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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 these foreign subsidiaries aren't "tax resident in any nation", are they protected by the laws of any nation? It seems odd that a company can exist and be recognized as an entity that can hold property without being incorporated in a recognized nation. Can't we just take their stuff and see who they turn to for the protection of law?
Define morally acceptable. I find that companies literally sucking money out of the economy, then letting it sit, thereby starving the economy of capital, thereby adding to high unemployment, lower wages, less benefits, less job security, less public services, etc... is pretty bad for society. But maybe things that are bad for the overall society are still considered morally acceptable. ... But I digress, they're re not breaking any laws... Then again, I'm sure they spent loads of money to lobby to make our current system of laws beneficial to them. They used their huge pocketbook to game the system to make their pocketbook massive!
Actually Steve Jobs and Eric Schmidt lobbied for a one-time tax holiday so they could repatriate their income earned overseas without losing a large portion of it in taxes. Congress didn't like the idea. Congress is putting on a dog-and-pony show to chastise Apple but doesn't seem to mind giving extremely profitable corporations like Exxon tax subsidies.
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Yes, there are real reasons for this. It a standards and compatibility issue.
Most of the world works on a country of source for corporate tax. You make a profit in country Y, you pay Y’s taxes. Now, when you are doing business in X and Y it can be hard to determine how to split the profit – and thus the taxes – between X or Y. It is subjective even under the best conditions. But there is still a compatibility issue between different countries tax codes which smart tax lawyers can figure out how to exploit.
The US works on a country of domical approach. If you make a profit in Y, you will pay US taxes. IIRC, back in the 70s when corporate taxes were high in both Europe and America, companies could be taxed $110 for every $100 in profit – because both America and the European country was demanding full taxes paid.
The US could have fixed this by moving the world standard. But that would have been rational – like going to metric. So instead we put in a lot of dodgy loopholes and tax credits so it would not look like we were giving big corps a tax break.
The answer is that America should move to the world standard of taxation by source.
I'm surprised a few of these companies, or even just one, haven't simply bought a small island nation. They could install one of their employees as supreme leader and set all tax rates at zero. Their only contribution would then be whatever it costs to fortify and defend the island.
const int one = 65536; (Silvermoon, Texture.cs)
SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
It's not a question of altruism. You can be selfish in the Ayn Rand sense and still arrive at the logical conclusion that paying taxes is good. Since I wasn't born rich and i'm not that lucky, then I have to find good work to become successful. In order to find this work, I need to live in a healthy economy, which comes from consumer spending, which comes from a more even distribution of wealth than what we have now. Taxes are a way of redistributing wealth and propping up the economy for the future. QED, unless your already wealthy or you're old, then you should want to pay taxes. The anti-tax people are just short-sighted.