Apple Explores Making iPhones in the US, Finds 'the Cost Will More Than Double': Nikkei (nikkei.com)

Apple is exploring the idea of making iPhones in the United States. But the company has realized that it will cost more than double to make the shiny new gadgets at home, according to a report on Japan-based outlet Nikkei. From the report:Key Apple assembler Hon Hai Precision Industry, also known as Foxconn Technology Group, has been studying the possibility of moving iPhone production to the U.S., sources told the Nikkei Asian Review. "Apple asked both Foxconn and Pegatron, the two iPhone assemblers, in June to look into making iPhones in the U.S.," a source said. "Foxconn complied, while Pegatron declined to formulate such a plan due to cost concerns." Foxconn, based in the gritty, industrial Tucheng district in suburban Taipei, and its smaller Taiwanese rival churn out more than 200 million iPhones annually from their massive Chinese campuses. Another source said that while Foxconn had been working on the request from Apple Inc., its biggest customer that accounts for more than 50% of its sales, Chairman Terry Gou had been less enthusiastic due to an inevitable rise in production costs. "Making iPhones in the U.S. means the cost will more than double," the source said.

Comments

So?

[kimvette]

So they would make $300+ per iphone rather than $500+ per iphone. It's still over a 100% markup, so I fail to see much of a problem.

Re:So?

[Anonymous Coward]

"According to research company IHS Markit, it costs about $225 for Apple to make an iPhone 7 with a 32GB memory, while the unsubsidized price for such a handset is $649."

So the Handset costs $225 to make, retails for $649, and Apple tends to target about 26-30% profit on each device they make. So let's say Apple is making about $195 (~200) profit per device, so Apple's overhead for marketing, retailing, R&D is about $229.

By doubling the cost to manufacture, you are at $450, adding $229 gives you $679 already, so Apple would be losing money charging $649, let alone trying to target 30% profit.

The $649 phone would wind up being around $880. No shipping costs would really be saved because I am assuming the components for the iPhone would still be sourced from China because that's where the supply chain is nowadays, maybe they factored it into the doubling.

Re:So?

[ShanghaiBill]

So they would make $300+ per iphone rather than $500+ per iphone. It's still over a 100% markup, so I fail to see much of a problem.

No. The component cost would not double. Only the labor cost. The component cost for an iPhone 7 is estimated to be about $250, and the assembly labor is estimated to be about $10. The average sale price is $649, leaving a marginal profit of roughly $390 per phone. If the cost of assembly doubled, that would decline to $380.

The figures would be different if the component manufacturing was also Americanized, but since most of the components are made by Asian companies, I don't see that happening.

Disclaimer: I didn't vote for Trump, and I think the government telling companies where to make their products is idiotic, but, at least in this case, it would make little difference in the price.

Re:So?

[ShanghaiBill]

That's not how profit works. There are a bunch of other costs which eat into that number, such as designing, engineering and proving the device just to name a few.

You seem to be unfamiliar with the term "marginal profit". Lmgtfy.

Re:So?

[ranton]

No. The component cost would not double. Only the labor cost.

There is nothing in the article which makes this claim. Did you read it from another source?

The article clearly states production costs would double (with no labor / component distinction), and that those costs are currently estimated at $225 for an iPhone 7 with a 32GB memory. So this clearly means the production cost would increase from $225 to $450. The accuracy of statements coming from Foxconn is certainly up for debate, but you seem to be just making stuff up.

Re:So?

[LeftCoastThinker]

In developed countries, like the US, we have this thing called automation. It is more reliable than manual assembly, it just requires initial investment. Once you invest in automation, you can hire Americans who have a manufacturing engineering degree to work at the plant and let them work to ensure that the automated systems run smoothly/get updated/maintained. Instead of 10,000 workers making $20k/year, you have 1000 engineers making $90k/year.

This is just PR BS from Apple because they know that Trump is going to start a trade war with China until we have a level playing field. All of the mega-corporations have been screwing over the US and the environment to squeeze out a few more bucks, and that is going to end with Trump.

Re:So?

[ShanghaiBill]

There is nothing in the article which makes this claim. Did you read it from another source?

No, I got it from a different resource called "my brain" using a technique called "thinking". There is no reason whatsoever that component costs will significantly change just because the phone is assembled in America. Only assembly costs would change.

The article clearly states ...

The article does not "clearly" state anything. It is muddled writing by an incompetent journalist.

So

[IWantMoreSpamPlease]

If the cost to make them will "more than double" does that mean they will double the price passed on to us? In other words, will they double their profits as well? Or are they screaming and crying how they won't be able to make them "cost effectively" in the mean-old-USA.

In other, other words, how much profit in built into an iPhone anyway?

Re:So

[kuzb]

It's estimated that the iPhone 6+ costs about $236 US to make. They've been gouging customers for years.

Re:So

[JustAnotherOldGuy]

In other, other words, how much profit in built into an iPhone anyway?

That metric really depends on how many child laborers you can fit into each factory.

Re:So

[CaptainDork]

They are charging too much for their broad offering of products

"If Apple's cash hoard was its own company, it would be the 11th largest company in the S&P 500, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indice."

They have a shit load of cash.

Re:So

[Tx]

How much is too much? Basic business rules say that you charge as much as the market will bear. Since the biggest problem with selling the iPhone 7 at the moment seems to be getting enough of them in stock to satisfy demand, I would say that the market is bearing the current prices just fine. Thus they cannot be said to be charging "too much".

Re:So

[MightyYar]

Apple is selling at monopoly prices.

And yet, I - like most smart phone owners - have an Android phone that cost less than $200. There is no monopoly here, only a company that has a happy and loyal customer base.

Re:So

[CaptainDork]

They can and do charge too much.

By way of example, look at Bill Gates.

That simple bastard charged so much he can't burn through his cash before he dies.

Re:So

[kuzb]

There's a difference in what is considered "reasonable" when talking about $1.50 vs $800+. Most people don't consider $1.50 unreasonable, even if the coffee only costs $0.01 to make. Sure it is technically gouging, but it's also very easy to make your own coffee if that's unacceptable to you. Try making your own smartphone.

Re:So

[bluefoxlucid]

Most companies (Apple and Microsoft being notable exceptions) have narrow or unstable margins (and even Microsoft has a cycle of loss years and profit years). The average profit margin in U.S. in total is 10%; 90% of income goes to wages.

All wages are paid from revenues; revenues are paid from sales; and sales are paid from income. Making a product requires labor from many people, fractioned together. If you have 100 people at $10/hr making 1,000 widgets per hour, that widget costs $1, and can have a price no lower than $1. Each of those people, in that 1 hour, makes enough money to buy 10 such widgets.

In one sense, those people are trading widgets for other widgets (or food). In another sense, they're trading labor for labor (time). When you make $20/hr, you're essentially trading 1 hour of your time for 2 hours of theirs.

That means money is kind of a closed system. There's a limited amount of income in any time frame, which determines what can be bought and what jobs can exist at that technology level. When you add in trade, you're moving income between isolated trading partners, which works the same way. Central banks can issue more money, allowing banks to give loans, allowing consumers to spend more, which adds money to the system; however, this counters technical progress (which causes deflation) and enables inflation (which makes your loan payments shrink in purchasing power over time). In the end, you're still dealing with trading hours for hours; mucking about with money just creates (and modifies) a representation of that time.

It gets more complex than that.

We can modify time.

Over a 100-year span of time, you can safely increase the level of technology such that productivity goes up by 10 times. If, overnight, you double productivity, then you have a need for half as many workers, and get instant 50% unemployment (this is the fear with automation); that collapses your economy. If you do this slowly over years, you create some unemployed, and then create a need for more jobs as prices fail to keep with inflation: your costs drop because the same wages are paying for less time, so the wage cost lowers, and market pressures still set you at the same general profit margin.

So you get enough technical progress to make 10 times the stuff in the same labor. The same proportion of dollars doesn't reflect the same buying power; or, to put it simply, 1 hour of labor buys 10 times as much stuff. That means even a 10% profit margin is 10 times bigger, because it's 10% of money representing the labor costs of making a thing, and that's kind of huge.

So the answer to your question is complex. The short answer is the profit margins stay the same, in the long-run; and the prices go up to adjust for rising costs (or down to adjust for falling costs--though "down" can be slower if the market isn't experiencing a flurry of change and competition). Those margins would actually have less purchasing power if industries have higher costs.

In the long-run, technical progress as I described drives the entire progression of economies. In the short-term, wage inequality and other opportunistic behaviors create fluctuations. It looks something like this. Trade tends to lower prices; Malthusian growth tends to adjust out any jobs you gain or lose through trade deals etc., so both the job creation argument and the job loss argument (we'll lose jobs if we pay American workers over a certain wage to replace Chinese manufacture--it's $18/hr for men's cotton pants, for example) are meaningless.

Rising costs mean more poverty and poorer people--not poorer rich people, but poorer consumers who have to barter their time against the time of other working-class workers. It is mathematically-impossible to disconnect wealth from the total wage cost of making products.

Wait...

[MitchDev]

If making phones "at home" means America, why aren't they paying their taxes here?

So let me get this straight....

[Anonymous Coward]

Apple looks into making the phones in the US and their answer is to ask the Chinese company they're currently using, who has no interest in making them in the US, how well that would work? And surprise surprise, they came back with, "sorry, costs too much, you should keep making them here where we already have our facilities." I'm shocked, SHOCKED!

How about investigate US-based companies? How about an investment group who might be able to put together a group who could find a way to do it more cheaply here?

Re:So let me get this straight....

[Anonymous Coward]

Just FYI, Foxconn operates factories in something like 14 different countries. Doesn't seem that strange to ask them to mock up a plan to set up a factory in the US. After all they do have all the manufacturing expertise for those devices, what US company even makes anything related to that sort of device to ask?

Re:So let me get this straight....

[joh]

The US totally lacks the industrial infrastructure for that. OK, you could import all components and build a robot factory assembling iPhone from these, but where's the difference then?

All of this became how it is because people buy cheaper goods over more expensive ones, just as companies make their products where it's cheaper to make them. This goes all the way back to people trading foodstuff against other things, because it was cheaper this way than to make them themselves. Global trade has been used by some people to enrich themselves, but without that there would have been less competition and the rich would be even richer. Look at your ISP. Much competition? No. Good prices? No. Start a trade war and everything will go this way. You will have one or two companies making smartphones and they will rake in money while screwing you over. But of course, try it. I'm all for it. Better try and fail than always talking and never doing. Some of you people are so angry that I'm all for handing the wheel to you.

Re:So let me get this straight....

[D00MSlayer]

Both Intel and AMD manufacture their CPU's in the US, is manufacturing a phone that much different?

You can also probably look at this list to find others:

https://en.wikipedia.org/wiki/...

Re:So let me get this straight....

[cdrudge]

Well, obviously it would be a gigantic room.

Re:So let me get this straight....

[phantomfive]

Apple looks into making the phones in the US and their answer is to ask the Chinese company they're currently using, who has no interest in making them in the US, how well that would work?

Foxconn is Taiwanese. They would probably be more than happy to reduce their dependence on China, which is a tenuous relationship at best.

Re:So let me get this straight....

[Orgasmatron]

The difference is that when someone thinks, "Hey, I can build a component factory here, down the road from a big customer." that someone will be here instead of there - and so will be the factory and the jobs. And later, someone else will think "Since I've got all of these components being built right here, I should build my widget here too."

That's how Detroit grew, and how it died. When it was growing, the answer to "where?" was Detroit (and Chicago, Milwaukee, Toledo, Cleveland, Eerie, Buffalo, etc). When it was dying, the answer was China.

Cost will double?

[skaralic]

According to this article. The $649 iPhone 7 costs around $220 to make meaning that Apple gets roughly around $400 in profit. Lets imagine that the cost does double, they will still be getting ~$200 per phone. A very healthy profit with a lot of that money staying in the US rather than China or Ireland.

Also, the cost doubling calculation (done by Foxcon!) probably assumes that they would do things exactly the same in the US as they do in China. That is, hiring thousands of people for minimal pay to to a large part of the assembly by hand. However, if moved to the US they would probably automate more of the process and employ much less people. Think of the savings on suicide netting alone.

Re:Cost will double?

[JoeyRox]

Allowing external forces to decide what a healthy / acceptable profit margin can be is the surest way to destroy capital investment by businesses.

Re:Cost will double?

[Yvan256]

And you think machines never think of suicide?

[Barney Stinson] Have you met Marvin? [/Barney Stinson]

Re:Cost will double?

[Freischutz]

According to this article. The $649 iPhone 7 costs around $220 to make meaning that Apple gets roughly around $400 in profit.

That assumes that Apple has $0 development costs, $0 shipping costs, $0 distribution costs, $0 marketing costs, they have $0 related to sales, $0 costs due to keeping an adequate inventory of iPhones on hand to supply distributors and of course there is $0 wastage (theft, etc.). Also, because we all know iPhones never break down, Apple has $0 costs related to returns and warranty repairs. Methinks that the your formula:

retail price - manufacturing costs = Apples profit per iPhone sold

...does not quite hold water

Re:Cost will double?

[imgod2u]

Most of the cost increase will probably come from having to ship parts back and forth. A great deal of China's appeal for manufacturing is that you can get almost any custom screw, panel, molding, etc. in a day vs months in any other place. There's just so many companies there setup to be someone's supply chain and they've had multiple decades to perfect the process of turning concept into tens of millions of parts in a very very short amount of time.

Compared to that, the labor costs are miniscule.

Re:Cost will double?

[Oswald McWeany]

So, if your employer were to call and say, skraralic, we notice we've been paying you $50k a year. We've decided to pay you $25k a year instead. You'll still be making a salary.

You would think that is just and acceptable?

Re:Cost will double?

[JoeyRox]

You're probably right. If we do switch to protectionist policies and the price of everything starts rising they'll all be looking for something to blame and I'm sure it wont be their own ignorance of the free market.

Re:Cost will double?

[JoeyRox]

I agree that moving production overseas has hurt many workers but what about the benefit all Americans have received in terms of lower product prices? How do we balance that?

Re:Cost will double?

[Orgasmatron]

Amusingly enough, Trump has tossed around the idea of a 35% tarrif, which works out to $227.15 on a $649 phone.

Re:Don't worry

[Dog-Cow]

This is an Apple story. That would be the option-Constitution.

Re:profit margins, and protectionism

[r1348]

Exploiting foreign underpaid workforce is, instead, perfectly acceptable.

Re:So what?

[Joce640k]

This is just starting some per-emptive whining because Trump has mentioned that he's going to make Apple manufacture in the USA.

I'm not sure how he thinks he can legally do that. A better solution would to to make Apple pay its taxes.

Re:Focus on automated assembly

[BasilBrush]

Your stereotypes are way out of date.

"The average factory worker in China earns $27.50 per day, compared with $8.60 in Indonesia and $6.70 in Vietnam. "
http://www.economist.com/news/...

Re:So what?

[Curunir_wolf]

This is just starting some per-emptive whining because Trump has mentioned that he's going to make Apple manufacture in the USA.

I'm not sure how he thinks he can legally do that. A better solution would to to make Apple pay its taxes.

Right. And that could come in the form of a special tariff. I'm told the cost to make an iPhone is around $178. So add a $178 tariff to each one, and it makes the choice very easy for Apple. They can either start making them in the US, providing jobs to Americans that can then more easily afford an iPhone, or keep making them in China where pollution controls are very low and worker protections are even lower.

Re:Labor expenses are a tiny part of total cost

[imgod2u]

The thing about moving it to the US isn't about labor cost. It's about the loss of the giant manufacturing supply chain that only exists in China.

If you want to make *anything* here in the U.S. you either wait months for some mom-and-pop shop to custom-make a mold or glass panel for you. Or you call up a Chinese manufacturer, send them a drawing and have 100k parts ready in about 2 days.

Just getting a printed-circuit board made in the U.S. costs ~20k for some PCB contractor and around 2 weeks for a prototype. There are shops in China you can send a schematic to that can send you 100k boards ready for production in 2 weeks for ~5-10k. Hell, if you want they can even take it the rest of the way and assemble the entire product for you.

You won't find *any* place in the U.S. to do that for you. Even if you're willing to pay money for it.

Disclaimers attempt to pre-empt racist accusations

[drnb]

Why do posts have to come with

Disclaimer: I didn't vote for Trump?

Because in these "politically correct" "entitled to a safe zone on demand" times anything hinting of Trump support is "hard evidence" that a person is a racist and a misogynist. There is no possibility that a person might think a Trump proposal might actually have merit or at least be the least worse or two bad proposals.

Disclaimer: I voted, but not for Trump nor Hillary.

Re:Labor expenses are a tiny part of total cost

[Tailhook]

I've read that the labor costs involved in building an iPhone are roughly between $12.50 and $30 per unit.

When you're employing disposable Asian workers with no rights or protections labor costs are low. When you don't have to employ teams of environmental compliance experts and sexual harassment lawyers and all sorts of other people to comply with the realities in the US it costs a lot less.

This whole story is suspect; Foxconn is not impartial here. That huge outfit is wedded to the Chinese government and the Chinese government doesn't want any change in the current pattern of evacuating the Western industrial base to China. So Apple asks this foreign manufacturer to calculate the cost of a domestic alternative and — big surprise — the foreign manufacturer concludes the cost is infeasibly high... Yeah. Whatever. They may be right but they aren't credible.

The story is so thin it's hard to see; no analysis, no breakdown of how they computed anything. Just an unsupported press release. So it's just a trial balloon being floated by Apple+Foxconn. Propaganda in other words. Yet here it is, ricocheting around the liberal echo chamber as unassailable fact; "see look Trump stupid herp derp."

Re: They would also have to pay for the plant

[drnb]

China ain't gonna just stand buy and let all their hard work go down the drain. Expect a fight.

We are already in a "fight". The proposals are merely about "fighting back" rather than just "taking it". For example see China adopting US and EU made jet engines but require technology transfer and manufacture in China, while simultaneously planning to switch to domestic jet engine companies in a decade after the necessary expertise is accumulated. If Chinese markets were to become more open to US goods and services (including forgoing the requirement of domestic partnerships), IP was better protected, and a rule of law more fairly applied (see Fellows paper shredder case) then its unlikely factories in China would be a "big" issue.

Re:Focus on automated assembly

[jellomizer]

In short that will happen. This double price if made in America is based if they make the phones in America the same way they do in China.

The low skill manufacturing job is going to go out the window, no matter how much the low skill laborers complain and have political pressure. Because It comes down to simple business. Hire 20 people at 100k a year and invest 50 million in automation that can be depreciated over 20 years. vs hiring
100 people to work the line at 50k for 20 years.

It is more economical to pay more of the skilled labor with automation vs. Lower waged workers to do the grunt work.

Re:First-world neighbour

[Oswald McWeany]

yeah... poor Canadians having to deal with the third world on their Southern border.

Re:So what?

[laird]

Apple tried to manufacture the iPhone in the US initially. The reason they didn't wasn't wages - in highly automated mass production, wages are a tiny percentage of cost of goods. The "deal breaker" was that the US didn't have enough industrial engineers to manage the production lines. Apple would have had to hire 100% of the new graduates from all US universities for 3 years to have enough engineering management to run the lines. The secondary issue is supply lines. All of the suppliers manufacture in or near Foxconn in China, so they can iterate on designs in hours, rather than weeks (shipping). So, to be in market years earlier, and with maximum agility, Apple had to be in China. Manufacturing on a large scale in the US was killed long before the iPhone launched.

The cost to Apple doubles, driving up retail $6.

[mr_mischief]

The cost to Apple doubles, driving up retail $6.

The manufacturing cost of an iPhone 6 is about $5. The parts and materials cost around $220.

Making it cost $10 or $11 to manufacture isn't going to break anyone.

http://www.zdnet.com/article/h...

Re:So what?

[K. S. Kyosuke]

And then, the Laffer curve will bite him in the ass?

Re:So what?

[Joe_Dragon]

no they where not able to find industrial engineers willing to work 60-80 hours a week for $32K a year.

Re:You forgot most of the costs

[BronsCon]

So the phone originally cost Apple $260 to make, then costs another $350 to replace under warranty, and they only get to keep $495 of the $695 retail price of the original sale? So... The cost to Apple of the original sale, plus replacement, is $610 and they only get $495 of that original sale? So they're assuming a $115 loss (before facilities, taxes, and paryoll) on every 32GB iPhone 7 sold?

Nah, I think the reality is more along the lines of: we're looking at a BOM cost built using retail pricing rather than Apple's bulk pricing, or even what you could get parts for at a Shenzhen market. Think closer to $50 in parts and $65 for the warranty replacement, with the retailer getting $150 of the retail price; Apple gets to keep closer to $430 of the retail price. Also, remember that Apple has been working on Campus 2, a $5B expenditure, since 2010; not all of that $5B is attributed to the iPhone, let alone the iPhone 7. None of the remaining $10B in facilities is attributed to the iPhone. The total labor cost of an iPhone by the time it reaches EOP (remember, each unit reduces the non-manufacturing portion of this cost) is around $30. We'll circle back around to facilities in a moment, but I want to clarify that, after labor, Apple still has $400 of that retail price in their pocket; call it $399, landed.

Now, Apple will sell 75 million iPhones this year, which will net them just over $29.9B after materials, labor, and shipping. Even if they had to pay their entire facilities cost out of that, they'd have a profit of nearly $15B.

Double the manufacturing labor cost ($20 -> $40), which increases the overall labor cost per unit to $50 and they still pull in just over $28.4B before facilities. Double the entire cost (including that warranty replacement) and they make $19.8B before facilities. Worst case, if they had to pay for all $15B of facilities costs out of one year of iPhone sales, they're still left with $4.8B in profit for the iPhone alone; that's what they'd be taxed on.

Of course, since the warranty replacement rate on the iPhone is less than 100%, I did not factor in Apple Care, and I only considered the 32GB model (which represents the lowest profit margin), my numbers are a bit low.

Re:So what?

[MickyTheIdiot]

When so many corporations get around their taxes completely, what can cuts do.

We keep doing the same bullshit over and over and over. Cutting corporate taxes helps the corporate class and does little for anyone else.

Re:So what?

[starless]

Right. And that could come in the form of a special tariff. I'm told the cost to make an iPhone is around $178. So add a $178 tariff to each one, and it makes the choice very easy for Apple. They can either start making them in the US, providing jobs to Americans

And the Japanese government should charge Toyota several thousand dollars for each car that Toyota makes in the US or other foreign (non-Japan) countries rather than making them in Japan, providing jobs to Japanese workers?

Re:So what?

[Scragglykat]

Can people making the US minimum wage and trying to provide for themselves really afford to buy more iPhones?

Re:So what?

[Joce640k]

The USA is producing college graduates with massive debt who can't afford to take normal jobs.

Re:So what?

[oh_my_080980980]

No Apple does not pay their taxes. Apple is hold revenue off their books in order to not pay taxes. Apple also has elaborate shell business that hide their revenues. http://prospect.org/article/pr...

Re:Never go full retard

[BronsCon]

You're pretending every single phone they make has to be replaced under warranty?

If you'd read my entire post, you'd see that I address that very point. You, on the other hand, implied that the cost applied to every phone; or, at least, failed to address the fact that it does not.

And chiding me for making shit up? Really? It's the middle of my work day, I don't have time to look up the actual numbers, but I do happen to know the numbers I made up are much closer to reality than the numbers you made up. Be careful with that stone in that glass house.

Re:So what?

[skids]

They do not teach the Laffer curve in the Republican school of Voodoo Economics.

Oh yes, they quite definitely do... they just lie about which side of it (or related macroeconomic curves) we are on.

Re:So what?

[Curunir_wolf]

Right. And that could come in the form of a special tariff. I'm told the cost to make an iPhone is around $178. So add a $178 tariff to each one, and it makes the choice very easy for Apple. They can either start making them in the US, providing jobs to Americans

And the Japanese government should charge Toyota several thousand dollars for each car that Toyota makes in the US or other foreign (non-Japan) countries rather than making them in Japan, providing jobs to Japanese workers?

Japan doesn't import US-made cars to Japan. They make them in the US to ... get around import restrictions! TADA!

Re:So what?

[tbannist]

That when someone says it's not wages, it's the lack of available experienced workers, they are actually saying it's wages. The proper response to not being able to find enough people to do a job is to offer more money, not complain that there's no one qualified because not enough people are willing to do the job at the price you're offering.

There are very few occupations where there can be a legitimate lack of talent/experience for the job. Running an assembly line isn't one of them.

Re:profit margins, and protectionism

[r1348]

Except history demonstrated the opposite. Most of the socio-economical conquests of the working class happened in the 20th century well before the Reagan/Thatcher era that imposed ultra-liberism as worldwide dominant doctrine. The fact that corporations could not move production elsewhere at whim, but were forced to keep it where the goods were consumed, was actually a major contributing factor to the success of these struggles. Once international free-trade deals took place, a slow but constant erosion of the working class rights started. To the point where blue-collar America ends up voting Trump (misguided, I agree, but they do have a point in supporting protectionism).

Re:So what?

[ShanghaiBill]

When so many corporations get around their taxes completely, what can cuts do.

A lot. One of the reasons that corporate tax payments are so low is because the rates are so high, so corporations have a big incentive to lobby for loopholes, and pay accountants to exploit them. If they pay an accountant $80k, and he finds $81k of tax reduction, then it is worth it to the corporation to employ that accountant, but it is an $80k dead loss to society.

Taxes should be simple and fair, and they should incentivize good behavior. Our current corporate taxes do none of that. They are immensely complicated, very unfair (two near identical companies can have dramatically different tax rates), and the incentivize a lot of harmful behavior, like shipping jobs and capital overseas.

We need to cut the rates, eliminate the loopholes, and get rid of the idiotic extraterritorial taxation that is done by no other country on the planet.

Disclaimer: My wife and I run a software business that is incorporated. I spend a lot of time reading up on tax laws. That is time that I could otherwise spend on productive activities. But it is worth it, because we pay near zero income taxes. Oh, and here is how many Americans we employ: 0. Our sysadmin is in Shanghai, our graphic artist is in Karachi, etc. You can thank your government for that.

Re:So what?

[coinreturn]

This is just starting some per-emptive whining because Trump has mentioned that he's going to make Apple manufacture in the USA.

I'm not sure how he thinks he can legally do that. A better solution would to to make Apple pay its taxes.

Except that Trump wants to give ex-patriated money a "tax holiday" to bring it home. Yeah, that'll help the deficit the Republicans cry about when Democrats are in office, but insist doesn't matter when Republicans are in office.

Re:So what?

[ShanghaiBill]

No Apple does not pay their taxes.

They pay what they are legally required to pay. How much extra money have you voluntarily donated to the IRS? Nothing? Then why should Apple?

Apple is hold revenue off their books in order to not pay taxes.

No, they hold it overseas, which is not "off the books". If you think it is absurd for the US government to incentivize companies to invest outside America, then you should complain about it to congress, not to Apple.

Re:So what?

[dinfinity]

. But it is worth it, because we pay near zero income taxes. Oh, and here is how many Americans we employ: 0. Our sysadmin is in Shanghai, our graphic artist is in Karachi, etc. You can thank your government for that.

Yeah, no. Take responsibility for being a selfish fucking asshole instead of blaming the government.

When I first started paying income taxes I shed a tear. Not because I felt 'robbed', but because I had reached a point where I was financially stable enough to contribute to my country and to all its people. Even though it was a very modest contribution at the time, I was helping to maintain and build roads, the electricity grid and all other vital infrastructure. I was helping to prevent people down on their luck from becoming homeless or starving. I was helping those with illnesses to get medical care. In short: I was helping to build a civilization. And I was and am fucking proud of it.

Paying taxes is a virtue, not an evil to be avoided at all costs.

Re:So what?

[sit1963nz]

The problem is, Trump was pushing how he was going to bring manufacturing back to the USA, effectively promising the angry voters Jobs. It was all about bring jobs to them. Truth is he can't, and won't . Apple makes 60% of its profits internationally. At best you will see Apple split into 2, "Apple International" and "Apple USA" Given the profits from other things like iTunes, Apps, Services etc lets assume that 30% of profits are US based, so at best Apple would bring back 30% of its manufacturing because internationally there is no requirement, there are no import tariffs levied by the US government, and Apple has to remain internationally competitive. Manufacturing is more expensive in the USA (power, water, land, buildings, etc etc all cost more), so end consumer prices will cost more, especially when those costs get distributed on a lower volume of production. You could well see a situation where the iPhone becomes cheaper in the rest of the world than in the USA, and it would not just be Apple, it would be all the major brands of electronics, clothes, shoes, etc etc etc. I am not sure the voters will abide by that either. ANY move by Trump will take time, and by time I also mean legal challenges. To see how quickly this will go just look at how many years have gone by since Apple won against Samsung and its still not finished. AFTER the legal wrangling by all the manufacturers you will get them complying, but very slowly. They know at best Trump is there for 4 years, at worst 8. Failure of Trump producing jobs is likely to see him there for 1 term, and I doubt he honestly wants to be there for two. So, IF apple then drags its feet, i.e. taking time with planning permission, deliberately blocking it up so they delay more because they have to redesign, argue of which state it will be in, delay any law suits that will take, plus any issues with infrastructure (required just to build the factory), they could spin this out way past a Trump 2nd term. And it won't be just Apple. The mid terms may punish Trump too, failure to supply jobs to the people who voted for him, with the rich getting tax cuts at the same time. Trump could loose badly here and be unable to push through his demands, effectively killing the whole process off. Look for lots of money being spent by corporations trying to influence decisions. And to be honest, it much more likely that Trump will be impeached before any manufacturing is bought back to the US. The failure to have a blind trust for his businesses , the non-wall between him and those interests because his children are both in control of the business and part of his team means risks of insider trading is extremely high. So, all in all, its NOT going to happen.

Re: So what?

[cyber-vandal]

Would it? Why would corporations who pay very little tax suddenly queue up to pay more?