to close the loopholes. It's the beancounters and lawyars jobs to find the new ones.
"The greatest lesson in life is to know that even fools are right sometimes" - Winston Churchill
Rule 1 of corporate income taxes: taxes are an expense built into the price of products. No company pays a penny of their own in taxes, they just collect it from customers and pass it on.
Why would anybody have a personal income when they can just register a company to buy them what they want?
Rod Taylor
One argument for corp income tax is preventing citizen income tax evasion. Too "easy" to boost share value by accumulating tax free cash on the corporate books instead of paying out salary, and then distribute valuable shares instead of payroll, and then get to track when and how each individual share gets sold on the market and cap gains tax each share. It would pretty much have to be a package deal where the cap gains tax AND the income tax are eliminated at the same time. The point is its all inter-related so "messing around" with corp income tax is going to have all sorts of strange interaction with capgains taxes and probably many others.
Another analysis, not paying corp income taxes will mostly result in higher dividend taxes and/or higher cap gains taxes on stock sales, so the net result is more govt tax collection, which is not good. Starve the beast.
Consumption taxes work until you fight over the inevitable and corrupt 8000 exceptions. In my state, cold deli items have no sales tax and hot deli items have full tax. So there's about a 6% incentive to buy fried deli chicken out of the cooler vs off the steam table. Crazy but true. Tax avoidance scheme: Purchase educational self assembly learn electronics at home kit that happens to be a working mp3 player at 0% educational consumption tax rate, vs 50% VAT for an ipod.
"Science flies us to the moon. Religion flies us into buildings." - Victor Stenger
Since corporations are considered to be people in the US, this means we can all do the same thing and pay only 2% tax!
Sorry, but gray text on gray background is making my eyes bleed.
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.
Corporations inherently pay less tax-- their expenses count against revenue, while individuals are taxed on "revenue."
They're a service to the government, not to the people, unfortunately.
Are you suggesting I should be happy about their ability to manipulate the situation so I get to pay for their infrastructure?
Given that they probably pay vast sums of VAT (which in turn was paid by their customers), it's fairly likely that it's actually those Apple customers who were paying for your infrastructure.
Plus there's employer's NI contributions, local business and property taxation rules, tax on the fuel that goes in their vehicles, and so on.
There's obviously something to consider in terms of Corporation Tax for international businesses that can shift where profits are recorded, but arguing as if these huge companies weren't contributing any taxes at all in the countries where they operate is either ignorance or wilful misrepresentation.
If you disagree, post your argument. (-1, Overrated) isn't your personal censorship tool for views you don't like.
And yet, if everyone respect the spirit of the law instead of finding holes in the letter of it, we as a society would most likely be a whole lot better off.
Then again, this would require such things as integrity and honesty.
The simple fact is that once barriers to capital flow across national borders were torn down, the modern social state was doomed. When money flows across borders with little restriction, organizations whose implicit purpose is to maximize profit will shift their resources to countries with the lowest possible tax rates. This creates a race to the bottom in terms of tax rates, especially when large organizations that are capable of physically or financially moving from country to country move large percentages of their wealth away from countries like the US.
I have begun to realize that right wing countries seem to do well economically largely because they have reduced their tax rates below that of other less right wing countries. This brings a temporary influx wealth and a temporary economic boost. However if the tax rates do not continue to decline, large organizations will again begin to leave, bringing large deficits and economic decline.
Let me emphasize this: I believe right wing economic policies work (temporarily) because lower tax rates bring an influx of capital, and NOT primarily because of the inherent efficiency of the private sector in managing resources. I believe that the claimed "efficiencies" of private corporations, and the claimed "inefficiencies" of government organizations are highly overstated.
The implication of this is that if we as a society wish to have the amenities of a great civilization, then we will have to find a way to restrict the flow of capital across borders. Otherwise, we will be doomed to an asymptotic descent towards a minimum level of civilization. The gap between rich and poor will continue to increase, and, seemingly paradoxically, the economy will slowly grind towards a halt, as the pool of middle class consumers evaporates.
This and no other is the root from which a tyrant springs; when first he appears as a protector - Plato (423 to 327 BC)
The two choices are a $600 toilet seat and $600 in taxes, or a $600 toilet seat and $600 in debt.
I don't like your two choices. If that's really all we have, then the libertarian idea sounds a lot better: government doesn't work, so let's reduce government.
"First they came for the slanderers and i said nothing."
I beg to differ. It's not up to just beancounters and lawyers to find loopholes, they're on the inside of this. THAT's part the of problem because they make the tax laws.
It's up to everyone to be vigilant and recommend mechanisms to identify and discourage loopholes. These tax haven users should pay the same taxes. To make the tax system even more fair, for every transaction where revenue is made, that revenue should be taxed and paid to the government where the selling company resides right away. Usage-based taxing, just like they do for their clients using cash/interac/paypal/mastercard. There should be no exceptions/waivers/grandfather clauses for any individual or corporation or other kind of business entity. If the lawyers in the parliament/congress don't expedite quickly enough the public's request for tax fairness, then we should question whether these tax lawyers have the better good of the majority of the public at heart. We should then probably appoint other kinds of individuals to create/enforce laws for tax fairness in every country. WCIT could help with this considering all international communication is internet-based.
It's a coincidence that I just heard about a book called "Treasure Islands" by Nicholas Shaxson recently about tax havens. From what I understand, the book discusses tax havens impacting heavily on world politics and economies and have much to do with world's current economic problems. Here's a quote: "A fundamental building block of modern economic theory is transparency: Markets work best when two sides to a contract have access to equal information. Treasure Islands explores a system that works directly and aggressively against transparency. Offshore secrecy shifts control over information and the power that flows from it toward the insiders, helping them take the cream and use the system to shift the costs and risks onto the rest of society."
The two choices are a $600 toilet seat and $600 in taxes, or a $600 toilet seat and $600 in debt
In the real world, when I make less than expected, I simply buy less. Perhaps I do not take a trip, eat out less often, or not buy a few books I like.
But in your world when the government gets less income than expected (or in fact even when it gets exactly what is expected, because after all the effects of tax breaks should be baked in to income estimates) the government; why it cannot reduce spending whatsoever! No, like a drug addled mindless creature, it carries on and spends (or overspends) with no regard to what it's taking in. How does that make sense?
Sorry buddy, but I don't buy into your philosophy. That's not how government has to be, and I certainly do not want a government that cannot control even itself (especially since it transfers that desire for control it cannot impose on itself, onto its citizens).
"There is more worth loving than we have strength to love." - Brian Jay Stanley
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.
The health of the economy is measured by the "flow" of money. In essence, it's the value of the total GDP measured in a time period (usually a year). Compared year by year, you always want this number to increase - it drives innovation, efficiency, and progress.
Money flows from people to corporations. By taxing people and not corporations, you are inherently slowing the flow of money, and reducing the corporate incentive towards higher productivity.
Consider the extremes: if you tax people at 50% and businesses at 0%, commerce will be much reduced because people will only have enough money to purchase necessities. If you tax businesses at 50% and people at 0%, then people will spend money more freely and commerce would increase.
You can't tax businesses 100% because you still need an incentive for people to start and run businesses.
This is just part of the transition to the post-scarcity economy**. In the extreme case there is one big automated factory which takes orders from people and ships the results. Every person is given $1000 virtual currency to spend each month - this represents their "share" of the production capacity of the factory(*).
Everyone gets $1000 of virtual money, but if you like you can start a business and perhaps earn a bigger share by selling goods that the automated factory doesn't make.
But if you tax the people and not the business - eventually business will collect all the money in the system. You tax the business and distribute the gains to the people in order to keep the money flowing.
* It's hard to imagine a completely automated factory, but not a largely automated factory. It might only require only a few overseers and mechanics, which would be negligible in comparison to the available workforce.
**Note that we have reached the post-scarcity economy in several areas. Computers used to charge by the hour of compute time (IBM 360), nowadays compute time is just the cost of the electricity. Hard disk storage is largely post-scarcity. Phone service is close - it costs more to bill and track calls than the calls themselves. Food production is almost at post-scarcity - the number of people needed for farming is so low that it's virtually at the "automated factory" level already, and requires government subsidies to continue. Media distribution is essentially free, as is software. In the near future, solar panel recharging stations (a'la Tesla) will make energy essentially free.
The difference between charity and tax supported government sponsored social programs is: who is buying the gratitude of the poor when they hand out the money. Its all about buying loyalty. Lets print the name of a tax payer on each public assistance check handed out. So the recipients will know who to thank.
Have gnu, will travel.
SOOOO sick of the stupid toilet seat argument.
Do you know that toilet seat was custom designed and manufactured to fit in the bathroom of a US Air Force bomber? When you custom design and manufacture a couple hundred toilet seats, yes, they are going to cost $600. I bet the toilet seat on the space shuttle cost 100x that...
And please now bring up the $400 hammer. That one that was custom designed to work on repairs in a submarine without creating enough noise to be detected by sonar. Such a waste! But not as much as would have been wasted if a $1B nuclear submarine was detected because of a loud hammer.
Bug surprise, sometimes context matters.
Businesses go way beyond tax avoidance. They bargain with local governments for tax breaks in exchange for locating there. Is that unfair? Maybe, maybe not. Is it against the public interest? Absolutely! Their interests do not always diverge from the public interest, but very often they do.
Businesses go further than that. They lobby for favorable laws, favorable spending, tax treatment etc. Look how hard Amazon fought against paying sales taxes. Amazon even tried to force the issue by shutting down all facilities in those states that tried to collect, to punish them. What's the difference between what they do and bribing? Perhaps just semantics. At any rate, it's all gone too far. They take the profits, and stick the rest of us with the bills. If Amazon won't pay tax, then they can remove their sorry asses from my state and good riddance. Don't let the door hit your butts on the way out, Amazon. We don't need those kind of businesses.
No doubt that banks, shopping malls and developers have more say in, for instance, road and street planning and traffic light placement and timing than any mere representative of the public, such as a city planner or mayor. And it's obvious they have no vision. They think only of themselves. Running a business is hard. They're looking for every edge, and they purposely disregard all other considerations. Social good be damned, except insofar as that's good for business. How should the lights be timed to drive the most people to their stores? They actually prefer badly timed lights on the idea that the more time people spend in front of their stores, the better business will be. And taxes? They care little if a city is driven to its knees because they got too good a deal on taxes, bargained too hard and sharply, and snookered the representatives of the moment. They feel no responsibility whatsoever for that. The cities are there for them, providing transportation, water, sewage, electricity, law enforcement, emergency services, and of course, customers. How quickly the police jump when business whistles! That overzealousness has lead to many embarrassing incidents over the years, things like the police being called to harass bank customers who wanted to close their accounts and weren't doing anything wrong, and border agents confiscating prescription medicines. But they sure aren't there for their cities. Indeed, they have the gall to whine that we aren't friendly enough to business. Joe Consumer can pay for the police and all the rest, but that's not enough, not for them.
Intellectual Property is a monopolistic, selfish, and defective concept. It is "tyranny over the mind of man"
There is a reason both Obama and Romney brought up Cleveland Clinic in a debate, they bill as things should be. Doctors work for the hospital, no separate bills for each doctor, each test... the cost for doing something is a base rate that handles everything involved. No surprise bills showing up months after the fact, no extra referals within the system because they're paid the same regardless of how many tests are done. Not surprising there are fewer tests and higher results as profit motivation isn't the major goal. One study shows they do things 50% cheaper.
Sure things are still damn expensive and I don't know how the cost comparison is to other countries. I do know from personal experience that this sort of billing is drastically easier than any other hospital I've ever dealt with. Sad we have just Mayo and Cleveland doing this in the whole country. A quick google points out the highlights better than me http://www.thedailybeast.com/newsweek/2009/11/26/the-hospital-that-could-cure-health-care.html