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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.
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.
Apple does not have anything in Ireland other than office that says Apple. It's a shell company. So good luck with that notion that that can move operations to ireland after massive investments in the US. If they want to do that fine. Let them. Call their bluff. But it's unlikely since Apple want desperately to move profits back home.
So much for making profits Ireland.
"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.
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.