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Cupertino's Mayor: Apple 'Abuses Us' By Not Paying Taxes (theguardian.com)
An anonymous reader shares a report on The Guardian: Apple pays a 2.3% effective tax rate on its $181bn in cash held offshore, according to Citizens for Tax Justice, a not-for-profit research group focusing on tax policy. Citizens for Tax Justice estimates that Apple would owe $59.2bn in U.S. taxes if the money weren't funneled into offshore shell accounts. Criticism over the company's offshore tax schemes has become more pointed in recent months, both locally in Cupertino and from Apple's own staff. At a recent Cupertino city council meeting, some residents protested about a lack of funding for public projects, Barry Chang, Mayor of Cupertino said: "They ball up the paper and throw it, and they say 'You're making all the wrong decisions'," Chang said. "In the meantime, Apple is not willing to pay a dime. They're making profit, and they should share the responsibility for our city, but they won't. They abuse us."
In the case of many corporations, a good deal (~40%) of their profits come from overseas. So yes, if heavier taxes were levied on them, foreign nations who purchase goods designed/made by United States companies would contribute to the U.S. tax system. That seems perfectly legit.
Taxes are levied, in theory, on agents who benefit from protections and perks offered by the United States. If a corporation is based in the United States and especially if it's publicly trade in the United States, it enjoys immense benefits and protections offered by the laws of the United States both domestically and abroad. From legal protection of its various properties to the infrastructure built to allow it to operate its design and research centers to the American talent it can draw upon to invent.
The later especially applies to tech companies. Their competitive edge is gained by hiring the talent available to them in the United States. Why shouldn't their profits -- no matter where they earn it -- that is derived from the inventive and productive power the US offer be taxed to benefit the system they've benefited so much from?
I know San Jose was licking its chops at that idea since they have been trying to get Apple to move its corporate headquarters for years.
Fast forward several years later, Apple is bringing 4.15-million square feet of office space to North San Jose over the next 15 years. In comparison, the Apple HQ in Cupertino is only 2.8-million square feet.
http://www.sfgate.com/business/article/Apple-gets-green-light-for-massive-San-Jose-6786465.php
But with the crash of the Euro, it would be have been less expensive to bring it back and pay the taxes. Only a fool keeps cash in the Eurozone.
No, its less expensive to take the 18% loss in EURO/USD exchange, 1.35'ish to 1.1'ish in the last 10 years.
http://www.xe.com/currencychar...
So with a US tax rate of 35% and an Irish tax rate of 12.5%, Apple would owe the US government the difference, 22.5%.
http://www.cbsnews.com/news/ap...
So they save about 4.5% even with the Euro's devaluation relative to the US dollar.
Consider that Apple has expenses in the Eurozone so that local cash can be used to pay those. Plus any new expenses, new stores, new R&D facilities, any acquired EU based companies, licensing any EU based tech, etc. The point (or problem from the US perspective) is that with all that cash "stuck" in the EU Apple will naturally look at ways to spend that cash in the EU. US tax policy encourages US corporations to expand overseas rather than bring those profits home to the US.
Now consider a 15% tax rate on overseas earnings. Apple would only owe 2.5% to the US government. Fear of currency devaluation would matter. The barrier to bringing those profits home would be negligible. But its not just the money collected by the US government through taxes, now that money can spur economic activity in the US rather then the EU. More R&D in the US, more acquisitions in the US, etc. Those robotic factories that are going to disassemble devices for recycling? Maybe those robots could be used for assembly too and we could have more manufacturing in the US, some low volume Macs are assembled in the US. Money is flowing in the correct (US perspective) direction with respect to foreign trade deficits.
Maybe make that 15% tax rate conditional on re-investment in US based plants, equipment, research, etc?