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How Ireland Got Apple's $9 Billion Australian Profit
elphie007 writes "An investigation by The Australian Financial Review has discovered how from 2002 to 2013, Apple has shifted approximately $AU8.9 billion of revenue generated in Australia to Ireland, via Singapore. The article states that last year alone, Apple Australia paid only $AU88.5 million in tax, or 0.044% of estimated potential tax liabilities. What's more, the Australian Tax Office has agreed that this arrangement is acceptable under Australian law."
Apple probably used Apple Maps to locate the tax office.
Slashdot, fix the reply notifications... You won't get away with it...
Remember moral != Legal, so just because they were able to cheat, doesn't mean they should. Also, they were under no legal or moral obligation to play silly buggers in order to cheat the Austrailians out of tax.
and yes it's cheating because they get to use all of the resources that Aus provides to allow business to make money the pay for almost none of it. That makes them little more than freeloading scum.
SJW n. One who posts facts.
Corporations are simply larger and more powerful than national governments. Their yearly turnover is larger, and they use this financial power to generate more money by bending or just ignoring the rules of governments.
But think of The Economy!
Quote: Apple Sales International extracts the bulk of Apple’s huge profits on sales outside the United States, which it claims as payments for intellectual property and intangibles. But the Irish-domiciled company has never filed its financial returns with the Companies Registrations Office in Dublin.
It initially filed accounts for its parent company, Apple Operations International, which receives funds only from dividend payments and gives limited visibility into how Apple shifts profits. Since 2003 Apple Sales International has filed no financial reports at all in Ireland.
Nope... money is moved and NO tax is paid....
http://en.wikipedia.org/wiki/D...
Ireland uses territorial taxation, and hence does not levy taxes on income booked at subsidiaries of Irish companies that are outside of the state. In the late 1980s, Apple Inc. was among the pioneers in creating this tax structure.
I guess not. They just siphon all the profits using Hollywood accounting over imaginary property to Ireland and stash them in Bermuda.
I don't know what summary or article you read, but it concludes that the minimal paying of taxes using this strategy is perfectly legal under both Australian and Irish law. The only precedent is that... business can continue as usual.
If you got $500 from writing a tech article, would you rather pay $200 of it in taxes or $2?
Also, doesn't Apple have a duty to shareholders to cough up as little in taxes as legally possible?
The Army reading list
Assuming they didn't violate any laws, they aren't "cheating". Go talk to your legislator if you are upset. People enjoy keeping money hey earn.
Also, this type of article should be filed under Slashdot/NPR, as it's about harping on certain political agendas -- let's gather together and reinforce our anger/banding-together memes. AKA politics as intended.
(-1: Post disagrees with my already-settled worldview) is not a valid mod option.
How long can this go on? Every one from the rich 0.1% of Americans, MNCs, two bit countries, supposed allies are all taking pot shots at America in every which way they can. It is time for the Atlas to shrug. The Atlas is not some super duper individual super achiever. It is the middle class of America that is the only one paying their taxes, and supplying canon fodder.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
I'm not sure that makes any sense. The article is about how this was a perfectly legitimate tax strategy. And if the world has their eye, that means Apple/Google/etc are watching everything... not the other way around.
If I were a dual citizen [Ireland/USA] could I shift all my income earned in the US to my Irish self and pay no taxes? After all, my Irish self needs lots of whiskey money.
He who forgets will be destined to remember. - EV
to be fair its a bit more complex than that, the rich do get stung for tax. In the UK you can see the proportion of taxation based on income bands. The top 50% pay 90% of the tax take, the top 5% earners pay 47.9% of the total tax.
Its eye opening how much the wealthier pay towards society compared to the poor. Now I don't mind that so much, except that the super-wealthy tend to have far too much compared to the rest of the population, and the general disparity between income is far to great nowadays, but to criticise the wealthier half of the population because the poor think the rich should pay more is a bit uninformed and a bit selfish.
Still, we need to get rid of these loopholes, make tax simpler, much simpler, and apply it to everyone.
With the value of labour dropping through the floor due to automation, globalization and peak consumption that would just be a one way ticket to feudalism ... well unless you have some kind of progressive consumption tax.
Speaking of being bad at math: If 88.5M = 0.044% then 1% = 2011M, or 2B, and 100% = 200B.
How can Apple be liable for 200B tax on 9B revenue?
What's the gain for Ireland?
I am sure they don't see much of the offloaded offshore profits.
So what does Ireland gain - other than may be few employees manning a registered office and may be a miniscule percent of the funds?
Is it a case of something is better than nothing?
Tat Tvam Asi
because i have been in the past.
"last year alone, Apple Australia paid only $AU88.5 million in tax, or 0.044% of estimated potential tax liabilities"
implying that Apple Australia made $AU200 billion last year?
...Apple/Google/etc are watching everything
Do you doubt Apple's accountants and lawyers are watching the taxing policies in all countries to minimize their tax burden? iSeeYou.
Be prepared to be ashamed for things you do buy then. Apple tends to get singled out for some reason, but the things it gets criticized for are the norm, any transnational that is not doing them is just hurting itself and becoming less competitive. This is something that can only be fixed if the rules change in a way that effect all the companies, not something that public shaming of individual ones can help.
You don't have 'profits' if you had the 'expense' of paying royalties on imaginary property (IP) that is actually 'owned' by an offshore subsidiary of yours. That's what's happening.
Why is perhaps why businesses should get taxed on income (aka revenue) like the rest of the tax payers. If I was only taxed on what I couldn't end up spending at the end of the year, I'd have to pay a lot less tax. Actually, I'd make sure that I spent almost all my money (on things that will appreciate in value), which is what businesses end up doing to get around paying taxes.
Anthropic principle: We see the universe the way it is because if it were different we would not be here to see it.
Apple - nor any corporation - is not a charity. It's not their job to pay more taxes than they legally have to. Their job is specifically the opposite - generate as much value for shareholders as they can.
Any company that pays more than they have to by law should be questioned, or the shareholders should revolt. Actually... I can't think of any example of one that does, intentionally at least.
So - the issue is NOT with Apple - TFS even says that the Australian tax office agrees this is all above board - but the issue is with their tax system. It's structured to allow that, intentionally or not. There are all kinds of tax incentives in the world, and they're all there to encourage the right mix of business development and growth that the region needs. Essentially, tax is used as an incentive to offset the disadvantages that would otherwise naturally be there (labor cost, non-ideal locations, skill levels, etc.).
Don't be mad at Apple... EVERY company does this. Haters be hat'n, I guess. :)
I used to have a sig, but I set it free and it never came back.
Totally missing on those $-addicts.
Seems to come with their genetics.
Not even sure if the word "patriotism" is the right term here. Maybe patriotism is including to cheat in taxes.
Nevertheless, people hate the taxman because they distrust the receivers - government.
So, it's an ingrained fad to reduce tax payments as much as possible.
Stash it away in Grand Cayman, Switzerland and hope you don't get caught. That's the smaller guys.
The larger whales in this game are doing it legally by feeding part of their stash to "friends" who implement "good rules" for them and don't touch their undertakings.
And there we have it... maximize $$ at any price to the top of the pyramid.
Is the school/university system with all the financial burdens on the future of participants and inequality a consequence of this? Maybe, who knows...
No the problem is the wealthy are constantly arguing visibly and publicly that the poor are stealing from them, and that they should be allowed to opt out of supporting anyone. For things like food and medicine. Because it the super-wealthy are just so upset at looking at that big tax number on paper (they are not affected in any literal fashion whatsoever - if they were, they'd be middle class...who also are frequently on the list of "people who should pay more" from the super-wealthy).
Umm, you should read the article. It does not say 30%, it says 4%. In fact the word, or number 30 is not mentioned in the article at all.
The company is not tax resident in any jurisdiction ... The average tax rate for all jurisdictions in which it operates is approximately 4 per cent.”
But
In its ASIC filings the company reported pre-tax earnings outside the US of $US4 billion in 2009 and calculated that 4 per cent tax would be $US160 million. The accounts show the actual tax paid was only $US3.65 million.
Also
They pay no US tax either because US law disregards where a company is managed and only looks at where a company is legally registered.
When you cant win, ad hominem.
Maybe save the shame for the governments that refuse to fix these loopholes. Most refuse to do it because their politicians have direct or indirect ties to companies that would be negatively affected. The big Canadian example was Prime Minister Paul Martin and his family's company Canadian Steamship Lines, that avoided paying Canadian Taxes by running the ships under 'Flags of Convenience'. This wasn't illegal, but that doesn't mean it shouldn't be. And before the biased far left pipes in, I have no doubts Harper also has ties to many companies that wouldn't be happy with him were he to change the tax laws.
Yes, I agree, things do have to change.
BUT people will NOT take notice until you DO start shaming individual companies.
That's how change happens.
Just throwing up your hands and saying, "Oh well, it's the norm. It's got to change." Means nothing to people; which means you are not going to get the political class to do something about it. They'll just keep things the way they are because people won't notice.
People have to get outraged. They have to see INDIVIDUAL companies and INDIVIDUALS who don't pay taxes because of BS like this: see the Forbes 400 for many of the folks who legally dodge taxes because they made up the rules.
So we NEED to shame Apple, Google, GE, HP, IBM, and every other golbal mega corp that shifts profits around the World to avoid taxes. We need people like Warren Buffet to say, "Hey look, my secretary has a higher effective tax rate than I do."
And this bullshit of "well if Buffet doesn't like it, then he can pay more on his own!" doesn't cut it because there are HUNDREDS of other billionaires and centi-millionaires who are getting away it.
We NEED 1950s income taxes again - adjusted for inflation, of course.
Their duty to shareholders comes after acting ethically.
I agree in principle but the problem with that argument is that it is easy to disagree about what is ethical. Many people see no ethical problem whatsoever with polluting or discrimination or tax avoidance or all sorts of other damaging/problematic behavior. Hell, a lot of people think it is downright heroic to stick it to the tax man. The usual argument for allowing pollution is that it is more ethical to allow pollution than to lose jobs. It might be a poor argument but many people honestly believe that it is the most ethical thing to do. Heck, sometimes there are bigger issues than ethics. I can say all sorts of hateful, wrong and unethical things but my right to free speech is considered more important. Ethics alone (too) often aren't enough of an argument.
Now you and I probably agree that Apple's tax avoidance is probably unethical as far as most of us are concerned and certainly in violation of the spirit of the law if not the letter. On the other hand if the government really wants to collect that revenue they can easily do so with some legislation. The fact that the government allows these loopholes to remain open speaks volumes about the priorities of those in power.
The US economy requires imports and exports to grow. Keep flipping off other countries and you will very quickly find that your "Fair" Tax only alienates the US economy and causes massive drop in exports. Anti American sentiment around the world is already quite high.
You should trying asking that to Tim Cook at a shareholders meeting and see what kind of response you get. Last time he was described as "visibly angry".
Whatever. This is the same guy that bluntly told congress they were wrong to try to collect more tax from Apple. He talks about social responsibility but he only means it if someone else has to pay for it.
it's a bit naive to claim that Apple has a moral obligation to pay taxes if they have a legal way to avoid it.
It's not naive at all. They can have both a (perceived) moral obligation to pay and a legal way to avoid paying. The one does not preclude the other. The ability to do something about it is a separate issue. The question is whether their duty to society trumps their duty to their shareholders.
The way to fix this is legislation, not a moral appeal.
Bingo. Exactly correct. And the fact that such legislation has not been passed says everything you need to know about our elected officials and their priorities.
so just because they were able to cheat
By definition what they are doing is not "cheating" if the tax department says it is legal.
As much as you and people like you want to paint Apple with the Evil brush, what Apple is doing is sound AND ethical . There's nothing wrong with shifting profits around in the way Apple is doing it, not legally OR morally.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
As another poster commented -- it doesn't mean much in the abstract. Make an example of a well-known company, and people can relate to it better.
Got them moderator blues I blieve I walk out the do', With these mod-points I been gettin', I 'most never post no mo'
Lol, as if any other companies are any better. Microsoft has been doing this for far longer than Apple, so has Amazon, Cisco, Dell, Dropbox, eBay, EMC, Facebook, Google, HP, IBM, Intel, LinkedIn, Logitech, Oracle, PayPal, Twitter and a number of other companies.
Custom electronics and digital signage for your business: www.evcircuits.com
Why the FUUUUUUCK does audio randomly start playing on ads on /.
who is the fucking imbecile that thought it would be a good idea to annoy the FUCK out of people.
Fuck you moron, Fuck you moron, FUCK YOU MORON!
Yes i'm mad bro.
Hope is the currency of fools
The territorial taxation remark is off point. Everybody except the US (and a few very small countries) use territorial taxation. The US uses domical for taxation which is not compatible. Congress has passed a bunch of kludges to “fix” the problem but it causes major headaches. Half of the issues that surround US multinationals are due to this. It would be much more rational if we jointed the rest of the world with residential taxation.
As for the Double Dutch and other tactics – it kind of boils down to incompatible tax law which results in exploits. Bad logic and bad programming will get you every time.
but that doesn't mean they aren't a bad actor.
Hopefully AU will change their regulatory law to stop this sort of greedy crap.
The US as well..also, well, everywhere else.
The Kruger Dunning explains most post on
He talks about social responsibility but he only means it if someone else has to pay for it.
No, Apple pays plenty (far more than any other company) for monitoring and reports on suppliers, for bonus to overseas workers that only Apple gives, for higher labor costs because they will not allow workers to be over-worked.
What does not make any sense is to pour MORE money into a giant engine of inefficiency that just wastes it. Why would anyone but a handful of government workers be better off if Apple paid more taxes? Instead Apple is in fact putting that money to good use in bringing production to the U.S. and other worker quality of life improvements - again, benefits to workers that every other company is utterly ignoring.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
It is a requirement of international business – and in theory it must be done. Look up transfer pricing.
I will use Toyota as a good, solid concert example. Toyota Inc. designs a car, Toyota Japan builds the powertrain which it sells to Toyota USA, which builds and sells the car. The car generates $1,000. Quick – how do you divide the profit? If Toyota wants to pay Japanese corporate tax they increase the price that they sell the powertrain to the US, shifting profits to Japan. Or if they want to pay US corporate taxes they drop the price.
There are principles to guide how the profit should be shared but there are large subjective areas.
This whole idea of paying taxes on "profits" is silly. If governments wanted to get taxes, they'd switch to gross receipts tax. Of course, their corporate masters won't let them, but that's a whole different problem.
Is it just my observation, or are there way too many stupid people in the world?
Why is perhaps why businesses should get taxed on income (aka revenue) like the rest of the tax payers.
Nothing would destroy the world economy faster than this staggeringly short sighted idea. A typical grocery store averages about 2% profit on sales. If, for example, a store pays $2.00 for a gallon of milk that it sells at $2.05 any tax that takes more than $0.05 make said grocer unable to restock his dairy case. How long exactly do you expect any store to remain in business under those terms?
It would destroy the middle class, increase the wealth gap, cripple trades, and we would take a steep hit in revenue.
What the fair tax doesn't take into account the difference in percentage basic needs to get along in society the rich have compared to everyone else.
And other issues as well, but I suspect anyone who thing the fair tax is a good idea probably wouldn't understand them. Not that the are necessarily stupid, but that they haven't learned to thin about the details of things and impact.
The Kruger Dunning explains most post on
What I want to know is why isn't Apple liable for US taxes here?
They are, they pay a lot of U.S. taxes.
If I leave the country and go work in another one, all money I make is still taxable by the US federal government
No, only after a certain amount (almost $100k) is it taxable.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
So this "fair" tax - it takes all the money we give to corporations and lets them keep it. And in return, for every dollar we give to corporations for private jets, seven and eight figure CxO benefit packages, and lavish corporate offices, we also get to give a percentage extra to the federal government?
How about this: a gross receipts tax. Instead of charging you EXTRA when you SPEND (which hampers spending and, hence, the economy), you kick in a percentage to the general welfare (in the constitutional sense) every time you RECEIVE money.
Is it just my observation, or are there way too many stupid people in the world?
Of course you're right. This is one of the reasons I drum the "all taxes are regressive". The rich can and will avoid as much tax liability, often quite legally (like this), while the poor and middle class cannot, because they do not have the resources. If you could spend 100 to save 1000 in taxes, wouldn't you?
There is a fix for this, a transfer tax, rather than an income tax. Tax money leaving your country. The easiest avoidance of these taxes is to keep the money in country, helping the country's economy. If money NEEDS to leave, then it provides an incentive to bring jobs home and use the resources of your own country.
Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.
That is not how it works.
Under your scheme, GM and Google would pay about the same amount in taxes because they have about the same amount in revenue, even though Google’s profits are much higher. Besides, I would be hard pressed to think of a example where a corporation could spend money to decrease profits? Pay out more to employees? That would be picked up in income taxes. Spend more on capital improvements? That would be on the asset side, not the income side – no effect on profits. Overpay their suppliers?
Perfectly legal....not perfectly ethical. There is a difference.
I've said, and will continue to say that we should not be imposing Taxes on things that we should be encouraging, like income. We should be taxing the things we want to curtail. Taxing income is downright EVIL, as it is a disincentive to actually working, which is only overcome by most people's need to better their lives.
How about instead of taxing income, you tax money being transferred out of state/country?
Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.
That's 30% of profit, but loop holes allow companies to eliminate profit from their revenues. So you'll have a $100 million in revenue, but use loopholes to reduce your net profit to only $5 million, and sure you may pay 30% on that $5 million. But it should of been paid on the entire $100 million.
If I could file taxes like a corporation, writing off my lease/loan payment of my buildings, my vehicles, deducting my utility costs, and many other incidentals. The result is, that I could pay myself a mere stipend of $250/month (my spending account allotment) and you could tax me at 50%, but on $3,000 net profit I'd pay $1,500. Which is a heck of a lot less than what I presently pay for taxes on my revenue.
Government has a duty and responsibility to ensure that they are paying more like $40-$60.
Frankly, force corporations to be taxed on a W2. Hey, Citizens United, corporations are people, right? So use the same W2. And those corporations will in fact pay 1000x in taxes than what they currently pay.
...Apple tends to get singled out for some reason
Advertising on column inches. A story about Apple gets more views than a story about some other company.
It's the same reason we keep hearing about "Google busses" being stopped, even though one of them actually belonged to Intuit; reporting it as a Google bus sold more ads per column inch than reporting it as an "Intuit bus" would have.
What we're saying is that the LAWS need to be re-written so that they can no longer legally pay such a low amount of taxes. And we are sharing this as an example of how extremely poor the laws are, and what a crappy job our government is doing in it's role.
And in Apple's case, they're in very gray territory. Creating a subsidiary company, and then charging it from another subsidiary company and insane license agreement. If it can be successfully argued that those charges are unrealistic (ie: no other company would pay even close to the declared charges) than it in fact becomes fraudulent.
It is akin to me taking an old coat, painting a quick picture on the back, taking it to Goodwill and exclaiming that it was worth $5,000 due to the art. And then claiming a $5,000 deduction on my taxes for my donation. If that $5,000 is an unreasonable value, than it is fraudulent. And I wager that the amount Apple is cross-billing between its subsidiaries would, if investigated show to be a fraudulent estimate of value. And thus in fact MAKE THIS AN ILLEGAL ACTIVITY.
If our governments would prosecute.
No, Apple pays plenty (far more than any other company) for monitoring and reports on suppliers, for bonus to overseas workers that only Apple gives, for higher labor costs because they will not allow workers to be over-worked.
"Far more"? Demonstrable nonsense. There are plenty of companies that actually have their own facilities in China (and elsewhere) and I assure you that doing that costs FAR more than what Apple pays to "inspect" their suppliers. I've been to China and visited plants for companies like Emerson Electric which has over 10 plants in China. Apple sending over a few inspectors and "demanding" that they not overwork their workers (which BTW they still do) is hardly what I consider socially responsible. And Apple only instituted those inspections after getting a lot of bad press for their earlier lack of giving a crap. When you have to be shamed into bad behavior you aren't being responsible.
What does not make any sense is to pour MORE money into a giant engine of inefficiency that just wastes it.
Ahh, yes. The old stupid saw that all taxes are just wasted money. It's a completely nonsensical and ideological argument made by people who don't want to actually consider the actual economics involved but would rather engage in soundbite arguments. Taxes are necessary for any society and much of it demonstrably serves the public interest. Yes there is waste but it does not follow that all taxes are bad because of that fact. Furthermore since the US government falls further into debt each year, letting Apple off the hook on taxes merely makes the burden on you and me just that much greater. If you want to argue that we should reduce spending I'll agree with you but until we do everyone (including Apple) needs to pay their share. Do you enjoy subsidizing Apple? I sure don't appreciate it.
Why would anyone but a handful of government workers be better off if Apple paid more taxes?
Have you seen the size of the US debt? Are you really so daft as to thing that Apple dodging taxes has no effect on you and me?
That would put its potential tax liability at $201B. 4.4% seems more likely.
Well, perhaps the tax rate wouldn't have to be so high, but it could still be based on income. Maybe 0.5% or lower. Maybe grocery stores would have to raise their prices a bit to pay the tax, but that would affect all grocery stores, so they would all raise prices accordingly.
Anthropic principle: We see the universe the way it is because if it were different we would not be here to see it.
What are you talking about? We import tons of stuff, and that might be somewhat diminished, as we have had a fairly nasty trade deficit for a very long time. As for exports, those would definitely increase, as much of the embedded income tax, that businesses currently pay when they manufacture things in the USA, would be abolished. The Europeans have the good sense to remove the VAT taxes that are applied to their manufactured goods when they leave their ports for the USA, but we continue to ship out our products with a heavy burden of the highest corporate income taxes on the planet making them more expensive. The Fair Tax would fix that, and dramatically increase our exports since their prices would dramatically decrease, maybe as much as 11% - 18%.
And so, in order to not PO other countries, we should continue with 47 million people in poverty and a high unemployment rate? The Fair Tax would fix that, dramatically increase manufacturing in this country, (and decrease global warming gasses since we would do our manufacturing with natural gas, rather than as China does it, with coal) and thus provide jobs for anyone that wants one. We have a record 93 million people not in the work force, the worst situation in history, and the reason is that most of our manufacturing jobs have left the USA for lower-corporate-taxed places, which is now anywhere else other than the USA. The middle class would be increased dramatically, as people go back to work, in manufacturing, one of the only 3 real sources of wealth along with mining and agriculture, and fix our unemployment problem. Want to see great lakes freighters take iron ore from Duluth to Cleveland to be manufactured in Pittsburgh again, this time with shale gas from WVa and Ohio, instead of being exported to be made into steel overseas and then shipped back to us as an import? I do. We can get our economy back with the Fair Tax.
What does legal tax practices have to do with what is morally correct.
Nothing. That was the GP's complaint.
It would rescue the middle class, by creating jobs for absolutely everyone that wants one. The reason for the wealth gap is that the middle class wages fall because there are far fewer jobs than there are people to do them, so those people compete with each other and "bid": those jobs down to the minimum wage. If we pass the Fair Tax, there will be a massive building of factories from both domestic investment and foreigners investing here to build things at the newest, bestest manufacturing tax haven on the planet. That will cause a labor shortage in short order, as industry rapidly outstrips the available help they can hire, and the wages will skyrocket. The middle class will be rapidly increased, and prosperity will be restored to the USA.
From Wikipedia: " Bill Archer, former head of the House Ways and Means Committee, asked Princeton University Econometrics to survey 500 European and Asian companies regarding the effect on their business decisions if the United States enacted the FairTax. 400 of those companies stated they would build their next plant in the United States, and 100 companies said they would move their corporate headquarters to the United States.[63] " That is in the Wikipedia entry for the Fair Tax. So, that shows that foreign investment is ready to build factories here. Our economy would be revitalized, and once again the envy of the world.
Not sure what you're trying to say by referencing the Dunning-Kruger effect, but I say that factory work is such that you do not need a college education to be an electrician, milwright, pipe fitter, boiler operator, or most other jobs in a factory. That is what will open up employment to much of the 47 million that are in poverty now for lack of work. The Fair Tax will fix that.
How about instead of taxing income, you tax money being transferred out of state/country?
Because that would discourage free trade and international investment – it would tend to be even more distorting and inefficient than an income tax. Industries would tend to be local, smaller, and less efficient. And why would people want to invest abroad knowing that their income would be taxed when it comes back to them.
The US already kind of does this. As one of the kludges to handle the resident / domical issue money left abroad is not taxed. This has led to some weird situations which non-US companies avoid.
As to taxes being evil – that is a different kettle of fish. We can debate what type of levels of taxes there should be. My principle point is that the US use of dominical instead of residence / territory is highly inefficient and distortive. If we are going to have a corporate income tax then we should have the best one out there – which means using residence / territory like the rest of the world.
Side note - I have seen studies that corporate taxes under ~15% have a low to no impact on future investments.
Most businesses lose money their first few years. Under the current system they pay no taxes until they make a profit (and burn off their carried losses.) Under a "tax every incoming dollar" plan, even at only a minimal amount businesses on an already shaky footing would be even less likely to make it.
What companies would do by not having to pay income taxes is to lower their product prices to attempt to capture market share and therefore increase profits. That would be a good thing for the American people, since American-manufactured goods would rise little in price after the Fair Tax is applied, but foreign goods, whose prices would not decrease at all, would get more expensive. This would create a bias to cause industry to manufacture here, rather than overseas, which is good for the American people.
What is your problem with well-paid CEOs? At the time of the GM bankruptcy, the CEO's salary was $10M, and they were manufacturing 10 million cars. What's wrong with the CEO getting $1 / car? Would you not buy it if GM paid its CEO $15M and the car's price rose by 50 cents? And if the CEO's salary were instead divided amongst the laborers, we know that it takes about 33 labor hours for a Detroit factory to build a car, so you're going to divide that $1.00 or $1.50 into 33 hours and raise the laborers' wages by 3 - 5 cents? How does that help the working class?
No, what helps the working class is to incentivize job creation, which is what the Fair Tax would do like no other method. Factories would be built to the extent that a labor shortage would be created. Fair Tax researchers believe that we would have a 3% unemployment rate within 2 years, which is full employment. Then we can start employing immigrants, and increase the tax base while making more prosperity for more people.
And by the way, I forgot to address this, the Fair Tax DOES take into account this basic fact that the poor spend more of their money on just existing. The Fair Tax has a mechanism called the Prebate, that pays EVERY citizen (not illegal aliens, tho) an amount of money every month that will pay for the Fair Tax on goods purchased up to the poverty level. That is, if you're a single person and the poverty level is $11,000, the gov't is going to send you the Fair Tax's 23% of $11,000, or $2.530, in monthly installments of $210.83. IOW, the poor pay $0 Fair Tax. And, the Fair Tax is the ONLY truly progressive tax ever proposed, since someone making twice the poverty level would be paying half the Fair Tax rate, someone making 3X the poverty level would be paying 2/3rds the Fair Tax rate, someone making 4X the poverty level would be paying 3/4 of the Fair Tax rate, etc.
In contrast, the proposed "flat tax" is anything but flat, since it does NOT eliminate the the payroll taxes of 15.3%. So, after an exemption for low income, a person begins paying the flat tax of 17%, added to the payroll tax of 15.3%, for a total of 32.3%. To add insult to injury, the payroll taxes stop taxing at $118K, so the CEO making $10M essentially pays 17%, while the middle classer at $75K pays close to 32%. That's a regressive tax, period.
No, the law is pretty clear. Management has a fiduciary duty to manage the companies’ assets for the owners – that is the shareholders.
That is legally correct but just remember that by making that argument you are essentially subsidizing Apple. The US government runs a deficit and by Apple weaseling out of taxes via legal loopholes they are placing the burden of that unpaid tax on you and me. They might be legally allowed to do what they are doing but the people paying the price for it is the citizenry. We have to make up the difference for taxes that go unpaid by Apple, legally or otherwise. I find it reprehensible that our government has failed to close these loopholes given the budget deficit.
CEOs can’t (or at least shouldn’t) just give money away to people they like.
What exactly do you think a charitable contribution is then if not giving away money to people they like? Charity does not improve the cash position of the company a bit. It doesn't matter if you are paying the tax man or a charity - the money is still spent on something that won't bring in a dime of revenue to the company.
Apple - nor any corporation - is not a charity. It's not their job to pay more taxes than they legally have to. Their job is specifically the opposite - generate as much value for shareholders as they can.
That is true. However you need to finish the thought. If Apple is not paying taxes then someone else has to pick up the tab because those government expenses didn't just magically vanish. That person is rest of the taxpaying public. Do you think it should be OK for Apple to avoid paying taxes and stick you with the bill even if they aren't breaking any laws by doing so? Given the size of our budget deficit I don't really appreciate having my future robbed from me so a company with $160 Billion in cash can get a smaller tax bill.
Any company that pays more than they have to by law should be questioned, or the shareholders should revolt.
And any company that pays less than they ought to should be questioned or the taxpayers should revolt.
So your argument is essentially "don't hate the player, hate the game"? Yeah, that's a pretty shitty argument when sleazy guys make it to justify their bad behavior towards women and it isn't any better here.
Tim Cook recently told a shareholder that Apple would put environmental concerns before profit. Are you saying that Apple should be questioned or the shareholders should revolt over that?
He said “When we work on making our devices accessible by the blind, I don’t consider the bloody ROI. If you want me to do things only for ROI reasons, you should get out of this stock.” Now to be perfectly frank he's being a little disingenuous here and cherry picking when he's going to consider ROI and when he isn't. I also think it is kind of ridiculous that a company that makes more than half their money from the iPhone and iPad which is close to useless to a blind person uses that as an example of corporate altruism. When he chooses to take advantage of tax loopholes he isn't doing it for altruistic reasons, he is doing it to maximize ROI by sticking the US taxpayer with a larger share of the cost of the government.
Or, you know, you could tax profits. Like we already do for the rest of society. That's why individuals have "write-offs" that reduce their tax burden. Spending money on acts that want to be encouraged (restocking the dairy, donating to charity, etc) reduces the taxable income by the amount spent. In this argument, only $.05 would be taxable per gallon of milk sold. That means that given a 20% tax bracket (most of the U.S.), the price would need to be raised to $2.06 to break even. Not exactly a major hardship.
This was meant for one post down. Sorry.
It's actually interesting to me to think that if *all* taxes could be collected, then how much fairer they could become. And how much this would affected the average salaried worker.
And you wonder why our societies are hollowing out?
Look, the Rich don't pay taxes like you and me.
Well, actually, it's just you. I use a lot of the things I learned from tax lawyers and tax accountants running a large estate so that I pay about what Bill Gates pays.
Stop subsidizing them. They won't love you more and they won't change their investments in your favor.
-- Tigger warning: This post may contain tiggers! --
If rules like this didn't exist, think of all the tax accountants and lawyers who would be out of work.
I don't know where you shop... my grocery store sells a gallon of milk for anywhere from $3.79 (same price as a gallon of premium gas), to upwards of $6, if you'd rather not have hormone, steroid and antibiotic enhanced cows excreting your beverage.
It is true that the overall margin in a grocery store is around 1 to 2%, but that gallon of milk has a whole lot more than 2% profit in it. Cost of goods run closer to 50%, which is why the stores can run unlimited Buy One / Get One Free sales all the time - they're not losing money on those items, just not making as much as they normally do. When you factor in costs of real-estate, taxes, electricity, labor, spoilage, breakage and theft - that's when the margins come down to 1-2%.
So, does this article mean that my local grocery store can merge with a couple of overseas grocery stores, they can all shuffle profits around, dodge taxes, and lower the cost of my grocery bill by 10% while still making more money? Maybe. But, then, those other businesses that still do pay taxes will have to pay more to support the existing services, you know, like roads to get to the stores.
Only if you have a pretty odd ethical code, IMHO.
No, it's pretty sound. Pay some taxes but not more than is reasonable.
Why does that strike a moral pang in your heart?
If the taxes were 100% of all earnings would you claim they should be paid?
There obviously is some value for which taxes are too high. It's too grey a line to claim anyone is crossing it unless they pay zero, and sometimes not even then (but, Apple does not pay zero taxes anywhere).
Some of us believe that corporations (like citizens) should have an ethical obligation to pay tax to the country they use the infrastructure of.
Apple does pay taxes in every country. They pay taxes in the U.S. They pay taxes in Australia. They pay taxes in Ireland. They just move where some of the income is declared in a way that the countries involved agree is correct. So how is Apple shorting Australia when they pay more in taxes than they consume in services?
In any worldwide company, it can make a lot of sense to shift where income is declared. If a device is assembled in a different country with parts made by still other countries, why does it make sense that 100% of the profit from every device sold in Australia is declared in Australia?
IMHO, this is as unethical as using the WIFI connection of your 80-year old neighbor cause she didn't know how to set up the security correctly.
That's unethical because you are literally stealing from her bandwidth cap, outbound connection speed, and potentially getting her in trouble if you are using any illegal torrents. But Apple is stealing from no-one. If even the Australia tax people don't think Apple is, what gives YOU the right to claim Apple is stealing just by shifting where some income is declared?
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Really, the "location" of these mega-corporations is a sham.
Instead, figure out (or estimate) what percentage of the shares are owned by US residents. Multiply that percentage times the corporation's profit times the corporate tax rate and that is what they should pay.
Note: Any public corporation knows who are the immediate owners, so that they can send out shareholder info. However, a shareholder might be another corporation which is owned by other corporations, etc. Hence, the need to estimate (along with following the money as much as possible).
Exactly.
I hate paying taxes as much as everyone, but I'm not super-rich, so I don't have options to avoid it. Once you go above a certain income class, your tax burden drops, in both relative and absolute values, because you can make use of loopholes that normal people can't.
Corporations are the worst of it all. As they can split up, merge and do other trickery that physical humans can't, they can exploit the system to the maximum effect. And since everyone else does it, they almost have a duty to do so, because otherwise their shareholders will grill them about it.
The problem is that the tax systems allow this, which is caused by countries competing against each other to attract corporations. Which, if you are able to see it for a moment from outside the pot in which you're slowly being boiled, is quite insane and perverted.
As long as the countries of the world readily sell out to corporations and super-rich, nothing will change. Only when they realize that (at least yet) they have the tanks and the guns and the corporations don't and maybe the power-relationship should be the other way around, and then work together to fight the parasites, this will stop. All it needs would be a world-wide agreement to, say, leverage a fixed % of revenue from every corporation, no exceptions, no loopholes, no special deals.
Assorted stuff I do sometimes: Lemuria.org
I did the math on this a while ago (it's on a /. comment so you might be able to find it...) Basically a 25% sales tax will allow you to eliminate income tax, pay everyone in the country a poverty-line income and stop deficit spending.
Is 1563649 a prime number?
I think you answered the question yourself.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
So? What's wrong with that? Does it harm anyone?
Meanwhile, you get relentless articles in the papers from "thinkers" telling you that people need to get over their hangups, that there's nothing wrong with renting a home your entire life, and that you shouldn't worry about owning your own home.
For a site about things like basic rights, Slashdot users sure do like to censor "dissent".
You are taxed on the same basis as businesses, on money earned minus the cost of earning that money. The difference is that you have to spend a considerable amount of money on things that you'd spend it on even if you didn't have to earn money, unlike a business.
"When you have eliminated the unacceptable, whatever is left, however improbable, must be the truthiness" - Holmes
The entity receiving the money is known as a stateless organisation. It's controlled by Apple, obviously.
How does an organisation become stateless? They take advantage of different of residency in different jurisdictions. For example, country A may say you are based in A if your headquarters are there. Country B may say you are a country B organisation if your board meets there. Country C may say a company is comes under its laws if the bulk of its board are residents there.
One way to be stateless that that situation is to have your headquarters in country B, and have your board meet in country A.
This is what the entity Apple transfers the money too does, so it isn't under the control of any country's laws. It is perfectly legal, of course.
This loophole won't be around for much longer. All that is needed to fix it is the various countries get the respective laws consistent. Doing that is on the agenda for the G20 meeting in September.
Why is perhaps why businesses should get taxed on income (aka revenue) like the rest of the tax payers.
Nothing would destroy the world economy faster than this staggeringly short sighted idea. A typical grocery store averages about 2% profit on sales. If, for example, a store pays $2.00 for a gallon of milk that it sells at $2.05 any tax that takes more than $0.05 make said grocer unable to restock his dairy case. How long exactly do you expect any store to remain in business under those terms?
Technically, wages are all profit anyway.
As much as I'd love to be able to offset my living expenses against my tax it would just lead to massive abuse as people and keep toys just to write them off on tax instead of investing money which would only drive up the prices of the toys I want. I can already offset some of my expenses on tax, but that's limited for good reason.
Also most places in the world have a sales tax, which is a flat tax on most if not all sales (I.E. Australia excepts essential items like milk from sale tax).
Calling someone a "hater" only means you can not rationally rebut their argument.
Some US states actually do have a gross receipts tax, which is kinda like that, and the economy seems to be doing fine regardless.
Physically no, but economically, very much yes. Companies going bankrupt results in layoffs (more unemployed people), defaults (more suppliers not getting paid for deliveries they've made), and the flow on effects of layoffs and defaults.
Let me guess... you're a Ron Paul supporter?
For a site about things like basic rights, Slashdot users sure do like to censor "dissent".
The /. item claims "The article states that last year alone, Apple Australia paid only $AU88.5 million in tax ..." but that is incorrect. The article states "Last year Apple reported pretax earnings in Australia of only $88.5 million ..."
So you pay more tax than you have to? Why?
Yes, 5% top earners pay 47.9% of the taxes, but which percentage of the country's wealth do they own?
You seriously think the company went bankrupt because they were paying their CEO $10M? Remember, that's $1 / car.
Or could it be the 25 MPG CAFE that, when enacted, the perpetrators in Washington actually said that it would probably bankrupt the Detroit companies? That couldn't have had anything to do with it?
Or in couldn't have been because of the 35% corporate tax rate that they were paying, 2nd highest on the planet at the time, only 2nd to Japan? That couldn't have been it?
And if the CEO were to receive instead $500K / yr, would GM have gotten as knowledgeable and adept a CEO as they had, or would they have gotten a far less experienced person that could only command a $500K salary, because those that were more skilled were pulling down millions of dollars in other large corporations? Maybe GM would have gone bankrupt _sooner_ than they did if they paid their CEO cheaply.
One more time, who does the $10M salary harm? I don't accept it as a reason for the bankruptcy.
Not Ron Paul, he's too isolationist for me. Rand Paul would be OK, tho.
Technically, wages are all profit anyway
No. Doing a job can have expenses - travelling to workplace, buying/maintaining tools, eating right to enable one to work etc.
Many countries have a "standard deduction" from salaries that are exempted from tax for this reason.
Bingo Dictionary - Pragmatist, n. A myopic idealist.
Ok, all you moral appeal people commenting in this story have failed to come up with the "moral" tax amount a company should pay. Why is that? You want to try?
Bingo Dictionary - Pragmatist, n. A myopic idealist.
How would tax movement of money encourage domestic investment? Why would I want to build a domestic plant for export knowing that the plant’s revenues (not profits) will be taxed? Why would a foreign company bother investing in a domestic plant knowing revenue being sent home will be taxed?
Well, yes. The point of a good tax policy is to extract the money needed with the least amount of pain – but what makes you think that the pain associated with your tax would be less than that of a corporate income tax?
I will point out there have been huge gains in efficiencies because of greater world integration which would be reversed under your tax regime. Currently, trade is about 25% of the US GNP. In Europe it is even higher. I suspect that to be revenue natural that your tax would be the greater disincentive to invest then a corporate income tax. For example would you want to pay a 20% tax on an investment that return 8% or a 30% tax on a investment that returned 10%?
By the way, I am not a huge fan of a corporate income tax, partly for the reasons you suggested. I will point again to studies that a low corporate income tax does not discourage investment and I do think they should pay some taxes for the advantages and privileges that corporate ownership has (i.e. limited liability). But this all comes down to my belief that corporate taxes should be low and simple – not nonexistent.
For trade as a percentage of GNP,
http://data.worldbank.org/indi...
If the top 5% have 80% of the wealth, shouldn't they be contributing 80% of the tax base. Or am I missing something here?
because taxing people on what they have is difficult - how much is your stuff actually worth? That's why we tax it when it is used in a transaction, bought or sold.
So we tax them on income, and the top earners pay more proportionately than the poor. Beats me why the rich don't want a flat-rate tax implemented.
I don't think you'll find that Hognoxious was claiming at all that the salary was the reason for the bankruptcy. I think you'll find that he was claiming that with the company going bankrupt, odds are that the CEO wasn't worth what he was being paid. Many a company in the hands of competent management has been brought back from the brink of the abyss, and I don't think you'll find anyone arguing against those people being paid a fair amount (e.g. Air New Zealand, once bankrupted and salvaged by government intervention, now turns over close to $200m in profit per year - the CEO gets about $1.9m per year. By contrast Qantas, now quarter of a billion in the red, pays their CEO $5m per year),
For a site about things like basic rights, Slashdot users sure do like to censor "dissent".