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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."
All of that money is money earned overseas. So it's not "funneled" anywhere, it's just not brought back
Why? Because the government makes it absurdly expensive to bring money back to the U.S. - money Apple has already been taxed on overseas.
Apple has said repeatedly it would be happy to bring that cash back if it had a much more reasonable percentage to pay in taxes on it. So if the government really wants it, it can have that money any time simply by making the tax rates for corporations something more in line with what the rest of the world has.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Hmmm .. from Apple's new headquarters gains approval of Cupertino City Council back in 2013
The Cupertino City Council voted unanimously Tuesday to reduce the annual tax break it gives Apple (AAPL) -- America's most valuable company by market capitalization, with a net income last year of $41.7 billion -- by 15 percent. Having wrung that concession from its richest corporate resident, the council then voted unanimously to give its final blessing to Apple's proposed new headquarters. The spaceship-shaped building has now officially landed.
Back in 1997, when Apple was on the verge of collapse, the city agreed to return 50 percent of the taxes generated each year from Apple's business-to-business sales as a way to help maintain the company's health and, more importantly, its Cupertino address.
Sounds like someone made a deal with the devil and now has a bit of buyers remorse.
I am Slashdot. Are you Slashdot as well?
Companies like Apple or Facebook that are basically IP and IT driven will soon anyway found their own "countries" on floating islands.
Tax their products ... not their money/earnings, that is much easier.
Cost free eBook I read (by iBook/Kobo/Amazon/ObookO/Gutenberg etc.): "The Green Odyssey" by Philip Jose Farmer.
Agreed, except this isn't how US corporate income taxes work. The reason Apple has all that cash parked overseas is that the US wants to tax Apple profits on products sold everywhere, not just in the US.
Even if we made the change to the US tax system that you suggest (move to a where earned from a HQ model), corporate taxation would still be a complex topic. If Apple sells an iPhone in Germany, it should pay taxes in Germany on that profit. But how much profit was really generated there? What's the "right" cost of that iPhone to Apple's German subsidiary?
Dear Mayor Chang,
What part of "building permit" and "property taxes" don't you understand? If you folks let Apple build a giant doughnut in Cupertino without the city collecting adequate local taxes on it, you can hardly blame us, can you...?
your friend,
Tim Cook
City Government: Please come to our city, Big Business! We'll give you incredible tax breaks! We'll practically pay you just for existing here!
Big Business: I don't know. That "practically" sounds kind of hesitant. Besides, there's a bunch of other towns down the road that might offer us a better deal.
City Government: Fine, we will literally pay to just to keep your corporate headquarters here. We'll give you the land for a pittance. We'll fast-track the permitting process. We'll give you a zoning variance. None of the city ordinances will apply to you. And no direct taxes on you, we promise. We'll make it up by taxing our citizens, who will probably mostly be working for you from here on out.
Citizen: Hold on. I was busy with my life just then, but it sounds like you're going to let some huge company move in and take over, and use my taxes to build a new thirty-story corporate headquarters in my front yard, and then crank up my taxes even more to make up for the taxes you spent on them?
City Government: Yes, but you'll be able to afford it, because you can get a good job at the company!
Citizen: I like my job now. I don't want to fucking work for those fuckers. I don't want a bunch of douches coming in and putting in 17 Starbuckses on the same street and making us all have to sort our garbage into eight separate bins and raising the rents to ridiculous levels so we have to all move out.
City Government: We hear your concerns. But we really want more tax money to play with. So, fuck you. Leave town if you want. Don't let the screen door hit you on the way out.
[Decades later.]
City Government: Hey, Big Business, uh, while our tax revenue has been growing continuously for decades now, it turns out that our expenditures have been growing even faster, because it turns out that a lot of money is not infinite money. We need infinite money. All our planning is based on infinite money. You need to give us more money. That'll get us closer to infinite money.
Big Business: Fuck you. Learn to do math, assholes.
City Government: I'm afraid we really must insist. We're going to raise your taxes.
Big Business: Then I guess we'll just move down the road to the next city. See you later.
City Government: But... but... you can't!
[But it turns out they can. Return to top and start again.]
So all those high paid Apple employees don't pay property taxes on their homes in the area? They don't pay sales taxes on the stuff they buy around town?
How does a local city government think it is entitled to tax revenue earned on sales in (other country) after the company already paid (other country) income taxes?
Yes. That is how taxation works. You pay local, state and Federal tax don't you? Are you stupid?
Hey, it makes sense.I don't know if 15% is the magic number, but I'm thinking it is likely in that ballpark....
However, if nothing else...you can NOT blame a company or a person, for taking advantage of every legal tax law to save as much of their hard earned money from the tax man.
I mean, do everyone one of ya'll, take every deduction you possibly can, or do you happily give more than you would owe if you took advantage of all deductions you could that are available to you?
I tend to doubt everyone is as altruistic as they think other folks/companies should be....
If you don't like how things are done, then do AWAY with the old tax code.
Make it simple for companies.
You make $x. Your expenses for the year were $y. You owe z% of ($x - $y). Bang...dead simple, no huge inflated tax rates that are just bypassed by loopholes/deductions. Company spends MUCH less on accountants. And Federal Govt has much less control over the citizens. This is especially true if you (as I assume) are also simplifying the tax code for individuals too.
If you don't like tax loopholes/deductions...then get rid of them all.....and simplify the laws. And quit trying to use taxation as a way to manipulate behavior...last I looked, that was NOT one of the few Constitutionally enumerated responsibilities and powers of the Feds.
They need to tax to get revenues to serve the populace, period. Nothing more.
Light travels faster than sound. This is why some people appear bright until you hear them speak.........
The 180+ billion dollars we are talking about are corporate profits that have basically never been taxed. Some of this represents profits generated in other countries, but much of it was profits from the US that was moved off shore. Apple sells intellectual property to subsidiaries in tax havens for a low price, then leases the technology back to its US based divisions at high prices. The books for the US based entities therefore show low profit and are barely taxed, even though Apple, as a whole, is raking it in.
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?
Well, good for you. However, that's not the law. If you wish to change things, you need to have your congress critters change the "technically" to be the same as the "right and proper". Until then, you cannot fault most people for following the law as written. It isn't up to you or the govt to legislate morality on what is right and proper, in terms of money.
Well, I'd dare say most of us, feel that we at this point overpay for what we get in services rendered.
So, perhaps the govt needs to do what most families do....learn to budget, and be able to figure out what they can afford, and what programs within that budget they can afford to do properly, and say "No" to things that can't be afforded.
Remember, this country was built on the concept of individuality....if you want more of a European socialistic society, where everyone pays to support the collective, and where they believe that the govt. knows better than YOU how to redestribute and spend YOUR money better than YOU do...there are plenty of places to live that fit that model.
But that is not historically what led to the US gaining the strength and economic might that it has (had).....and why you see much of Europe having fiscal woes. At some point, there are too many trying to get the free ride on the tails of fewer and fewer worker bees. It's all over once the public learns how to vote themselves money out of the public coffers.
Light travels faster than sound. This is why some people appear bright until you hear them speak.........
"They're making profit, and they should share the responsibility for our city, but they won't. They abuse us."
Frankly, I agree.
Stashing your money offshore is done for one reason: to avoid taxes.
Big companies like Apple can get away with it but you and I can't. If you or I tried to do this we'd be prosecuted for "tax avoidance".
Just cruising through this digital world at 33 1/3 rpm...
Apple seems to be front and center in this debate but what about General Electric? http://www.sanders.senate.gov/...
"From 2008 to 2013, while GE made over $33.9 billion in United States profits, it received a total tax refund of more than $2.9 billion from the Internal Revenue Service.".
Not only did GE not pay any corporate tax they got a $2.9 billion dollar REFUND from Uncle Sam (i.e. you and I).
I'm not blaming GE, or Apple for that matter, for trying to minimize their tax burden. But when politicians start jumping up and down about it - about a tax system that THEY crafted - it seems to me the blame is misplaced.
The whole system is rotten to the core and both Republicans and Democrats are to blame for this. It seems to me there are one of two ways to fix it. Either go to a flat tax system for both individuals and corporation or just outlaw lobbyists entirely and get the dirty money out of the system.
Vote for a person who is not your current congressperson. Get others to do likewise if possible.
Last election cycle: 94% re-election rate; 14% satisfaction with congress.
As long as these elected officials continue to work to convince their constituents that it's always the other congress-critter's fault, there will be no change. There's no reason for them to change their behavior as things stand right now. Tell the new guy that if he doesn't knock off the corporate "donations", he'll lose his job, too.
But pointing at Apple and saying they are doing a bad thing by doing precisely what their stockholders expect them to do? That's not going to get anyone anywhere useful.
The vote is the last (perhaps only) tool we have left to us to even have a hope of remediating our slide deeper into oligarchy. Use it or not, your choice. I do. Every time.
I've fallen off your lawn, and I can't get up.
Middle-class doesn't stockpile money anymore, much like the poor.
Only wealthy individuals and corporations do, and it's a huge detriment to society.
Assets stockpiled (held in excess) anywhere should be taxed to prevent an economy from drying up when a handful of The Rich have everything.
It's called a Wealth Tax. France has it. America needs it.
Without it, humanity cannot survive a fully-automated economy. Since 2008 America experienced a "Jobless Economic Recovery" via automation. This isn't Science Fiction, it's today. Humanity needs wealth taxed.
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and notice how development skyrocketed in the 80s as taxes fell???
See how the middle class shrunk, real wages stayed stagnant and infrastructure fell apart?