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Tim Cook Calls Apple's Tax Questions 'Political Crap' (cbsnews.com)
nerdyalien writes: Apple CEO Tim Cook dismissed as "total political crap" the notion that the tech giant was avoiding taxes. Cook's remarks, made on CBS' 60 Minutes show, come amid a debate in the United States over corporations avoiding taxes through techniques such as so-called inversion deals, where a company redomiciles its tax base to another country. Apple holds $181.1 billion in offshore profits, more than any other U.S. company, and would owe an estimated $59.2 billion in taxes if it tried to bring the money back to the U.S., a recent study based on SEC filings showed. The current tax code was made for the industrial age, and not the "digital age," Cook said.
Apple's tax arrangements have been in place for over 30 years, they are hardly new. It is also pays more US tax than any other company.
Essentially they have subsidiaries in low tax countries ( Ireland and Singapore) that control the buy price of the international sales in the other non-US countries their kit is sold in. This is commonly called transfer pricing.
This effectively holds international profits in low tax foreign locations.
Apple doesn't do the next logical step in financial engineering, which is to move the companies IP to a zero tax location , and license it back to the other subsidiaries , at a rate that simply transfers all profit to a zero tax location (eg Bahamas) . Many companies do take this extra step.
Part of the goal of companies in doing this is that the US is almost unique , in that it taxes the profits on foreign sales, after they have been taxed in the country of sale. Very few other countries do this. Most countries don't double tax like this.
This legal situation with US tax law encourages the kinds of thing Apple has done for over a quarter century, as well as far worse. It encourages companies to minimize tax earns in foreign countries, and minimize the fraction of profits they bring back to the US. It's an everybody loses outcome, the country stuff is sold in has its corporate income tax takings reduced, and the funds are never repatriated to the US, living in limbo offshore, reducing US government tax income as well.
If the US adopted tax law consistent with most other countries, there would not be a double taxation incentive to avoid the return of funds early on international sales to the US.
Tax money is your money too. So less tax for companies means more tax for you. And I'd rather have more expensive iPhones than higher taxes, because if I don't buy iPhones, why should I pay more taxes so that others can get cheaper iPhones.
Actually who pay the taxes doesn't matter much, however big companies doing tax avoidance are unfair. Smaller, local companies still get to pay full tax, effectively paying for others trickery.
Some people actually seem to believe that "Corporations run at whatever profit, period", and would like to imply that those corporations owe nothing to the society they are based in.
Of course that's total nonsense as a moment's reflection will show.
Corporations aren't islands. They are built on a solid foundation provided by society, embedded in that society, fed and protected by that society. In Apple's case that would be the US. They owe that society for all the things they cannot do or provide for themselves but are only too happy to take for granted.
An educated workforce, the ideas that they built their business on (more often than not based on government or semi-government research at some stage), a legal system that grants them all kinds of rights (contract rights, property rights, copyrights, patents) and protects them if and when those rights are infringed on (both nationally and internationally), a huge part of their market (no company can exist without clients affluent enough to purchase its products/services), a culture in which their products are valued (what's Apple's market share in India?), an ecosystem of suppliers and service-providers, a reliable currency, network and communication infrastructure, roads, ports, transport, housing for its operations and its workforce, etc. etc..
The bill that society at large presents to them for all that vital infrastructure is known as "Tax". And, companies being companies, would rather minimize that bill any way they can.
CEO's for example are paid to help their company increase its revenue and reduce expense. The issue of what's fair or reasonable never even comes up. Any anything that increases profitability (and doesn't result in said CEO being convicted and/or jailed) goes. Companies have no responsibility for anything whatsoever except their bottom line. Of course they understand that they can't do without the society they are rooted in. Only, as with any supplier, they try to talk the price down. Even if that hurts the society they are so busy benefiting from. That doesn't make them "immoral", but it does make them firmly "a-moral".
It is in that light that we should view their comments about "Tax being just political bs.". It's their job to say that; it's in their interest to say that; they're paid to say that. So that's what they say. They might even believe that (a job requirement perhaps?). They couldn't be less concerned with considerations as to whether that's true, reasonable, or fair.
The sad and risible fact is that there still are Americans (not being CEO's) who haven't spotted these simple facts and actually lend credence to rah-rah-taxes-are-a-waste sloganeering.
Every humongous company does this. They pay internally (using pricing mechanisms which they can set arbitrarily internally as well) between branches all over the world, and handle 'profit' where it's least taxed. IKEA, for example, have this down to an art. I forget how it works exactly, but I believe it is a non-profit in the Netherlands, which gets charged by the other branches for the distribution of saleable goods leading to an exact zero profit. You try to sell your house to a child for an arbitrary price and you'll have the taxman pulling you inside out - big companies do the same trick on a routine basis. And get rewarded for it. Tim Cook is talking out of his ass.
Religion is what happens when nature strikes and groupthink goes wrong.
You have to be a slave to the government for half of your life because corporations are permitted to avoid taxation in this manner. If the corporations paid their tax burden and didn't manage to shift profits to other countries, then you wouldn't have to pay nearly so much to maintain the system that they're profiting from far more than you are, and then not paying to maintain.
Perhaps one of the most unsustainable concepts ever invented is corporate offshoring of profits to avoid taxation, while at the same time supply siders demanding pay levels so low as to require the average employee to require government assistance just to live.
Which always leads to the question of how much we can reduce the pay of the "Overpaid American Worker" until we get to the point that is considered proper? And will still allow the same person to buy the shit that is being produced. One of the most bitched up aspects regarding what people who call themselves Capitalists these days have is a complete lack of understanding that they make more money when they have more customers, who are more likely to buy the stuff they are selling if they have money to buy it.
It doesn't take a capitalist, socialist, libertarian, communist, Democrat or Republican, or any other ideology to figure this out. It only takes some really basic math, and not much more.
The shepherds did so well protecting the flock that the sheep no longer believed that wolves existed.