5 ms·

From http://www.aboveavalon.com/notes/2015/6/13/apples-cash-dilemma http://www.aboveavalon.com/notes/2015/6/13/apples-cash-dilem... it seems like Apple may not

• briandear 11y ago
  Not defending apple for not paying artists, but I will defend their 'weaseling' out of US taxes. U.S. Corporate taxes are among the highest in the world and until Washington starts lowering their confiscatory tax rates, I would encourage all businesses to avoid repatriating earnings. A 10% tax rate is high enough.
  • logicchains 11y ago
    US taxes contribute more to violent deaths and unnecessary punishments/imprisonments per dollar than taxes paid in most other countries. The US spends a greater proportion of GDP on "defense" than almost all other Western countries, so a tax dollar paid in the US is more likely to contribute to "defense" and less likely to contribute to education, healthcare or whatnot than a tax dollar paid in e.g. Sweden or Holland. Similarly, the US has 25% of the world's prison population yet only 5% of its total population, so necessarily spends a relatively higher percentage of tax dollars on incarceration. There are actually people who do everything they can to minimise their tax liability in order to reduce the money spent on things they consider unjust: https://en.wikipedia.org/wiki/Tax_resistance https://en.wikipedia.org/wiki/Tax_resistance. Every dollar not paid in US tax is a dollar that won't contribute to blowing up people in the Middle East who have the misfortune of being in proximity to suspected terrorists (tens of thousands of people over the past decade) [1]. Similarly, every dollar not paid in US tax is a dollar that won't be spent putting poor people in prison for smoking a weed that causes less violence in a decade than alcohol causes in a day. https://en.wikipedia.org/wiki/Civilian_casualties_in_the_war_in_Afghanistan_%282001%E2%80%93present%29 https://en.wikipedia.org/wiki/Civilian_casualties_in_the_war...
    • programmernews3 11y ago
      I hope the people who are avoiding tax are donating their avoided taxes to their local schools and hospitals.
  • sanswork 11y ago
    Where is the western world has lower tax rates than the US? Edit: answered above.
  • fordh 11y ago
    I was curious and looked up this claim. Turns out PolitiFact looked into it: http://www.politifact.com/punditfact/statements/2014/sep/09/eric-bolling/does-us-have-highest-corporate-tax-rate-free-world/ http://www.politifact.com/punditfact/statements/2014/sep/09/... The conclusion: Bolling said the United States has "the highest corporate tax rate in the free world." He was referring to the statutory rate, meaning the rate before deductions. On that score, he’s right: The United States does have the highest statutory rate among developed countries. However, the United States’ corporate tax rate doesn’t appear to be the highest once deductions and other exclusions are taken into account. I found it an interesting article so I decided to share.
    • nicolas_t 11y ago
      There's also some countries that have relatively "low tax rate" but very high social security costs which are not always counted as tax rates by studies.
      • seanmcdirmid 11y ago
        And not all those costs can be credited against US taxes on repatriation, so double taxation scenarios exist.
    • deleted 11y ago
      [deleted]
    • adventured 11y ago
      The US effective corporate tax rate tends to be 25% to 27% in normal times, which is still one of the highest effective tax rates in the world. The median S&P 500 effective tax rate is 30%, also one of the highest rates in the world. You often see 12% or 13% bandied about as the effective rate, but that's intentional intellectual fraud: they refer to 2010 numbers, when the US was coming out of the great recession and corporations had lost a ton of money.
  • deleted 11y ago
    [deleted]
  • RexRollman 11y ago
    I agree with corporations who attempt to legally pay as little taxes as possible. That's what I do. If someone doesn't like it, then get the laws changed.
    • jjoonathan 11y ago
      Changing the laws requires a sizable investment in lobbyists and bribe money before any ROI can be achieved. Most individuals simply don't have enough taxable income to make the investment worthwhile. Megacorps do. The situation is not morally symmetrical and not practically symmetrical.
    • hobs 11y ago
      Yeah, why dont the poor and downtrodden just pay their lobbyists to change the law of the land... what? The corporations have the money and the drive to get the laws changed, who else does?
      • WorldWideWayne 11y ago
        I was hoping someone would start a popular kickstarter style site for this. It seems pretty simple to me. If you want your laws changed, pool your money and go lobby the gov't just like every other corporation.
        • nona 11y ago
          Yeah! None of this one-man-one-vote crap, back to some good old fashioned plutocracy. After all if the top 10-20% own 90% of the wealth, it's only right and proper that they also own an equivalent share of the political power. ;-)
          • icebraining 11y ago
            Nobody said it was right, just that it's less bad than having just the rich lobbying.
        • evunveot 11y ago
  • GFK_of_xmaspast 11y ago
    How come 10% is high enough for corporations but I pay a lot more than that in income taxes. Shouldn't it be the other way around?
    • jannotti 11y ago
      I think it could be either way, but many object to the fact that it is both. In other words, corporate tax is seen as double taxation, since the earnings (after taxes) are then passed on to shareholders, who pay tax on it again. I could see a coherent tax code that taxes corporations, but not individuals, or one that taxed individuals, but not corporations (Of course with either of these there would no doubt be all sorts of new loopholes to deal with). But taxing both seems odd to me.
      • jjoonathan 11y ago
        If there are loopholes allowing corporations to not actually pay their taxes and the capital gains tax rate is a fraction of the income tax rate, is it really fair to call it double taxation?
      • samuellevy 11y ago
        I'm not sure how the tax system works in the US, but I was just talking to my accountant about this issue the other day. In Australia, my company gets taxed at a flat 30% on all profits in a year. If I want to take cash out of the company after that tax has been taken, I pay "top-up" tax that brings the total tax paid to the level of my income tax rate. For example, if the company earned $10000, after all expenses, then it would pay $3000 in tax, leaving $7000 left that I can take out. If I earned no money in the year, my income tax rate is 0%, so the top-up tax is -$3000 (I.e. I get a tax refund for $3000). If I earned $50000 in the year, then my income tax rate is 32.5%, so I would have to pay top-up tax of $250 (I.e. 2.5% of the original $10000, which has already been taxed 30%). Double taxation shouldn't happen, and while my company was set up for tax minimisation purposes, international corporations are able to do an insane level of fuckery to avoid almost all taxation.
      • GFK_of_xmaspast 11y ago
  • yequalsx 11y ago
    Nice usage of the word 'confiscatory'. My experience with people who use this word in relation to taxation is that they use it in derogatory sense and is used primarily by conservatives and libertarians. I don't know if that is the case for you. What do you consider the optimal corporate tax rate? You said 10% is high enough. Do you think it should be 0%? If you are in the libertarian and/or conservative branch of U.S. politics why do you look to other countries' tax rates for guidance on what our tax rates ought to be? I have been under the impression that looking to other countries for guidance on our social policy is bad and contrary to the notion of exceptionalism. The U.S. uniquely, I believe, considers corporations persons. Hence the Citizens United decision. Given this shouldn't the tax rate on these citizens be the same as on other citizens with like earnings?
    • comex 11y ago
      There is no sense setting up a strawman about a topic, exceptionalism, which the parent did not even raise or mention. Blaming Citizens United (certainly a harmful decision) on corporate personhood is, while popular, unduly reductive; the actual ruling was more about freedom of association. Even in the context of the debate about corporate personhood, your rhetorical question about tax rate is pure demagogy.
      • yequalsx 11y ago
        Have you ever heard of someone refer to taxes as confiscatory and it be the case that that person is not a conservative or a libertarian who holds the beliefs mention in my post? I haven't but I did acknowledge that perhaps those beliefs were not shared by the person I responded to. Thus the questions I asked. It was not demagoguery. The argument was quite rational. People who refer to taxes as confiscatory rather than as being too high are attempting to frame the topic of taxation as it being, necessarily, wrong. It's a ridiculous starting point. These same people almost always scoff at arguments that the U.S. ought to adopt some social policies because all other industrialized nations have them. It is, with this fact in mind, quite rational to ask why looking at the corporate tax rate of other countries is a good argument. Why is it demagoguery to ask why a person in the form of a corporation should pay less in taxes than a person in the form of a human?
  • toddmorey 11y ago
    I think in some ways, you have a fiduciary responsibility to your shareholders to use reasonable means to maximize the value of your company. It seems to me that includes both operational efficiency and prudent use of available tax breaks. I'm uncomfortable with the line of reasoning that we "can't do anything until we change the system," but I do wonder how Wall Street would react to a company that decided for moral reasons to avoid the schemes and pay more taxes.
    • cdash 11y ago
      Except you actually don't and this has been a myth that has continued to plague any type of discussions like this.
  • TYPE_FASTER 11y ago
    https://commons.wikimedia.org/wiki/File:US_Effective_Corporate_Tax_Rate_1947-2011_v2.jpg https://commons.wikimedia.org/wiki/File:US_Effective_Corpora...
• nrp 11y ago
  Per the RIAA, the entire recorded music industry in the US recorded under $7 Billion in revenue in 2014. Apple has north of $20 Billion in cash in the US. There are likely many reasons for Apple to make the move they did, but it is unlikely cash on hand was one of them.
  • rsync 11y ago
    "Per the RIAA, the entire recorded music industry in the US recorded under $7 Billion in revenue in 2014." Amazing. We think of the RIAA, or "big music" as some kind of juggernaut force in society and politics - especially Internet politics. But their entire industry top line is smaller than what fedex makes in a month.[1] [1] http://www.nasdaq.com/symbol/fdx/revenue-eps http://www.nasdaq.com/symbol/fdx/revenue-eps
    • charlesdenault 11y ago
      That's astonishing. I'd be interested in seeing some more statistics on the amount of lobbying vs market size compared to other industries (e.g. Transportation, Hospitality, Pharma).
      • jdjb 11y ago
        Something tells me we'd see a direct correlation between the amount of lobbying and the amount of legal backing your "product" needs in order to have value (copyright protection, patents, brand trademarks, etc).
    • maxerickson 11y ago
      The months there are dates marking fiscal quarters, so each number is for 3 months. Fedex monthly revenue is a bit less than $4 billion.
    • ixtli 11y ago
      Sadly that's still more than enough money to bully individuals :(
    • reagency 11y ago
• zymhan 11y ago
  Would they have to pay taxes all of the overseas earnings if they use just some of it? I figured they only paid tax on what they actually bring back here.
  • URSpider94 11y ago
    No, just what they repatriate. But they already have $22 BILLION in cash in the U.S., and they can borrow more for far less than their income tax rate, so why incur even a little tax?
    • adventured 11y ago
      The only reason for them to be concerned, is they've accumulated a vast amount of debt in a very short amount of time, all to put off dealing with the cash / tax problem. That debt starts to add up, even when you're paying record low interest rates on it. Right now they're losing a billion a year just in interest on their debt, that's up from nothing three years ago. At the rate they're taking on debt, they'll be losing two billion dollars per year to interest within another two years. That starts to become a lot of money to be pissing away just on interest, all to avoid taxes. Over time it'll become a net larger sum than they would have paid in taxes on the cash.
      • matwood 11y ago
        It's not just about avoiding taxes. Bond rates are extremely low. If one believes rates will soon start to go up, taking on fixed rate debt can be a smart thing. As rates rise, the cash lying around can be used to generate returns above the rate on the debt. The tax angle makes it a double win.
• wmeredith 11y ago
  "it would need to pay taxes on the cash it is holding outside the US" Oh, the horror.
  • chvid 11y ago
    They would not - paying their artists is a deductible business expense.
    • malnourish 11y ago
      I believe what the grandparent meant is that bringing the money in to the US will require taxing it.
• spinchange 11y ago
  They "only" have about 22 BILLION in American cash! They can raise capital in the bond market in perpetuity secured against all their global cash. There's demand for debt like Apple's. SO, they absolutely, unequivocally, unquestionably can pay the artists. This is a business decision based on greed - just like leading a wage suppression cartel. They are not too poor!
  • nemik 11y ago
    Hmmm I was under the impression that cash was part of their operating expenses. They have retail stores, their campus, most of their employees and all their most expensive employees are all in the US too. But you're right, it's probably still enough to eat 3 months worth of royalty payments. Also likely, this isn't going to be the only or last fuck-you Apple is going to be giving artists or content producers. The ones who agree to be screwed for the 3-month opening trial will be push-overs who can be leaned on again when the time comes.
• chernevik 11y ago
  They can almost certainly borrow against their foreign holdings.
  • simonh 11y ago
    No, they'd become liable. If it was that easy to avoid paying taxes on repatriated earnings it wold simply stop being a problem.
• simonh 11y ago
  > By trying to weasel out of paying any US taxes, they can't spend their own money. It's not about avoiding paying any US taxes, it's about avoiding paying US taxes on earnings abroad. This is why so many Americans living abroad are giving up their US citizenship. I'm a Brit living in London and I know several American born friends that have become British citizens to avoid paying both UK and US taxes on their earnings. In fact the current mayor of London, Boris Johnson, is Anglo_America and even though he has never lived or worked in the USA, because he had US citizenship the IRS hit him with a massive tax bill on his lifetime earnings in the UK. On what possible basis could anyone consider that appropriate? He promptly gave up his US citizenship. The US Government's attitude to earnings abroad is IMHO utterly reprehensible. I'm not aware of any other country that does this. I'm not a US citizen but I do work for a US owned company.
  • michaelt 11y ago
    The US Government's attitude to earnings abroad is IMHO utterly reprehensible. I'm also a Brit and I disagree - at least in the case of multinational companies like Apple. If you have a lower tax rate for profits from abroad, the American operation can "license intellectual property" from shell companies in tax havens, then the American operation makes no profits (and hence pays no tax) while the tax haven shell company makes big profits (but pays no tax). America has a system of foreign tax credits - so if the American tax rate is 35% and the company was taxed 20% in the country where they made the profits, when they repatriate the money to America they only have to pay 15%. This is much fairer than the British approach to tax-dodging which appears to be "ignore it and maybe the crooks will donate to our political party".
    • mike_hearn 11y ago
      It's normal that companies can choose where to book revenue by performing various forms of cost shifting. The entire EU system of corporate taxation is based on that principle (tax is paid where your HQ is registered). Global tax treaties, ditto. It's the USA that is weird and exceptional in this case. So the British approach is not to "ignore tax dodging". It's to theoretically apply the same system it's always used, along with everywhere else, whilst simultaneously trying to appease populist anger over spending cuts by branding various foreign companies as socially irresponsible, although (a) there is no chance of this making any different to austerity and (b) those companies were only following rules that were considered uncontroversial not so long ago. It's kind of a dumb strategy.
• cowsandmilk 11y ago
  That article discusses buybacks and dividends. Buybacks and dividends are post-tax expenses. Paying royalties is an expense that comes before taxes. If they bring $500MM over and pay it as royalties, they would pay no taxes on it.
• rndstr 11y ago
  > it seems like Apple may not actually have the cash to do this Maybe they could do a Kickstarter campaign?