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Web of Tax Shelters Saved Apple Billions, Inquiry Finds
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."
If what they did is legal, so what? I take every tax deduction I can legally find, why shouldn't Apple?
...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).
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BMO
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.
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BMO
You understand that the government offsets lost or unavailable corporate tax revenue by increasing the taxes it does collect, i.e. yours, right?
No kidding!!! What do you say at this point?
If it is legal, and apple DIDN'T do it, then they are not doing what is in the best interest of their sharheolders.
Don't like it? Get the law changed. Corporations exploiting the rules for profit is just what they do. I'm sure every single person here tries to ensure they get the biggest tax refund / avoids paying as much tax as they legally can.
I run: Windows, OS X, Linux, FreeBSD. Just because you have a hammer, doesn't mean everything is a nail.
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.
I run: Windows, OS X, Linux, FreeBSD. Just because you have a hammer, doesn't mean everything is a nail.
With the recent IRS debacle and large corporations like Apple and Facebook avoiding billions in taxes, it should be obvious to everyone that taxes are not about fairness. They are a weapon to be wielded by government to attack opposition and to grant favors to business cronies who elect them and donate to them. If ever there was an argument for a simple tax system, like a flat tax, this is it.
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. 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.
Judging by the deficit... I'm gonna go ahead and disagree with you.
"Hot lesbian witches! It's fucking genius!"
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?
I run: Windows, OS X, Linux, FreeBSD. Just because you have a hammer, doesn't mean everything is a nail.
Or possibly many of the shareholders are smart enough (or can pay someone smart enough) to find their own tax loopholes. The is the real problem as you pointed out. The tax system is too complicated. Making things too complicated allows for loopholes. Also Apple employs more than 50,000 Americans. Mind you those are Apple's numbers, so take them as you will, but I'm sure there's no denying that Apple is a doing a lot of good for the US economy.
Anthropic principle: We see the universe the way it is because if it were different we would not be here to see it.
This is a good analogy up until the "deprive it of food..." bit, since a weak wild dog can't do its job, and, arguably, that is exactly what happened here - a smart wolf came in, stole some of the dog's food, and the dog couldn't do anything about it. Keep developing the analogy though. If you can make the argument of limiting the "dog" without limiting its effectiveness against "wolves" you have a useful rhetorical tool.
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.
Yes, the best thing to do with a guard dog is to mistreat it and starve it. That will never backfire.
Fanatically anti-fanatical
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.
I am not a tax accountant, nor a tax lawyer, but I did have to read and convert into code a lot of tax law.
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.
"We receive as friendly that which agrees with, we resist with dislike that which opposes us" - Faraday
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."
>So instead of the load being distributed properly, you want the government to shift most of the load to your back?
that argument is no logically different than saying, "well if that nigger escapes from the plantation, the master will make us other niggers work harder"
It's just plain stupid.