7 ms·

Finally! I love Apple but taxes should be paid. There is a difference between legal and ethical and US companies should begin to understand that. So hopefully o

by dirkdk 9y ago

Finally! I love Apple but taxes should be paid. There is a difference between legal and ethical and US companies should begin to understand that. So hopefully others will follow suit.

adamnemecek 9y ago
The tax system needs to be fixed.
- stochastic_monk 9y ago
  It's going to need a lot more fixing after the disaster that happened this past week in US Congress.
  - adventured 9y ago
    US corporations will finally be more competitive on their effective income tax rates, with such nations as: Britain, Ireland, Sweden, Norway, Finland, Canada, China, Switzerland, Czech, Taiwan, Egypt, Estonia, Iceland, Israel, Italy, South Korea, the Netherlands, Turkey, Portugal, Romania, Russia, Singapore, Spain, Vietnam, Thailand and so on. All of those nations have significantly lower effective rates.
    - stochastic_monk 9y ago
      That's not accurate. Considering the enormous loopholes, corporations in the US actually pay something comparable to these other developed countries. The average company pays something between 12% [1] and 22% [2] -- much less than the ostensible tax rate. (See also [3,4].) Now we have nearly all the same loopholes and a lower base rate: a simple recipe for disaster. [1] http://money.cnn.com/2013/07/01/news/economy/corporate-tax-rate/index.html http://money.cnn.com/2013/07/01/news/economy/corporate-tax-r... [2] https://www.nytimes.com/2017/03/09/business/economy/corporate-tax-report.html https://www.nytimes.com/2017/03/09/business/economy/corporat... [3] https://www.politico.com/interactives/2017/35-percent-corporate-tax-rate-100-companies/ https://www.politico.com/interactives/2017/35-percent-corpor... [4] https://itep.org/the-35-percent-corporate-tax-myth/ https://itep.org/the-35-percent-corporate-tax-myth/
      - valuearb 9y ago
        This is ignorant and misleading, the only reason effective rates are lower than 35% is because of tax deferral, specifically for foreign earnings. Taxes on those foreign earnings are still owed when repatriated, but it would be foolish to repatriate them when companies would have to pay over 40% in both state and federal taxes, and their shareholders an additional 20%+ on any dividends. Most countries don't tax their companies foreign earnings at all, so the rates don't even compare. The real corporate income tax rate should be zero. There is no reason to tax investment, it's hugely counterproductive. Raise the capital gains and dividend tax rates to personal income tax rates, and eliminate corporate income taxes, you've eliminated double taxation and restored progressively to our tax system. There is zero reason an 80 year old retiree living on a fixed income should be paying over 60% in taxes on her Apple dividends.
      - drak0n1c 9y ago
        A lower tax rate is a boon to small and mid sized US companies that make up the majority of the economy and don't have the financial scale or international presence needed to take advantage of those loopholes. These companies compete daily against foreign firms, and against US conglomerates. I don't see how your comment counters the parent's argument that this a good thing for international competitiveness.
    - MarkMc 9y ago
      Not sure what your source is for that claim, but when you look at corporate tax revenue as a percentage of GDP the US is significantly below average: https://espnfivethirtyeight-files-wordpress-com.cdn.ampproject.org/i/s/espnfivethirtyeight.files.wordpress.com/2014/04/chalabi-tax-rates-24.png?w=1150&quality=90&strip=info https://espnfivethirtyeight-files-wordpress-com.cdn.ampproje...
  - valuearb 9y ago
    Lowering the corporate tax rate to 20% goes along way to making the US tax system better for everyone.
    - adamnemecek 9y ago
      How?
      - valuearb 9y ago
        Corporate income taxes are a double layer of taxes on investment. Investment is good, and lower taxes means more investment. Apple's shareholders are currently subject to 40%+ total tax rates on dividends paid from US profits, and 60%+ total tax rates on dividends paid from foreign profits. Lowering the portion that's corporate income tax rates makes these rates far more reasonable.
        Nursie 9y ago
        Investment gets to be taken out before tax in most places. Investment by the company in R&D, growth and training becomes more attractive in a higher tax environment.
        valuearb 9y ago
        Investments that companies make aren't an expense per se. It's almost always "capitalized" as an asset and can't be expensed, only expenses can. But we are talking about investment in businesses by investors/owners. Imagine a successful US (California) company called Shmapple approaches you about funding a joint venture. You invest $10M for half of the shares in a subsidiary that will build a factory for a new product they've designed, they sell the resulting goods and split all profits with you. So you ask, what will my share of the profits be? The company gives you very reasonable financial forecasts showing the factory should generate $3M a year in profit on average, grossing you $1.5M a year on your $10 million dollar investment, or 15%. But wait, you say. I don't care about gross profits, only net profits after taxes. So you calculate it. First they have to pay California corporate income taxes (8.84%), about $260,000. Then they have to pay 35% federal corporate income taxes on what's left, or $1,180 more, leaving $1.78M (59%) left or $900k to you. But that's just the corporate level, you still haven't paid your taxes yet. When the company pays you your share of the profits, you now owe income tax in your state, and dividend tax to the federal government. Lets say you also live in California, in the top bracket you average around 11%, or another $100k. And 20% for federal dividend tax, or another $160k. So you will net a little less than $640k, or a 6.5% after tax return on your investment. But wait, it gets worse. Shmapple tells you that their business model is highly international. About 60% of the profits will actually be earned overseas, so they will also be forced to pay income taxes in every country products are sold in. So that's another 10% off the top. So you redo the math again, and now you only get $600,000 a year, or a 6% after tax profit (and you've lost $900k, or 60%, of your profits to taxes!). So you say, hell no, I'm not funding that factory! I can make nearly that much risk free in treasury bonds, taking the huge risk on a new business for only an extra 1-2% a year would be colossally dumb. So Schmapple says to you, okay, we've got a way to lower everyones taxes. Turns out we can defer the taxes on our foreign earnings if we don't bring them back to the U.S. We'll find a friendly country with an extremely low tax rate and deposit the profits there. And we'll wait for the US government to wake up and realize how awful their corporate tax system is, and pay the taxes then at a lower tax rate. In the mean time we can borrow against the foreign bank deposits and pay you dividends from that. So you say, yea, even with all that hard work, my effective tax rate is still going to be close to 50%. You are just deferring, not avoiding, taxes, and when we pay them the future US corporate rate is still going to be pretty high, 20% or more. So you make a counter-offer. Let's build the factory and incorporate the joint venture in Shmireland, a fair country across the sea. Sure the Shmirish might not be quite as good as workers as Californians are (maybe, maybe not, but they ain't much worse), but look at the tax savings. Building in Schmireland means paying a 12.5% corporate income tax rate. Schmireland also doesn't tax world-wide income, just the income earned in Schmireland. We'll account for our profits being the same 60% rest of world (at an average 10% income tax rates), and 40% in Schmireland where we make the products. So our average tax rate is 11% TOTAL!. Now the net corporate profits are nearly $2.7M, and your share is $1.35M. After your California income and Federal dividend taxes, you will have around $960,000 left, or nearly 10% after tax. Now you tell Schmapple, do it in Schmireland and we have a deal! This is what's happening in real life. If the U.S. tries to close it's "loopholes", say by no longer letting companies defer earnings in their foreign subsidiaries, they'll just make it even more attractive to invest overseas. It's already insanely more attractive now, how much do you think Samsung pays in taxes compared to Apple? It's Samnsungs biggest advantage!
malux85 9y ago
I used to think this -- but then I heard the argument that if Apple was to behave "ethically" and pay the taxes that technically the law requires that they dont, then the shareholders can sue the company for not acting in their best interest. Even if the above isn't true (not a lawyer) we cannot rely on ethics alone, it will have to be enforced by law, otherwise nobody will do it
- barrkel 9y ago
  There's another way to twist that: cheating the people out of their government's revenue is a fine way to build up negative goodwill. That has a longer term cost.
  - alehul 9y ago
    This is very true. There was a recent incident in France in which people protested outside an Apple store for them to "pay their taxes." Apple wasn't explicitly breaking the law, however customers are entitled to vote with their wallets, and showing their vote will likely have some effect on the company.
    - jotm 9y ago
      You're joking right? The tax deals and some protests will not affect Apple's bottom line in the slightest. Customers vote with their uncaring brains, which will pull out the wallets just as they did before.
      - alehul 9y ago
        Clearly some customers are not uncaring. I'm not saying that one protest will have a massive impact on Apple's bottom line; just that: 1. protesting is a sign that the tax issue is an area customers care about, and those out protesting are likely a very small minority of those who feel that way. 2. the act of companies' feigned goodwill for a net profit could extend to any area customers care about, including legal vs ethical tax practices.
- 9y ago
deleted 9y ago
[deleted]
tpush 9y ago
The difference between legal and ethical is irrelevant in this case. Both Apple and Ireland had an agreement regarding Apple's taxes which was deemed illegal by the EU. Apple and Ireland can count themselves lucky not to be additionally fined, since the likelihood that Apple's or Ireland's lawyers were unaware of the existing EU state aid laws are very slim.
valuearb 9y ago
First of all, nothing has been settled. This is just escrow, both Apple and Ireland are appealing. Second, what Apple did was both legal and ethical. It had $200B in cash that it had already paid taxes on to the countries where it was earned. Ireland offered them a near zero tax rate on the interest it would earn if they deposited it in Irish banks. That was a great deal for Ireland, and a good deal for Apple, and hurt no one.
- matt4077 9y ago
  > and hurt no one. It hurt whatever country didn't participate in Ireland's race to the bottom, and would have been Apple's preferred base of operations when ignoring tax issues.
  - valuearb 9y ago
    There is no race to the bottom on bank deposits, Apple already paid taxes on these earnings to every european country.
    - matt4077 9y ago
      ? There isn't even a tax on bank deposits, in any country I know. So what, exactly, do you think this case is about?
      - valuearb 9y ago
        Talking about taxes on interest, not deposits.
- ainiriand 9y ago
  It hurts because it adds to the already big amount of inequality in this country (Ireland). Me, as a software engineer, I am pretty much accommodated economically but you should see the amount of junkies and homeless people in this town. It is shocking.
  - 9y ago
philwelch 9y ago
> There is a difference between legal and ethical I don't see this as an ethical issue on the part of Apple (or, for that matter, any other taxpayer). I don't think anyone does any soul-searching about their tax deductions, nor should they. The soul-searching happens when we decide what the taxes and deductions are in the first place.

by dirkdk 9y ago

Finally! I love Apple but taxes should be paid. There is a difference between legal and ethical and US companies should begin to understand that. So hopefully others will follow suit.

adamnemecek 9y ago

The tax system needs to be fixed.

stochastic_monk 9y ago
It's going to need a lot more fixing after the disaster that happened this past week in US Congress.
- adventured 9y ago
  US corporations will finally be more competitive on their effective income tax rates, with such nations as: Britain, Ireland, Sweden, Norway, Finland, Canada, China, Switzerland, Czech, Taiwan, Egypt, Estonia, Iceland, Israel, Italy, South Korea, the Netherlands, Turkey, Portugal, Romania, Russia, Singapore, Spain, Vietnam, Thailand and so on. All of those nations have significantly lower effective rates.
  - stochastic_monk 9y ago
    That's not accurate. Considering the enormous loopholes, corporations in the US actually pay something comparable to these other developed countries. The average company pays something between 12% [1] and 22% [2] -- much less than the ostensible tax rate. (See also [3,4].) Now we have nearly all the same loopholes and a lower base rate: a simple recipe for disaster. [1] http://money.cnn.com/2013/07/01/news/economy/corporate-tax-rate/index.html http://money.cnn.com/2013/07/01/news/economy/corporate-tax-r... [2] https://www.nytimes.com/2017/03/09/business/economy/corporate-tax-report.html https://www.nytimes.com/2017/03/09/business/economy/corporat... [3] https://www.politico.com/interactives/2017/35-percent-corporate-tax-rate-100-companies/ https://www.politico.com/interactives/2017/35-percent-corpor... [4] https://itep.org/the-35-percent-corporate-tax-myth/ https://itep.org/the-35-percent-corporate-tax-myth/
    - valuearb 9y ago
      This is ignorant and misleading, the only reason effective rates are lower than 35% is because of tax deferral, specifically for foreign earnings. Taxes on those foreign earnings are still owed when repatriated, but it would be foolish to repatriate them when companies would have to pay over 40% in both state and federal taxes, and their shareholders an additional 20%+ on any dividends. Most countries don't tax their companies foreign earnings at all, so the rates don't even compare. The real corporate income tax rate should be zero. There is no reason to tax investment, it's hugely counterproductive. Raise the capital gains and dividend tax rates to personal income tax rates, and eliminate corporate income taxes, you've eliminated double taxation and restored progressively to our tax system. There is zero reason an 80 year old retiree living on a fixed income should be paying over 60% in taxes on her Apple dividends.
    - drak0n1c 9y ago
      A lower tax rate is a boon to small and mid sized US companies that make up the majority of the economy and don't have the financial scale or international presence needed to take advantage of those loopholes. These companies compete daily against foreign firms, and against US conglomerates. I don't see how your comment counters the parent's argument that this a good thing for international competitiveness.
  - MarkMc 9y ago
    Not sure what your source is for that claim, but when you look at corporate tax revenue as a percentage of GDP the US is significantly below average: https://espnfivethirtyeight-files-wordpress-com.cdn.ampproject.org/i/s/espnfivethirtyeight.files.wordpress.com/2014/04/chalabi-tax-rates-24.png?w=1150&quality=90&strip=info https://espnfivethirtyeight-files-wordpress-com.cdn.ampproje...
- valuearb 9y ago
  Lowering the corporate tax rate to 20% goes along way to making the US tax system better for everyone.
  - adamnemecek 9y ago
    How?
    - valuearb 9y ago
      Corporate income taxes are a double layer of taxes on investment. Investment is good, and lower taxes means more investment. Apple's shareholders are currently subject to 40%+ total tax rates on dividends paid from US profits, and 60%+ total tax rates on dividends paid from foreign profits. Lowering the portion that's corporate income tax rates makes these rates far more reasonable.
      - Nursie 9y ago
        Investment gets to be taken out before tax in most places. Investment by the company in R&D, growth and training becomes more attractive in a higher tax environment.
        valuearb 9y ago
        Investments that companies make aren't an expense per se. It's almost always "capitalized" as an asset and can't be expensed, only expenses can. But we are talking about investment in businesses by investors/owners. Imagine a successful US (California) company called Shmapple approaches you about funding a joint venture. You invest $10M for half of the shares in a subsidiary that will build a factory for a new product they've designed, they sell the resulting goods and split all profits with you. So you ask, what will my share of the profits be? The company gives you very reasonable financial forecasts showing the factory should generate $3M a year in profit on average, grossing you $1.5M a year on your $10 million dollar investment, or 15%. But wait, you say. I don't care about gross profits, only net profits after taxes. So you calculate it. First they have to pay California corporate income taxes (8.84%), about $260,000. Then they have to pay 35% federal corporate income taxes on what's left, or $1,180 more, leaving $1.78M (59%) left or $900k to you. But that's just the corporate level, you still haven't paid your taxes yet. When the company pays you your share of the profits, you now owe income tax in your state, and dividend tax to the federal government. Lets say you also live in California, in the top bracket you average around 11%, or another $100k. And 20% for federal dividend tax, or another $160k. So you will net a little less than $640k, or a 6.5% after tax return on your investment. But wait, it gets worse. Shmapple tells you that their business model is highly international. About 60% of the profits will actually be earned overseas, so they will also be forced to pay income taxes in every country products are sold in. So that's another 10% off the top. So you redo the math again, and now you only get $600,000 a year, or a 6% after tax profit (and you've lost $900k, or 60%, of your profits to taxes!). So you say, hell no, I'm not funding that factory! I can make nearly that much risk free in treasury bonds, taking the huge risk on a new business for only an extra 1-2% a year would be colossally dumb. So Schmapple says to you, okay, we've got a way to lower everyones taxes. Turns out we can defer the taxes on our foreign earnings if we don't bring them back to the U.S. We'll find a friendly country with an extremely low tax rate and deposit the profits there. And we'll wait for the US government to wake up and realize how awful their corporate tax system is, and pay the taxes then at a lower tax rate. In the mean time we can borrow against the foreign bank deposits and pay you dividends from that. So you say, yea, even with all that hard work, my effective tax rate is still going to be close to 50%. You are just deferring, not avoiding, taxes, and when we pay them the future US corporate rate is still going to be pretty high, 20% or more. So you make a counter-offer. Let's build the factory and incorporate the joint venture in Shmireland, a fair country across the sea. Sure the Shmirish might not be quite as good as workers as Californians are (maybe, maybe not, but they ain't much worse), but look at the tax savings. Building in Schmireland means paying a 12.5% corporate income tax rate. Schmireland also doesn't tax world-wide income, just the income earned in Schmireland. We'll account for our profits being the same 60% rest of world (at an average 10% income tax rates), and 40% in Schmireland where we make the products. So our average tax rate is 11% TOTAL!. Now the net corporate profits are nearly $2.7M, and your share is $1.35M. After your California income and Federal dividend taxes, you will have around $960,000 left, or nearly 10% after tax. Now you tell Schmapple, do it in Schmireland and we have a deal! This is what's happening in real life. If the U.S. tries to close it's "loopholes", say by no longer letting companies defer earnings in their foreign subsidiaries, they'll just make it even more attractive to invest overseas. It's already insanely more attractive now, how much do you think Samsung pays in taxes compared to Apple? It's Samnsungs biggest advantage!

malux85 9y ago

I used to think this -- but then I heard the argument that if Apple was to behave "ethically" and pay the taxes that technically the law requires that they dont, then the shareholders can sue the company for not acting in their best interest. Even if the above isn't true (not a lawyer) we cannot rely on ethics alone, it will have to be enforced by law, otherwise nobody will do it

barrkel 9y ago
There's another way to twist that: cheating the people out of their government's revenue is a fine way to build up negative goodwill. That has a longer term cost.
- alehul 9y ago
  This is very true. There was a recent incident in France in which people protested outside an Apple store for them to "pay their taxes." Apple wasn't explicitly breaking the law, however customers are entitled to vote with their wallets, and showing their vote will likely have some effect on the company.
  - jotm 9y ago
    You're joking right? The tax deals and some protests will not affect Apple's bottom line in the slightest. Customers vote with their uncaring brains, which will pull out the wallets just as they did before.
    - alehul 9y ago
      Clearly some customers are not uncaring. I'm not saying that one protest will have a massive impact on Apple's bottom line; just that: 1. protesting is a sign that the tax issue is an area customers care about, and those out protesting are likely a very small minority of those who feel that way. 2. the act of companies' feigned goodwill for a net profit could extend to any area customers care about, including legal vs ethical tax practices.
9y ago

deleted 9y ago

[deleted]

tpush 9y ago

The difference between legal and ethical is irrelevant in this case. Both Apple and Ireland had an agreement regarding Apple's taxes which was deemed illegal by the EU. Apple and Ireland can count themselves lucky not to be additionally fined, since the likelihood that Apple's or Ireland's lawyers were unaware of the existing EU state aid laws are very slim.

valuearb 9y ago

First of all, nothing has been settled. This is just escrow, both Apple and Ireland are appealing. Second, what Apple did was both legal and ethical. It had $200B in cash that it had already paid taxes on to the countries where it was earned. Ireland offered them a near zero tax rate on the interest it would earn if they deposited it in Irish banks. That was a great deal for Ireland, and a good deal for Apple, and hurt no one.

matt4077 9y ago
> and hurt no one. It hurt whatever country didn't participate in Ireland's race to the bottom, and would have been Apple's preferred base of operations when ignoring tax issues.
- valuearb 9y ago
  There is no race to the bottom on bank deposits, Apple already paid taxes on these earnings to every european country.
  - matt4077 9y ago
    ? There isn't even a tax on bank deposits, in any country I know. So what, exactly, do you think this case is about?
    - valuearb 9y ago
      Talking about taxes on interest, not deposits.
ainiriand 9y ago
It hurts because it adds to the already big amount of inequality in this country (Ireland). Me, as a software engineer, I am pretty much accommodated economically but you should see the amount of junkies and homeless people in this town. It is shocking.
- 9y ago

philwelch 9y ago

> There is a difference between legal and ethical I don't see this as an ethical issue on the part of Apple (or, for that matter, any other taxpayer). I don't think anyone does any soul-searching about their tax deductions, nor should they. The soul-searching happens when we decide what the taxes and deductions are in the first place.