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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.
Any day now there will be a startup which "fixes" the tax code.
The current tax code was made for the industrial age, and not the "digital age," Cook said.
Then we should update the tax code and close the loopholes Apple and every single other large corporation has been abusing in the process.
And then make you pay the taxes you owe, retroactively, Tim, if you're going to try and be a smartass about it.
Did anyone expect him to say "yeah, actually we feel bad about it and will be paying a few billion of what we owe next year"?
const int one = 65536; (Silvermoon, Texture.cs)
SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
.
"It doesn't work like that."
Taxing them more simply means higher prices for all the customers. That would be us, not them. If they keep prices the same, it means less investment by them in jobs, or higher prices for us, period. Further, while most people see reports of huge "cash in the bank" values for some of these outfits, they fail to look at the financials of same to discover that there are loans against most of the balance in most cases, often as not used to buyback shares to keep earnings/outstanding share up and thus share prices (and C-suite compensation) as well - most companies don't actually have a lot of that cash in hand (though some do). At any rate, a tax on them is simply a tax on the customers in the end, there's no free of that sort in this universe. I suppose one could make the argument that since I'm not a customer of theirs, I wouldn't care - and I'm not - but costing for example, Apple customers more would trickle down to me in the form of other raised prices I'd pay for things made by their customers in the end, anyway.
It's dangerous to live in a world of flat-broke spendthrift governments who use words like "fair" to mean "gimme more of your money to buy your votes with" - whether a company or an individual. Consumption taxes are effectively regressive... While profits have a poor record of trickling down, losses seem to always do so; is that rain, or are you p*ssing on my back? TANSTAFFL
Why guess when you can know? Measure!
They are not U.S. profits. The U.S. has no right to tax them uuntil and unless Apple does something stupid, and converts them into U.S. profits.
Is there anything Apple could spend that money on in the U.S.?
It's not like they are going to build factories in the U.S. and raise their costs of production by complying with U.S. environmental laws, or hiring more expensive U.S. workers.
Even if they did bring it back to the U.S. as profits, and offset the environmental costs by subtracting out the shipping costs in exchange: you aren't going to get U.S. jobs out of it: those tasks will be automated. Sorry, blue collar workers: no paycheck for you!
Like Steve Jobs told Obama in Feb 2011, when Obama asked what it would take to manufacture Apple products in the U.S. ("Why can’t that work come home?") -- the answer is: “Those jobs aren’t coming back.”
Others agree. On 23 Jan 2015:
“Our economy is in deep trouble,” said billionaire and self-professed American Dream-liver Jeff Greene in an interview yesterday at the World Economic Forum in Davos, Switzerland. “We’ve had a realistic level of job destruction, and those jobs aren’t coming back.”
So other than funding the U.S. government with a bunch of money so they can bomb more Muslims and make them even more pissed off at the U.S. (is that even fricking possible?!?), there's no good reason to convert it to a dividend from the subsidiary, paid to the U.S. Apple headquarters (which is, from an accounting perspective, how it would have to be handled).
What I don't understand about countries like the UK allowing this to happen is not the simple equation of lost tax revenues but the fact that a UK company that wants to compete with Apple or one of the other companies not paying taxes can't. Basically the UK is asking its companies to pay huge taxes and then compete against companies that don't.
This means that Apple can operate in most of the world's major economies without having to pay 20-40% of its profits to the governments. The local companies often do. Minimally this gives the tax avoiding companies that much more to dump into marketing, research, etc while still returning a healthy profit to their shareholders.
So when looking at the losses, the UK Germany and so on, should not just look at the lost taxes but the lost benefits of having the next Facebook, Apple, Google, etc be born in their countries. What is Google worth to the US beyond simple corporate tax revenues? I suspect that at first blush that having a Google in your country would be worth a shocking amount.
I actually like an arguement made before the Australian Royal Commission into tax avoidances many years ago. I think it was one of the Packers who said something along the lines of, "We have a moral and legal obligation to pay the government as little tax as possible. We will always pay the minimum required. If you want us to pay more tax then change the laws." (paraphrased since I can't find the actual quote).
Which is all quite true. I myself don't donate anything to the government and I do everything within my legal power to minimise the tax I pay. Corporations are no different and if you want to tax them then you need to close the loopholes that allow a company to operate in your country without paying tax. But good luck getting anyone to do that as the business groups then complain and say you'll drive away business with your "high" tax.
Well, for most the dividends *are* taxed at almost 40%, also short-term stock gains. Longer term taxed at lower rate, but it's tax on non-inflation adjusted profit.
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.
But you cannot pick
Well they have been.
They take their profits in Ireland to avoid taxes. They build their products in Asia to avoid the EPA, OSHA, NLRP, EEOC, et al. They get to pick their preferred rules on both ends. Yay "free" trade.
Tim is ordinarily so smooth it's creepy; words like "crap" are outliers in his vocabularly. He messed up a little here. But no worries. They'll have him say we need to "do something" about LGBT rights or "do something" about the climate and all will be well again.
Maw! Fire up the karma burner!
It would be nice if corporations actually paid tax in the country where they actually earned the money. Apple, like other giant corporates, earns billions in Australia and pays bugger all tax, carefully moving the "profit" to other low tax countries.
If the country required taxes paid on where the profits were earned this wouldn't be a problem would it? Don't blame giant corporations for not being charitable towards your cause, they have shareholders to look after. Instead why not blame your governments, the ones who keep saying they'll close the very loop holes these large corporations use but after "consultation" decide that it's not in the best interest (reads: a mega corporation convinced them it would cost jobs and they'll make them look bad politically).
Legal definitions invite legal scholars to find loopholes. Even the best intentioned law will have some clever law students finding a way to be employed by finding a way to remain legal enough to survive a court case.
Following the spirit of the law is not part of capitalism, nor part of the American cultural tradition. Argue otherwise all you like, but history shows the truth.
A stockholder should not be punished if the held company is following the law. And good luck trying to word a law that does what you want without penalizing companies and stockholders that are legit.
Your idealism is adorably ignorant. And probably dangerous.
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.
Stocks wont work very well if you start getting punative on the holder. Besides driving people away from investing in the market, it would become a weapon to drive undesired investors from a company. Just imagine next year when your 401k causes you to go bankrupt just trying to pay the estimated taxes on one of your holdings that you probably didnt even know you had. Or did you mean to narrow the definition to mean "other people than yourself"?
I think you underestimate just how much I just dont care.
You don't actually understand why capital gains are taxed at the rate they're taxed, do you? The percentage can, arguably, be discussed but first you should understand the reason that the rates are as low as they are. The reason they're low is because you want me to keep my money invested and you want me to do so in the long-term area.
So, I do. I'm taxed at a very low rate (about 15% or so federally and maybe 8% at the State level) and I keep my money invested in the market instead of socked away in a bunch of smaller accounts in various savings institutions. I take more risks but I have a greater earnings potential. Also, it's actually kind of easy to avoid a lot of taxes if you want to be a dick about it. It's entirely lawful, tax avoidance is legal while tax evasion is illegal.
"So long and thanks for all the fish."
But the idea that somehow if the USG takes money from Apple that there will be more social good is laughable on its face.
Individuals have to pay all the taxes but get no say in how the money is spent. Corporations get all the say in how the money is spent. If we make them pay the taxes, then they will demand that less money be spent. They will pursue the efficiency that they don't care about today because they're not paying for the government anyway.
People fear Google, I just hope they take over, because they are relatively efficient and competent
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
tl;dr version: If the market would bear a higher price, they'd already be charging it.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
You speak the truth. My accountant is a dear old lady who worked for the State's revenue department until retiring to open her own practice. She's, well, I'm not going to say that she's unethical or anything but she's really creative. I have no idea what witchcraft she does nor do I pretend to understand it. I'm just really grateful for her.
For my own amusement, I've done my own taxes and then brought them in for her to correct. Heh... She still bitches at me for donating anonymously. She tells me countless ways to save money. She's not devious, that's not the word. She's... Hmm... I'm just going to have to stick with "creative."
Like you said, it is indeed an art. I've been just fine after two audits after retiring. They are, I'm told, random audits in both cases but I'd like to know how they're defining random. I notice that both audits happened after I'd sold and retired. :/
"So long and thanks for all the fish."
I agree that capital gains should be inflation adjusted. So if you buy $100,000 of stock and sell it for $300,000 and in inflation adjusted terms it's only worth $250,000 then you should only pay capital gains on $150,000. But you should pay the full income tax even if you held the stock for 3 years. And you should pay Social Security and Medicare. And I don't care about the whole notion of double taxation because there we have a 35% rate in name only - they only pay 12.6% of worldwide income and Amazon, Google and Apple get away with murder. For example:
An investigation by the U.S. Senate showed Apple had paid just 2 percent tax on income of $74 billion over 2010-2012, largely by exploiting an unusual loophole in Ireland's tax code. In 2011 Google paid a rate of 11.9 percent, while Yahoo paid 11.6 percent and Microsoft paid 18.9 percent. Xerox paid 7.3 percent of its income in taxes, while Amazon paid only 3.5 percent.
In 1952, corporate taxes accounted for 5.9 percent of GDP, a figure that has fallen to 1.6 percent today. We need to have them start paying 5.9 percent again because if they don't pay it, then we will and we certainly don't have the cash.
The last time I checked, dodging taxes was a criminal offense.
Time for you to look up tax avoidance vs. tax evasion.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
Because the money is made by an American corporation an is controlled by an American corporation so it is subject to the same tax laws as all other Americans corporate or not. However, the part about paying European tax is moot as a credit for taxes paid to other countries is given in the tax code.
What this amounts to is basically you or I making money and due to some political boundaries, are able to hide it from the IRS or whatever your home taxing authority is called yet still keep control and advantage of it as if it was with you all the time. In the US, the tax man thinks all your income- foreign and domestic- is taxable. It works the same in most European countries too (at least for citizens who cannot do complicated double Irish dips of whatever in the hell it is called).
You don't actually understand why capital gains are taxed at the rate they're taxed, do you?
Yes, actually. The rate was dropped significantly shortly after Bush entered office to help out rich cronies. The economy did quite well in the previous, higher rate on capital gains.
And then Obama, with a Democrat-controlled Senate and a Democrat-controlled House, did NOTHING about it.
So maybe your "blame BOOOSH!!!" stupidity is just that - stupidity.
Either that, or Obama and the Democrats are WORSE than "teh evul BOOOSH!!!" - lie to you, then do the SAME thing "the evul BOOOSH!!!!" did anyway.
I'm going with "YOU are stupid".
There is a huge tax problem in the US. There is an 80,000 page tax code, where 79,500(1) are favoritism, cronyism, and the results of bribery. Yeah, Apple should probably be paying more, but given the current tax code they are working within the law. You don't have to like it, but if that was not the case people would be in jail for tax evasion (especially given the amount of money we are discussing).
Not only does all this favoritism mean that companies like Apple legally pay a fraction of what small businesses pay, but there is something worse afoot. Namely, that there is a massive economy built on top of this pile of corruption. I laugh when I hear people talk about flat tax or "fixing" the tax code because they ignore that the US has at least 50Billion dollars a year relying on our current corrupt tax system.
A flat tax, or even corrections to make the tax code fair, are going to put massive numbers of CPAs, Attorneys, and Accountants out of work. The few people leaving from the IRS that you hear about on rare occasions is quite frankly peanuts. Where does everyone employed by H&R Block, Quickbooks, Kiplingers, and thousands of Law firms work if we fix the tax code? Those are some high paying jobs too, so lots of middle class income requires them to be there or they take a massive hit as well.
While I absolutely want fairness, if shitty laws are on the books why is it wrong to follow the law exactly? We need to fix it, but it's not like waving a magic wand or voting for "that guy/gal" will fix the problems. I'll get off my soap box.
(1) Giving 500 pages for title, cover page, index, and boasting by writers
-The wise argue that there are few absolutes, the fool argues that there are no probabilities.
But you should pay the full income tax even if you held the stock for 3 years
The reason they do the short term rate higher than long-term is good, they're trying to slow down day trading and all the instability and insanity that model introduces. I definitely think we want to penalize short term investors for being nuisances. Sometimes even 1 year seems to short. I get tired of these quarterly reports where every financial emission of a company is scruitinized on a 3 month basis. A hardware technology company may take 2 years to change directions if they have a good year or a bad year. You won't see it in 3 month increments, what you are seeing are seasonal buying patterns and noise. But...the game continues.
On the other hand, it seems like selling the stock should be considered income, and holding it longer just gets you a big discount to encourage long term investment. But it's still income and should be taxed that way. I shouldn't be in the position of investing $100M and paying myself millions in capital gains taxed at 15%. I may have been taxed on that $100M (or may not have been...very unclear) but i haven't been taxed on the income from growth, and it is income as soon as I realize it.
An investigation by the U.S. Senate showed Apple had paid just 2 percent tax on income of $74 billion over 2010-2012, largely by exploiting an unusual loophole in Ireland's tax code.
In terms of corporate tax avoidance, the issue is that people think avoidance is illegal and immoral. It is not, it's a feature, we all do it. I do it by deducting 401k, IRA, HSA, dependents etc. Corporations have more options. The issue is not the avoidance, it is that they are able to avoid too much, and we further discourage them from realizing profits in the US, which in turn discourages them from investing in the US (real estate, capital purchases, employment, etc.). Tim is one of a few CEOs that is right out there saying "don't hate the player, hate the game", a lot of them just flat out deny they're breaking the law (true, usually) and give you the old "fuck you I got mine" spiel. We need to fix the system, but our government isn't exactly functional right now.
It's almost as if our government is dysfunctional on purpose, that perhaps having a broken government is working out really well for certain people.
if you omve into the house and its still there, and you dont clean it up, yes it is your fault
have you seen my sig? there are many others like it but none that are the same
Your points would be fantastic, if any of them were true: 1. I live amongst more educated people: While many in California feel you are better than everyone else, the rankings say...not so much. Tenth worst, actually.
http://247wallst.com/special-r...
2. Most welfare mouths are in the midwest: Here is a list of the states with most welfare population compared to working population. 1. Ca 2. NM 3. HI 4. MI 5. Al 6. SC 7. IL 8. KT 9. Oh 10. NY. Now, two of those are midwest, and because IL and OH enjoy large, urban centers.
http://brandongaille.com/welfa...
3. Most are white: Slightly more welfare recipients are black compared to white (39.8 vs. 38.8) but, black people make up 13% and white are about 63 percent, to say most are white is such a torture of reality it borders on a sickness.
http://www.statisticbrain.com/...
4. The one you did get right is that most welfare people did not finish school. However, when you look at graduation rates, places that I am fairly sure you would say are "educated" i.e. coastal meccas, are not exactly nation beaters. Ca is middle at best and New York is near the bottom. Br> https://www.washingtonpost.com...
I know making such statements are cool in some circles, but facts and links make for stronger arguments, better policy, and more honest discussion. You simply can not fix problems without this. I for one, want to fix issues, not play blame games.
"Liberalism is a very noble idea, currently controlled by some very bad people. Be sure you do not get the two confused.
So let me get this straight:
1. Party X does stuff we don't like, so Party Y campaigns on the idea that they don't like that stuff, and they're going to do something about it.
2. Party Y wins enough elections to outright control Congress and the Presidency, based on this campaign.
3. Party Y does jack shit with their outright majorities about the stuff they said they don't like.
4. Somehow Party Y still blames Party X, even though they had every opportunity to do something about it, but didn't want to do anything about it because they would rather campaign on it, than fix it.
Note: this is the same general tactic employed about practically every issue facing the United States today. They aren't interested in fixing shit, because they can use the problem to generate campaign funds through FUD.
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