Stiglitz Calls Apple's Profit Reporting In Ireland 'a Fraud' (bloomberg.com)

Jeanna Smialek, and Alex Webb, reporting for Bloomberg: Nobel economist Joseph Stiglitz said U.S. tax law that allows Apple to hold a large amount of cash abroad is "obviously deficient" and called the company's attribution of significant earnings to a comparatively small overseas unit a "fraud." "Our current tax system encourages companies to keep their money abroad, opens up a vast loophole through what is called the transfer-pricing system that allows them not only to keep their money abroad but, effectively, to escape taxation," Stiglitz, who advises Hillary Clinton's presidential campaign, said. Stiglitz was speaking in response to a question about whether policy makers like Clinton and Senator Elizabeth Warren, a Democrat from Massachusetts, could develop a plan to encourage companies like Apple to bring their accumulated foreign earnings back to the U.S. About $215 billion of Apple's total $232 billion in cash is held outside of the country, third-quarter earnings results showed this week.

Comments

Current U.S. corporate tax equally fraudulent

[SuperKendall]

What is fraudulent is calming that the government really deserves 39% of a companies earnings. At that rate it is simply theft, to call it a tax is a joke.

That is WAY more than most other countries charge, and is the rate Apple would be required to pay if they decided to bring the money back to the U.S. (important to note as some of the Wormtongue-esque apologists for this theft claim the rate is reduced through deductions - true to an extent, not at all is this case).

Re:Current U.S. corporate tax equally fraudulent

[Anonymous Coward]

It's way more than other countries charge, and for good reason. Do you see any other country on earth with 11 carrier groups patrolling the sea lanes making global commerce possible? Do you see any other country on earth keeping the malcontents busy in their failed states rather then letting them disrupt countries worldwide? Do you see any other country on earth funding the technological R&D that makes most of these corporations possible?

Re:Current U.S. corporate tax equally fraudulent

[roman_mir]

They also knew how to escape this theft (income and wealth taxation is theft). Nobody ever paid the insane marginal corporate taxes. Nobody paid the 94 or 96% corporate taxes, nobody paid 50% corporate taxes, etc. American Revolution was fought over a puny tax, what was it 3 or 4%? The modern tax... theft system is completely out of control compared to those times. What was the point of fighting against taxation without representation at 4% then just to become a slave today?

Why encourage them?

[BarbaraHudson]

Force them. It get's their attention quicker, and there's less chance of a sweetheart deal or some sort of forgiveness. Failure to do so could result in sanctions such as loss of all copyrights and other IP. Get them by the short curlies, and their minds will follow.

The time for polite talks is way past.

Which is why we need a gross receipts tax

[Overzeetop]

Does your real estate agent take a percentage of your profit?
Does your broker base his fees on your profit?
Does your property tax bill ask what your profit was?

Of course not, so why is the US Government that? The value you get from the government running the military, maintaining safety programs,and building and maintaining our transportation infrastructure isn't based on how much you made last year, it's a fixed cost. Change to a gross receipts tax and every dollar you receive is taxed at a fixed rate. No worries about what is deductable, or what does or doesn't qualify as pre or post tax. Plus it's more easily auditable.

My town uses it and it's pretty fucking straight forward. You put down what you grossed, and you multiply that by between 0.10% and 0.37%. Yes, you read that correctly - our local business tax is ten to thirty-four CENTS for every One Hundred DOLLARS you gross. And, aside from lying on your tax forms, there's no way around it.

Re: Look for a vast increase in donations to Clint

[saloomy]

No, I think the ball is clearly in the Republicans corner concerning tax policy. The goal of Democrats is to have government control the spending, not private entities.
First off, that money would benefit America greatly IF it was used domestically to create more facilities, hire more labor, or encourage R&D spending by acquisitions or investment in US companies, or organic R&D spending, etc... etc... so I would propose making the cash import taxable, but giving a write off for spending it domestically, bolstering domestic investment. Paying dividiends or share buyback not included, since the majority of these companies shares are foreign owned.

As far as Apple specifically is concerned, they have had their fare share of bad press on these issues. They do have a valid argument as to why they operate this way: local competition.
When a company in Japan sells goods in Japan, it pays Japanese sales tax. It then pays Japanese income tax on its profits. When Apple does it, it pays Japanese Sales Tax, Japanese income tax (for that entity ( the local Apple subsidiary)), and then American income tax on top of that, three taxes. It minimizes this third tax by diverting the income to Ireland and holding it there. They and everyone else knows that this third tax creates an unfair playing field against global or international companies because domestic ones don't have to pay that transfer costs. If you feel that this tax is fair, every company will eventually build it's headquarters in China, since long term that's where the majority of their income will be generated.

Stiglitz is wrong here.