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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.
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).
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Oh, c'mon, I couldn't have been the only one thinking about his cousin Hugo coming in to visit those who are "obviously deficient"...
The time for polite talks is way past.
"Transparent" is a shit show that trades on every stereotype going. A man in drag is NOT a transsexual.
The reality as always is that corporations pay nothing in tax.
Apple paid seven BILLION dollars in U.S. taxes for just six months ending in March 2015 for example.
As I stated, whatever money Apple moved back to the U.S. would be taxed at the maximum corporate rate and not subject to deductions.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
They're good at buying your politicians.
Just use a little logic would you. If you tax corporations on money they keep here but let them keep it overseas then what the hell do you think they will do? If you fix it so US corporations have to pay no matter where the money is but foreign corporations can get away with it then what the hell do you think will happen. Finally, if you fix it so all money made here is taxed here what will happen? Think about it.
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.
Is it just my observation, or are there way too many stupid people in the world?
And Taxed in Ireland.
They should add this to all product labels.
I think I need to quote Inigo Montoya on this one. Because if something is legal, how can it be fraudulent?
I am Slashdot. Are you Slashdot as well?
Apple has stated in the past that if the tax rate were reduced they would pay the tax to bring the cash back to the U.S. - they just consider (rightfully) the current rate to be exorbitant. Note that in the article the amount they want the tax rate reduced to for re-patriation is higher than they pay for taxes in Ireland.
People (and companies) will do the right thing as long as it does not hurt TOO BADLY to do so. Currently moving the money back to the U.S. would be negligent on their part and invite a shareholder lawsuit for blatant stupidity.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
That's not how it works.
Step 1: Invent some shitty cell phone nobody cares about.
Step 2: Sell shitty cellphone design to Apple Ireland for $1.
Step 3: Lease back shitty cellphone design for 99.9% of the revenue.
Step 4: Design not so shitty, sells a billion phones, pays 99.9% of the revenue to Apple Ireland.
Step 5: No profit after licenses and other expenses.
If you really want to break this pattern, force public auctions of all such transactions. If Microsoft Ireland had bid $2 on the phone design, we'd all be thinking differently!
Apple also funnels U.S. profits through a Nevada corporation to avoid paying taxes in California and other states.
http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html
"...Presidential campaign..."
And that's where I stopped reading.
They can't have their cake and eat it too.
Actually Apple and most other massive companies in the US have been doing exactly that.
The average person however, gets fed a strict diet of cake of a different kind.
-The wise argue that there are few absolutes, the fool argues that there are no probabilities.
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.
gary johnson ftw!
have you seen my sig? there are many others like it but none that are the same
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.
The reason they pay American income tax is because the USA provides the infrastructure that allows them to exist in the first place. By "USA", I mean mine, and yours, and everyone else's tax dollars.
If you are suggesting that we should provide the infrastructure for Apple and it's execs to make billions of dollars and not expect them to kick back, you are nuts.
I'm by no means expecting them to go along, tax free. I'm only stating that by paying the agregious tax IN ADDITION to the foreign taxes, they would be disadvantaged in the global market. We should encourage "USA" companies to make sales over seas and return said profits to domestic investment. That's what any country wants.
Apple complies with the relevant statutes in every jurisdiction in which they do business, and they report their finances on a regular basis. There is no fraud here, and Stiglitz can go fuck himself.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
Apple, Google, Microsoft etc won't let this heinous idea get loose.
Actually, all these companies, and many others, are strong advocates of corporate tax reform, even though they would almost certainly pay more tax. Our current system is idiotic. We incentivise companies to keep profits outside America, and to move jobs overseas. We need to stop the extraterritorial taxation (which no other country demands), and we need to align taxes on domestic profits with other countries so companies invest here.
But there is too much pandering and populism from both parties for these problems to be fixed. My company has offices in San Jose, California, and Shanghai, China. We are adding several employees this year, and whether Donald or Hillary wins, I think you can guess where those jobs will be created (hint: not in California).
The idea Apple doesn't pay enough US taxes to cover any possible use of US infrastructure beggars belief - the company paid over eight billion in 2014 alone. Apple pays US taxes on all US sales - what Stiglitz is saying is somehow Apple should pay US taxes on profits from European sales.
When a device is made in China and shipped to and sold in Germany, what US infrastructure is Apple using that needs to be supported with additional billions of dollars every year? Yes, there are some companies that do shady things like sell IP to subsidiaries and then pay huge fees to use their own IP, shifting US profits to the subsidiaries. But Apple is in a small subset of US corporations that doesn't play those kinds of accounting games.
Were I Tim Cook I'd move Apple to Ireland just to hear idiots like Stiglitz try to explain why Apple should still pay US taxes on every penny it makes everywhere.
They may need to start reporting their income as having been earned in China (where they do sell quite a few units). Which government do you think will cooperate with the US more fully in case of fraud investigations? China or Ireland?
Any guest worker system is indistinguishable from indentured servitude.
'If corporations are legal 'persons' making profit'
But they aren't. They are a legal entity owned by shareholders who have invested money in the hope of getting a return. When shareholder receive dividends they pay tax on those dividends. Therefore potentially a company pays tax twice on its income - as itself and as its shareholders.
This matters because companies can be financed by their shareholders - whose income stream is variable, dependent on a company's profits - or by bonds or bank loans, which do not allow this control, instead the company pays a fixed rate of interest. THAT payment is before the company has paid tax on its profits. This has problematic consequences: if a person wants to receive income from a company, he's likely to to do better to buy a bond, which is only taxed once, rather than a share. There is thus a tax advantage to borrowing over shareholders' funds. This is destabilising; a company can stop dividend payments when its profits fall, but must keep on paying its bond and loans.
Bottom line: it is totally legitimate to tax the income that people receive from firms. It is irrational to tax firms' profits directly. Unfortunately this is hard to explain, and our democracies don't like what is hard to explain.
Step 1: Invent some shitty cell phone nobody cares about.
Step 2: Sell shitty cellphone design to Apple Ireland for $1.
Step 3: Lease back shitty cellphone design for 99.9% of the revenue.
Step 4: Design not so shitty, sells a billion phones, pays 99.9% of the revenue to Apple Ireland.
Step 5: No profit after licenses and other expenses.
You lost me between step 3 and 4, how did the design go from shitty to not so shitty, sells a billion? You appear to be saying that the mere act of leasing it from Ireland transforms shit to gold.
I think you need to check your assumptions, but if you're right then you really should figure out if your steps for going from shitty to sells a billion can be applied to anything other than phones.
I couldn't have said it better my self, companies shouldn't have to pay domestic tax on foreign, developed, manufactured, and sold goods. The solution is simple just have an import tax on licensing fees and other methods companies use to get profits out of the country tax free. The other solution which will never happen is to adopt Fair Tax.
Knowledge = Power
P= W/t
t=Money
Money = Work/Knowledge so the less you know the more you make
And that can be explained so easily?
The idea that an idea in accounting can be explained simply is part of the reason why Trump gets taken seriously by the stupid. They've been told they have a right to understand. No - a lot of them are too stupid to understand a complex line of logic. So they dismiss it. And sulk.
If an American company designs a product in France
Apple didn't design a product overseas. They designed it here. All of the R&D happened in the USA. All of their staff lives and works in the USA (and all of their staff uses the USA's infrastructure).
companies shouldn't have to pay domestic tax on foreign, developed, manufactured, and sold goods
Well, maybe. Does this apply to Apple? Did Apple wholly design and manufacture this product overseas using no resources in the USA? Of course not. Not even close. Almost all of Apple's engineering is in the USA.
Emphasis on *could*. Sure, she *could*. *Will* she? Probably not.
Apple et. al. create the production which generates revenues to let the government (which has lawlessly taken-over functions it has no business performing so terribly and inefficiently for local back-scratching) build that infrastructure.
What came first? Apple or the US Government and the infrastructure? Are we to believe that Cupertino was a barren rock before Apple got here? It was Apple's taxes that allowed Silicon Valley to grow from a desert? The employees of Apple? Did Apple go back in time and fund the institutions that educated them?
Apple didn't design a product overseas. They designed it here.
You are missing the point. It doesn't matter where the work was done. The tax due to America is the same.
(and all of their staff uses the USA's infrastructure).
That is irrelevant. The tax is the same.
Stop assuming that the tax laws make sense.
You are missing the point. It doesn't matter where the work was done. The tax due to America is the same.
Obviously folks here are not discussing tax law but what makes logical sense. Do try to keep up.
I hope it makes the points I was trying to make clearer.
http://www.economist.com/news/...
No - I am NOT trying to reduce the burden of taxation on capital - I entirely agree that it is appropriate to tax it, and the present mess over capital gains and all the rest is a disaster. But this is about the damaging distortions that taxing equity investment more harshly than loans does, and it is a problem. Unfortunately the correct solution - increasing taxation on loan payments by companies - would rightly be seen as discouraging investment.
How we get round the perception that companies should be taxed twice - as themselves and as their shareholders - is a clear and persistent problem which the ignorance of the 'Occupy' movements ignore. Capitalism works and does bring benefits to the poorest - as the record of the decline in poverty in China clearly indicates. The free trade that has accompanied this has left victims in the west, and it's their pain that Trump and Hillary are both channelling in a depressing outbreak of selfishness at the present time.
Should 'capital' be taxed more? Certainly dead capital - such as land investments and housing for rent should (nb - I write as a residential landlord!), and the abolition of tax relief on mortgage interest payments is one of the great achievement of the British government over the past 40 years - the US should do likewise. But 'real' investment that creates productive, long term jobs? There's the challenge; if you hit that too hard growth WILL stop...
[I used the word 'potentially' in my earlier post because a lot of tax avoidance is about getting past this sort of mess of taxation. However it's not as available to little people]