Slashdot Mirror
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).
--
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.
--
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 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?
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.
Why not link to their answer as well?
http://images.apple.com/pr/pdf/Apple_Testimony_to_PSI.pdf
“Apple does not move its intellectual property into offshore tax havens and use it to sell products back into the US in order to avoid US tax; it does not use revolving loans from foreign subsidiaries to fund its domestic operations; it does not hold money on a Caribbean island; and it does not have a bank account in the Cayman Islands. Apple has substantial foreign cash because it sells the majority of its products outside the US. International operations accounted for 61% of Apple’s revenue last year and two-thirds of its revenue last quarter. These foreign earnings are taxed in the jurisdiction where they are earned (“foreign, post-tax income”).”
You understand that corporations don't pay taxes, people do. Either in the form of higher prices on products, reduced income from investments or a combination of these. Government like corporate taxes since this obscures the tax burden from the voters and the popular politics of envy.
All taxes are evil, but they are a necessary evil in that governments do things that make life better (provide for the common defense, establish courts, etc.). However, it is very common for governments to overspend (i.e., in things not for the common good) and likewise overtax. Overtax and over regulation results in reduced liberty and economic growth, under tax and regulate and you have reduced liberty and economic growth as well.
So, while I expect Apple to minimize their tax burden legally it is not fair. What would be so terrible about replacing the tax system with something simple and fair so that the little company does not pay higher rates than large companies that can afford complex tax schemes, etc. My company pays rates much higher than Apple, Google, etc. because I can't play their games.
You forget that when someone else does this, it/they are not paying their "fair share". When I do it it is perfectly reasonable.
This posting is provided 'AS IS' without warranty of any kind, implied or otherwise.
All the foreign "loopholes" actually only help Apple avoid paying foreign taxes, those aren't about US taxes at all. These seem more about adding to the political theater of the government going after tax dodgers.
The entirety of Apples foreign cash horde earned on foreign sales, is subject to US taxation. Not one of those foreign shell games protects those earnings from US taxation. In fact they make the cash horde larger, making it potentially sweeter for US taxation.
But here is the one "loophole" that really counts. US Taxation doesn't come into effect until Apple repatriates the cash, which there is no requirement that Apple (or any other US corporation) ever actually do.
This is why US corporations have 1.45 Trillion dollars parked outside the USA.
http://www.forbes.com/sites/afontevecchia/2013/03/19/u-s-companies-stashing-more-cash-abroad-as-stock-piles-hit-record-1-45t/
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.
I pay my taxes in full, not because I believe it's morally right, but because I understand the consequences of disobeying coercive authority.
You must be religious. You know, one of those people whose brain works along the lines of "It's good that we have God to send us to hell if we murdered someone; imagine how many people would go on a killing rampage if there were no God - I know I would!".
Ezekiel 23:20
Congress needs to mount an investigation to find the batch of idiots who wrote these tax laws which allow corporations to do this!
If Slashdot were chemistry it would look like this:Cadaverine
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.
It is unpossible to know if it is legal or illegal.
And it could take a decade of arguing between the IRS and well-paid Apple super-tax-lawyers/accountants for a decision to be made, because the size and complexity of tax code means there are never any final answers and mountains of gray-area that can be argued over indefinitely.
Priest: "Universe from nothing, no laws of physics, sped up time"+ huge discrepancies. Creationism? No. Big Bang Theory
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.
What's really missing in the discussion here is that all large multinational corporations use tax avoidance strategies. GE for example has a team of lawyers and accountants just focused on minimizing their tax liabilities globally. http://www.huffingtonpost.com/2013/03/11/general-electric-taxes_n_2852094.html . This Tax avoidance problem has been discussed for the past few years especially with deficits running as high as they have been. It's the old "we're not taking in enough revenue, so where can we get more." The administration plays that message up, the spin doctors on the Sunday morning news programs echo it because it keeps the discussion in the public eye. Even the news in the UK about the same avoidance strategies being questioned just echos the same problem. What's missing from the discussion is how much money is being pissed away by bad ideas, red tape and boondoggles like studying the sex life of squirrels. Fraud and waste alone cost us billions in the US each year and for every billion we save, that's a billion that could be put to towards other programs (like offsetting the sequester) or simply put back into the taxpayer's pockets by not taking it in the first place. http://www.businessinsider.com/government-waste-spending-sequestration-sequester-2013-3?op=1
So, Apple in this case isn't alone and it's just business. What needs to happen in the US is that the crappy tax code and the IRS need to be changed. We need to get rid of the loopholes that allow companies to shelter billions in profits overseas and allow them to move money from place to place without being taxed. That requires changes to the law and specifically to the tax code, I for one am in favor of abolishing it and going to consumption taxes or a flat tax. Think of it: no April 15th hassles. No audits.. That will put thousands of bureaucrats out of work and H&R block and Quicken to boot! Does that mean a smaller government too? Yes, and that is a good thing.
Harrison's Postulate - "For every action there is an equal and opposite criticism"
Google, Amazon and Apple are like those people who turn up to a "bring a bottle" party with a litre of supermarket own brand cola and then proceed to drink the Wyborowa vodka and Hendricks gin all night. They may upset a lot of people, but they've not technically broken any rules.
If governments feel that companies (that follow their rules) still manage to pay too little tax - then the onus should be on the government to change them. Anything else they do is just blowing hot air.
Avantslash - View Slashdot cleanly on your mobile phone.
Yes, the best thing to do with a guard dog is to mistreat it and starve it. That will never backfire.
Fanatically anti-fanatical
But it only controls a compound in the capital. The rest is practically ungoverned.
"When information is power, privacy is freedom" - Jah-Wren Ryel
In case you haven't noticed the point here is that it's ungoverned, so it can't possibly be totalitarianism.
But the libertarians are right about it reducing prices. You can buy an AK-47 for $30.
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.
Sucker.
You're buying the line that companies will hold their breath until they turn blue if we enforce some of our corporate tax laws. It's like the "we'll offshore if you don't increase the H-1B quota" line. If they could move to a country with lower taxes or cheaper labor without endangering their business, then they would have already. In fact they've already done it as much as possible, so there are important business reasons to keep some of their operations in the US.
Additionally, "money comes back into the country for reinvestment" has already been shown not to work. That was the excuse the last time there was a tax holiday allowing companies to repatriate profits without paying taxes. They repatriated the money, didn't pay taxes, and didn't invest squat.
It has shown our government where the loopholes are and now they can close them. ( Yeah, right, that might happen! )
Oh, by the way, Apple, since you don't pay, what is in my opinion, your fair share of US taxes, then I do not feel that the US should use taxpayer money to go after people that steal your IP, patents or trade secrets. And those H1Bs you have? We will be paying very close attention to them.
While the quoted article says "... committee claims...", the summary here is headlined "... committee finds... ". A subtle change that completely changes the meaning.
So if California would lower their tax rate they could get at least a piece of the money instead of none of it.
Coder's Stone: The programming language quick ref for iPad
Agreed, Companies are legally and ethically responsible to their shareholders to maximize the bottom line. If any company does not do everything they can to minimize their tax liability "legally" then, not only are they are at a distinct disadvantage to other companies, they are also not taking care of their (owners/shareholders). Even if the shareholders don't have the board of directors ousted, in the long run, they will lose out to competition, and eventually go under, or get bought out by a company with a better tax team.
TODO create witty sig.
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
I actually don't understand what the issue is... It seems to be "wha wha wha, apple leaves the money it makes in other countries in those countries, rather than bringing it into the US"... It seems to me that apple is perfectly entitled to do that.
It's certainly nothing compared to google's "We don't sell anything in the UK, it's all in Ireland, honest" bullshit.
Apple's subsidiaries, located in Ireland, paid a mere 0.05 per cent in tax on $22bn in revenues.
You get 5 and insightful...there is nothing worth discussing here.