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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.
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.
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.
In 2014, corporations paid income tax accounting for under 10% of all taxes and 20% of all income taxes (Excluding OASDI). If you include OASDI payroll and wage taxes, corporations paid 23% of all taxes and 38% of all income+OASDI taxes.
Sales taxes, payroll taxes, and wages are paid by the consumer. These through some manner increase the cost of products directly. Income taxes skim the top: a business barely-getting-by doesn't pay income taxes. That is to say: If I pay $250,000 to employee wages, have $50,000 of other expenses, and have $310,000 of revenue, I pay income taxes on $10,000; if my operations grow 10x in size, I have $3,100,000 and pay taxes on $100,000. If I'm paying 10% on payroll, I've suddenly got to pay taxes on $250,000--and $25,000 of taxes! To compensate, I'll need more revenue; and to make more of whatever I'm supplying, I'll need more employee work time, meaning more wages, and more taxes on those wages. Basically, it means my prices have to go up by $15,000 for me to break even.
That doesn't mean a 40% business income tax is desirable. Business income taxes were $274 billion in 2013, SOMEHOW. Taxable business income was $2,090 billion, and wages were $7,633 billion. Wages would have about $1,700 billion of standard deductions, and total is $12,427 billion, so businesses would have under $1,100 billion in deductions in total.
Because it's so little, I typically ignore it as an accounting smudge. Business tax reform patently doesn't matter, and I am more interested in knocking down payroll taxes to produce the effect of lowering wages without lowering the amount of money that people actually take home. Sales taxes (and any form of VAT) also need to go away.
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They knew what the tax rate was in the country whose laws and protections they chose to work in. So now you're saying they should just be able to say "well that's not fair, I want to pay less"?
Apple hasn't moved head office to any of those other countries with less tax for many reasons, not a few of them are based on benefits derived from what that tax pays for. They can't have their cake and eat it too.
Sure, Corporate rates are highest in the U.S. But do you realize that the U.S. has a lower personal income tax rate?
For example, Ireland has a 48% personal income tax rate and only a 12.5% corporate tax rate. While Japan is sitting at near 51% personal and 32% corporate tax rates. While Canada is 26% and 29%. Chad has a 60% personal income tax rate.
The U.S. has a higher value on personal wealth than common wealth, while many developed countries do the opposite.
"...Presidential campaign..."
And that's where I stopped reading.
The reality as always is that corporations pay nothing in tax.
That's wrong. It depends on the price elasticity of the demand. In the end it's likely that Apple is paying part of that corporate tax, and passing another part to the consumers.
https://en.wikipedia.org/wiki/...
"The corporation merely figures taxes as one of the costs of selling a product and rolls the cost of the taxes INTO the product that people then pay for."
No. No no no. No a thousand times NO.
This stupid argument needs to die. Economics 101: The price of an item is what the market will bear. The price of a iPhone is not (Cost of manufacturing + amount of profit we want) * (100%+Tax rate). The price of an iPhone is what the analysts at Apple have worked out is the amount that maximizes the profits that they can make.
Have you ever noticed how electronic goods cost different amounts in different countries, and this correlation bears no resemblance to the tax rates in those countries? Try the steam store for hints if you haven't. The prices of those products are set by how much money companies think they can sell their products for.
If I make a widget, and I know I can get people to pay $400 for it, I don't go "Well, it costs me 100 to make, so 150+tax = 180 is what I'll charge". I say "It costs 100 to make, people will pay 400, so my profit is 400-(tax+100). That's how I make the most profit. If tax goes up, people will still only pay 400 for it, so my profits may go down. If they go up high enough, it may make sense for me to charge more and sell fewer widgets, but the base price is set by what I know I can sell the item for.
This stupid stupid stupid argument that people always raise about "passing the tax on" needs to go in the heap of half-brained misunderstandings of economics where it belongs. Stop it now.
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.
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.
they just consider (rightfully) the current rate to be exorbitant.
Oh really? They think they should pay less taxes? Shocking I say. Just shocking.
People (and companies) will do the right thing as long as it does not hurt TOO BADLY to do so
Are you serious? Corporations aren't people. Concepts like the "right thing" are absolutely meaningless. People (and companies especially) will pay as little as absolutely possible including NOTHING if they can find a way to get away with it. How do you think that conversation is going to go?
"Hey Apple, you owe $200B, but we will let you pay only $100B. For that $100B, you get a T-shirt that says 'I did the right thing!'. Or you can keep stifling us with your army of lawyers. What do you think?"
Duh?
Why dont you just fuck off already? Why should a company be charged anything to bring its money home?
Umm, let's see. Because the USA provided the infrastructure that allowed them to exist in the first place let alone making billions upon billions of dollars. People, and corporations like to put out this idea that their earnings sprung from barren rock on an island somewhere in the Pacific Ocean. Corporations can make money because nations (actually the tax payers in those nations) allowed them to.
Look up the 1957 Federal revenues per capita, and adjust for inflation. You'll find the revenues per capita today is a little over twice as much as that in 1957. While the nominal tax rates are lower - the effective tax rates now are considerably higher.
Note too that the last time the Federal Government actually ran a real surplus (meaning - no new debt because we paid for everything, didn't borrow to buy) was in 1957 with half the effective tax rate. Spending has gotten insanely out-of-hand, and the calls by Stiglitz and others to "raise more revenue" will just ensure spending accelerates even further. At least that's what history shows - as revenues increase, spending increases even faster.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
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.
Well, yes, the modern state infrastructure is also out of control compared to those times. Get rid of the highways and the standing military and national intelligence services and the space programme etc. etc. and you can lower the taxes.
Ezekiel 23:20
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).