or Connect
AppleInsider › Forums › General › General Discussion › Apple wins $920K tax refund from 1989, loses appeal for overseas tax reprieve
New Posts  All Forums:Forum Nav:

Apple wins $920K tax refund from 1989, loses appeal for overseas tax reprieve

post #1 of 67
Thread Starter 
California's Supreme Court has affirmed a $920,000 tax refund for Apple dating back to 1989, but it refused to hear the company's request to lower its tax bill for income earned abroad.

The court upheld an appellate ruling earlier this week that returned $231,000 in taxes to Apple, along with $689,000 in interest, The San Francisco Chronicle reports. The Franchise Tax Board was ordered to return the money because Apple should have been allowed to deduct interest from loans for its U.S. operations

However, the final ruling came as only a partial win, as the Supreme Court rejected Apple's request to reevaluate tax rates on foreign-earned income. After California reduced taxes on overseas income in 1989, the Cupertino, Calif., company sought to reclassify the status of income it received as dividends from its foreign holdings.

"Apple argued that its foreign dividends from that year should be attributed to income from previous years that had already been taxed," the report read.

But the appeals court sided with the tax board's assertion that companies should be taxed on foreign dividends from income generated that year.

Apple's lawyer warned the decision could have expensive ramifications in the future. "It creates some potential issues for companies that want to repatriate earnings from overseas," Jeffrey Vesely told the publication on Thursday.

According to the report, two organizations, the California Taxpayers Association and the Council on State Taxation in Washington, D.C., backed Apple in petitioning the state Supreme Court to hear the case.

The issue of overseas earnings has reached "heightened importance during our current economic climate, as it affects the ability of United States companies to bring billions of dollars of foreign earnings back into the United States economy," the California Taxpayers Association told the court.

Deputy Attorney General Kristian Whitten, speaking for the Franchise Tax Board, argued that Apple was "attempting to avoid, or at least indefinitely defer, the payment of tax on its remaining foreign-source income."

As the portion of Apple's income that it earns outside of the U.S. has surpassed its domestic earnings, the company has taken to lobbying for a tax holiday that would allow it to repatriate its cash with a reduced tax load. A consortium of companies, which includes Apple, has proposed a one-year break that would let companies pay just 5 percent to bring their money home, rather than the 35 percent tax rate they currently face.

Two-thirds of Apple's cash hoard, which reached $81 billion in the September 2010 quarter, is located offshore. The company's participation in the WIN America group fighting for the tax holiday has drawn the ire of a group opposing the proposed tax cuts. US Uncut staged several protests outside of Apple retail stores last year.

Protest outside Chicago Lincoln Park Apple Store
post #2 of 67
I'm surprised that I haven't heard Canada make an offer to accept tax-free investment in their country. Usually they jump at these opportunities. There is probably some office space available in Waterloo.
post #3 of 67
Lol, $689,000 in interest. Serves the government right for being so slow.
post #4 of 67
I'm confused by the phrase "anti-lobbying group opposing the proposed tax cuts." Aren't they themselves lobbying, but for the opposite outcome. Are they against lobbying or just against corporate tax cuts for offshore profits?

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply
post #5 of 67
Quote:
Originally Posted by SolipsismX View Post

I'm confused by the phrase "anti-lobbying group opposing the proposed tax cuts." Aren't they themselves lobbying, but for the opposite outcome. Are they against lobbying or just against corporate tax cuts for offshore profits?

It's possible they have no idea what they're even protesting or what the ramifications of their "dream" might actually entail.
post #6 of 67
Quote:
Originally Posted by SolipsismX View Post

I'm confused by the phrase "anti-lobbying group opposing the proposed tax cuts." Aren't they themselves lobbying, but for the opposite outcome. Are they against lobbying or just against corporate tax cuts for offshore profits?

Hrmm, yeah I guess that isn't very clear.

They're against companies lobbying for the corporate tax cuts and they're against the cuts.

Their demands for Apple: "Leave the Tax Cheat Lobbying Group and Stop Lobbying Congress for More Tax Loopholes"

It doesn't look like they themselves lobby the government (in the formal sense) since they consider themselves a grassroots movement.
post #7 of 67
Quote:
Originally Posted by joshong View Post

...they consider themselves a grassroots movement.

Translation: All four of us meet on the 3rd Tuesday at the Y... and Debbie brings pie.

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply
post #8 of 67
Quote:
Originally Posted by SolipsismX View Post

I'm confused by the phrase "anti-lobbying group opposing the proposed tax cuts." Aren't they themselves lobbying, but for the opposite outcome. Are they against lobbying or just against corporate tax cuts for offshore profits?

That's a damn good point. They are protesting this tax cut, not protesting lobbying. What a bad caption.
post #9 of 67
Whoopee. $980K. These days Apple truncates the dollar amounts in its financial statements to the millions.

I admit to being a Fanatical Moderate. I Disdain the Inane. Vyizderzominymororzizazizdenderizorziz?

Reply

I admit to being a Fanatical Moderate. I Disdain the Inane. Vyizderzominymororzizazizdenderizorziz?

Reply
post #10 of 67
"A consortium of companies, which includes Apple, has proposed a one-year break that would let companies pay just 5 percent to bring their money home, rather than the 35 percent tax rate they currently face."

I'm an Apple stockholder but I don't think that is fair. I'm not requesting a one time annual tax rate of 5% so I can cash out my 401k with virtually no tax.
post #11 of 67
Quote:
Originally Posted by DaveN View Post

"A consortium of companies, which includes Apple, has proposed a one-year break that would let companies pay just 5 percent to bring their money home, rather than the 35 percent tax rate they currently face."

I'm an Apple stockholder but I don't think that is fair. I'm not requesting a one time annual tax rate of 5% so I can cash out my 401k with virtually no tax.

But we're talking overseas profits. Profits that were not made in the US. Profits that will not come back to the US and therefore won't be used in the US so long as there is a 35% tax rate on them. Some US companies may have no choice because they don't make enough profit in the US to stay above water but Apple is not one of them. So what is better: getting 5% of tens of billions or 35% of nothing? As a US citizen I'm all for funneling more money back to this country.

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply
post #12 of 67
The primary job of any government is to maintain law and order in a given geographical area, and that is the main reason they receive taxes. Therefore taxes should go to the government in the area you earned the money. US companies operating overseas should pay taxes to the local government not the US government.
post #13 of 67
Now that's government efficiency in action ... an issue from 1989 resolved in 2012.

And people want to give them control over healthcare too ... name me one entitlement program or agency the government runs in an efficient and/or in a sustainable fashion.
post #14 of 67
Quote:
Originally Posted by SolipsismX View Post

But we're talking overseas profits. Profits that were not made in the US. Profits that will not come back to the US and therefore won't be used in the US so long as there is a 35% tax rate on them. Some US companies may have no choice because they don't make enough profit in the US to stay above water but Apple is not one of them. So what is better: getting 5% of tens of billions or 35% of nothing? As a US citizen I'm all for funneling more money back to this country.

However Apple, like many other companies including Google and Microsoft, use the Double Irish tax loophole that assures them they pay virtually no taxes on those overseas profits either. They can't have it both ways; you either pay taxes in the US or you pay them overseas.

http://en.wikipedia.org/wiki/Double_Irish_Arrangement
http://news.cnet.com/8301-30684_3-20020329-265.html

I'm with California here. Either Apple agrees to pay the tax rates owed, or they keep the money overseas.

Besides, such a tax holidays was granted once before. Instead of "spurring the economy" here in the US, as proponents of the holiday will say, companies used the savings to buy back stock and give their CEO bonuses instead of hiring new people or investing in R&D. In fact after a $150 BILLION dollar tax break, the top 15 companies actually laid people off.

http://www.businessweek.com/news/201...et-repeat.html

In an economy where everybody seems worried about where every penny is spent, how about we start looking at where the pennies are getting lost in the system instead of trying to give a $300 billion tax break to companies.
post #15 of 67
Quote:
Originally Posted by ascii View Post

The primary job of any government is to maintain law and order in a given geographical area, and that is the main reason they receive taxes. Therefore taxes should go to the government in the area you earned the money. US companies operating overseas should pay taxes to the local government not the US government.

Quote:
Originally Posted by SolipsismX View Post

But we're talking overseas profits. Profits that were not made in the US. Profits that will not come back to the US and therefore won't be used in the US so long as there is a 35% tax rate on them. Some US companies may have no choice because they don't make enough profit in the US to stay above water but Apple is not one of them. So what is better: getting 5% of tens of billions or 35% of nothing? As a US citizen I'm all for funneling more money back to this country.

Yep, this tax law is bizarre. Apple earns $xxmillion in Australia, pays its corporate taxes according to Australian tax law, but then can't take the money home without paying tax, all over again, just because they hit the button for electronic funds transfer.

I'm surprised they were still willing to pay 5%.

Speaking as an Australian, this is great. It means that Apple is more likely to use this money for investment over here, rather than those profits head back to the USA. Meanwhile, you mob get none of it, and keep right on borrowing like no tomorrow.

I feel sorry to tell you your country is run by a bunch of clowns, who very soon will run out of other people's money. That would normally be your business, but as the world's biggest economy, if America sneezes the rest of us get a cold. You seem to be borrowing money to the extent that you are about to get the plague, and where will that leave everyone else?
It's the heat death of the universe, my friends.
Reply
It's the heat death of the universe, my friends.
Reply
post #16 of 67
$980k? That covers their power bill this month...next

And agree with Entropys. Bloody American country-runners, they're more bothered about today than than tomorrow. Always have been, always will. Bash the last guy, bomb a minority country and spend, that's American policy.
post #17 of 67
Quote:
Originally Posted by skittlebrau79 View Post

However Apple, like many other companies including Google and Microsoft, use the Double Irish tax loophole that assures them they pay virtually no taxes on those overseas profits either. They can't have it both ways; you either pay taxes in the US or you pay them overseas.

I'm under the impression Apple doesn't employ the double fisted Irish or Dutch oven like MS and Google.

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply
post #18 of 67
Quote:
Originally Posted by SolipsismX View Post

But we're talking overseas profits. Profits that were not made in the US. Profits that will not come back to the US and therefore won't be used in the US so long as there is a 35% tax rate on them. Some US companies may have no choice because they don't make enough profit in the US to stay above water but Apple is not one of them. So what is better: getting 5% of tens of billions or 35% of nothing? As a US citizen I'm all for funneling more money back to this country.

i think a better rate ought to be possible than 5%!!
post #19 of 67
Quote:
Originally Posted by SolipsismX View Post

I'm under the impression Apple doesn't employ the double fisted Irish or Dutch oven like MS and Google.

Regardless, it's not like it is any surprise to Apple, or any other multinational company, that they have to pay tax when the money is repatriated. Surely they knew this when they were (are) making money hand over fist overseas?

EDIT: I a word.
post #20 of 67
Quote:
Originally Posted by djsherly View Post

Regardless, it's not like it is any surprise to Apple, or any other multinational company, that they have to pay tax when the money is repatriated. Surely they knew this when they were (are) making money hand over fist overseas?

EDIT: I a word.

Sure, it's not a surprise, but that's not the issue. The issue is they have no reason nor legal obligation to bring move profits across countries so why would they at 35% interest rates.

Assuming you are an American, imagine if you were charged 35% for moving money from one state bank to another even though you had plenty in the states you travel. You simply wouldn't move the money because the cost of doing business would be too high.

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply
post #21 of 67
I'm glad companies in the US don't get it so easy with the IRS. It seems here in the UK, all you have to do is have a few nice lunches with the top tax inspector and get your tax bill cut in half, and we are talking billions here. See Vodafone & Goldman Sachs.
post #22 of 67
[QUOTE=SolipsismX;2021218]Sure, it's not a surprise, but that's not the issue. The issue is they have no reason nor legal obligation to bring move profits across countries so why would they at 35% interest rates.[/quote[

Exactly, that's why it's equally open for any of these companies *not* to repatriate the cash.

Quote:
Assuming you are an American, imagine if you were charged 35% for moving money from one state bank to another even though you had plenty in the states you travel. You simply wouldn't move the money because the cost of doing business would be too high.

This goes back to the point that it's no secret this arrangement is in place. You plan your business accordingly.
post #23 of 67
Quote:
Originally Posted by SolipsismX View Post

Sure, it's not a surprise, but that's not the issue. The issue is they have no reason nor legal obligation to bring move profits across countries so why would they at 35% interest rates.

Assuming you are an American, imagine if you were charged 35% for moving money from one state bank to another even though you had plenty in the states you travel. You simply wouldn't move the money because the cost of doing business would be too high.

And that's fair enough, but if Apple wants to move that money they should pay the taxes that entails. Their customers don't get a "tax holiday," why should they?
My Android phone is the worst phone I've ever owned.
Reply
My Android phone is the worst phone I've ever owned.
Reply
post #24 of 67
Quote:
Originally Posted by ascii View Post

The primary job of any government is to maintain law and order in a given geographical area, and that is the main reason they receive taxes. Therefore taxes should go to the government in the area you earned the money. US companies operating overseas should pay taxes to the local government not the US government.

The main reason for taxes is that that there are people who want to rule our lives.

The BNP of most countries goes up 3% per year in average. That means that the politicians get 3% more taxes each year without doing anything. Somehow that play away with this money.

I live in the country that have the highest taxes in the world. The lowest tax rate for a worker is 75%. If schools/healthcare/care worked people would never accept these high taxes. This leads to the absurd thing that the government have a self interest that things does not work.

Each government sector get X amount of money. At years end: If a sector is good and haven't spent all money they are punished with lover budget money for the next year. The sectors that misbehave and spends to much money are rewarded and gets more money. The waste is enormous.

The US problem is not low taxes. The problem is unemployment. Even if the country create 100K new jobs/month the unemployment goes up because of that immigration is higher. As a non American I can also see the great white elephant in the US economy: the insane military spending.
Why should Apple buyers money outside US go to these insane spendings?

In Apples case/most companies: They want to have the better tax rules for overseas income and income in US. Apple pays 23% taxes in US. (google 21% and MSFT 7%). Money that are generated in US use US infrastructure that are payed by US taxes. Money that is generated outside US haven't used any US infrastructure. With todays 35% tax rule money generated outside US, for no cost of the US government, is taxed higher the money generated in US.

And last: In a country there are X amount of money. If you rise the taxes there will be less money in the private sector that leads to less jobs. Less jobs means less tax income. Many countries choose then to raise the taxes and they are in a vicious cycle.
post #25 of 67
Quote:
Originally Posted by blursd View Post

Now that's government efficiency in action ... an issue from 1989 resolved in 2012.

And people want to give them control over healthcare too ... name me one entitlement program or agency the government runs in an efficient and/or in a sustainable fashion.

I am so sad for US. I live in a country with government health care.
After paying about 1 million dollar in tax I got a back problem. Had to wait 4 years for an operation. That lead to that I did my last work day before the age of 30.

I am now on medical benefit for the rest of my life.

Had I lived in US, I would have had the operation within 2 weeks and the quality of health care is on a totally different level.

All Obama care lovers should look at this hint: There are many Canadians that work in the US. Most of them choose to pay for health insurance in US even if they could get free care in their home country. Waiting years for treatment is not good.

And last: If the "government" pays for health care they will try to save money. Here in Sweden they refuse to give cancer patients medicine that could prolong their lives 6 month. The government have no incentive to spend 10000 dollar extra on there drugs.
post #26 of 67
Quote:
Originally Posted by djsherly View Post

Regardless, it's not like it is any surprise to Apple, or any other multinational company, that they have to pay tax when the money is repatriated. Surely they knew this when they were (are) making money hand over fist overseas?

EDIT: I a word.

Is it wrong that Apple makes money "hand over fist"?

Do you understand that its good that private companies makes money? Do you know this simple economic fact that ALL taxes are generated from private companies and their employees?

Isn't it good that Apple want to take the money "home" and that they are ok to pay the government their protection fee? They are just negotiating the "protection" fee.

Todays government is worse then the mafia.
post #27 of 67
Quote:
Originally Posted by ascii View Post

Lol, $689,000 in interest. Serves the government right for being so slow.

The government doesn't care about the Interest. That issue was decided years ago that is was going to have to pay that. The government really cared about the other issue that Apple lost on. Had the government lost on that, many companies including Apple, would have had to pay significantly less taxes on foreign income. This was a win for the government.

Moreover, if Apple would pay it's taxes, maybe the government could afford to do things quicker. :O)
post #28 of 67
I would have never guessed this board was filled with so many libertarians!

Every few years businesses start lobbying for a tax holiday on their earnings. As other posters on this board have noted, they went into business knowing this repatriation tax existed, but want to weasel out of it when it comes time to actually bring the money home.

Repatriation money is taxed as income, and for Apple that would be at the 35% rate. This is not in addition to the taxes they already paid to the originating country, however.

Let's say Apple earned $100 in Australia, and their tax rate is 30%. Apple would have paid $30 in taxes, and held on to $70. Now, when they repatriate that money, their tax burden would be $35 (35% of $100), but they'd get a $30 deduction for taxes already paid. (Anyone here who pays state taxes gets the same federal deduction).

Add in the complex system of laws and dedication, write-offs, etc, and the average American company in the highest tax bracket pays an effective tax rate of around 25%, putting them right in the middle of the world's corporate tax rates.

The US is pretty much alone in repatriation taxes. You can agree or disagree that it's a good idea. What you can't disagree with is that Apple knows full well that the repatriation tax exists, yet, for some reason, maintains their headquarters in the US.
post #29 of 67
Quote:
Originally Posted by shompa View Post

Is it wrong that Apple makes money "hand over fist"?

Do you understand that its good that private companies makes money? Do you know this simple economic fact that ALL taxes are generated from private companies and their employees?

Isn't it good that Apple want to take the money "home" and that they are ok to pay the government their protection fee? They are just negotiating the "protection" fee.

Todays government is worse then the mafia.

Really? Fact. Companies today pay lower taxes than any other point of time in our Countries histories. The largest bank in our Country, Bank of America paid zero federal taxes last year. The same was true with GE. This is odd, since companies are treated as individuals under the Constitution and reap more representation from the government than the living breathing people obtain.

Moreover, since the founding of this Country there was an import tax, which essentially made it so american industry didn't have to compete with slave labor. In the greatest economic times our Country has seen, many of these companies used their new found wealth to do away with these taxes in the guise of so called free trade agreements. As any idiot can figure out, since the passing of the free trade agreements american manufacturing shipped to all the countries our government has been for years claiming abuse people, and worst undermine our way of life. I didn't see the US rush our military into China after the Chinese murdered potentially thousands of students for protesting in Tiananmen Square. Instead, we gave China our entire manufacturing economy and all the taxes that go with it. If I recall, this was sold to us by claiming it would create more jobs right here in the US. I wonder when that will be happening.

Further, since the beginning of our Country our so called Founding Father's understood the value of the raw materials in our Country. We didn't want foreign Countries gobbling them all up, so we imposed an export tax. Currently, the same companies have lobbied away the export tax on things such as steel and oil. We claim there is an oil shortage in our Country, but a lot of the oil mined from public lands is actually sold overseas. We get to pay for the expensive stuff coming from overseas.

The loss of these taxes that have been around since the beginning of time in our Country is the reason you see government struggling to pay police, firefighters, and maintain roads. Ironically, the Chinese government is using its new found wealth to loan money to the US, which we the tax payers get to pay back. At some point last year, Apple had more cash on hand then the US government.

I love Apple, but the tax break on foreign earned income is ridiculous. Apple isn't going to use that money to patriotically benefit the rest of us back home. It is going to use the money to buy stock grants to give to its executives. Don't get me started on how companies lobbied to screw us over in the stock market.

"Taxes are what we pay for civilized society" Oliver Wendell Holmes, Jr.
post #30 of 67
Quote:
Originally Posted by iulius View Post

I would have never guessed this board was filled with so many libertarians!

This.

iPhone 4S 64GB, Black, soon to be sold in favor of a Nokia Lumia 920
Early 2010 MacBook Pro 2.4GHz, soon to be replaced with a Retina MacBook Pro, or an Asus U500

Reply

iPhone 4S 64GB, Black, soon to be sold in favor of a Nokia Lumia 920
Early 2010 MacBook Pro 2.4GHz, soon to be replaced with a Retina MacBook Pro, or an Asus U500

Reply
post #31 of 67
Quote:
Originally Posted by skittlebrau79 View Post

However Apple, like many other companies including Google and Microsoft, use the Double Irish tax loophole that assures them they pay virtually no taxes on those overseas profits either. They can't have it both ways; you either pay taxes in the US or you pay them overseas.

http://en.wikipedia.org/wiki/Double_Irish_Arrangement
http://news.cnet.com/8301-30684_3-20020329-265.html

I'm with California here. Either Apple agrees to pay the tax rates owed, or they keep the money overseas.

Besides, such a tax holidays was granted once before. Instead of "spurring the economy" here in the US, as proponents of the holiday will say, companies used the savings to buy back stock and give their CEO bonuses instead of hiring new people or investing in R&D. In fact after a $150 BILLION dollar tax break, the top 15 companies actually laid people off.

http://www.businessweek.com/news/201...et-repeat.html

In an economy where everybody seems worried about where every penny is spent, how about we start looking at where the pennies are getting lost in the system instead of trying to give a $300 billion tax break to companies.

I am not 100% sure, but the case with Double Irish with Apple isn't exactly the same as Microsoft or Google. Which uses IP to dodge the Profits tax.

Governments has actually gaining Sales Tax from every Apple products sold if they have VAT, like UK, or Import Tax like China.

So, like what others have said, Why Should apple pay tax again? Even a 5% is pretty god damn good deal for the government.
post #32 of 67
Quote:
Originally Posted by ascii View Post

The primary job of any government is to maintain law and order in a given geographical area, and that is the main reason they receive taxes. Therefore taxes should go to the government in the area you earned the money. US companies operating overseas should pay taxes to the local government not the US government.

The point you're missing is that Apple is already paying taxes in all the countries they do business in - according to the laws of that country. The US wants Apple to pay taxes in the foreign country PLUS an additional 35% if they bring the after-tax profits to the U.S. THAT is what is being discussed.

Quote:
Originally Posted by skittlebrau79 View Post

However Apple, like many other companies including Google and Microsoft, use the Double Irish tax loophole that assures them they pay virtually no taxes on those overseas profits either. They can't have it both ways; you either pay taxes in the US or you pay them overseas.

http://en.wikipedia.org/wiki/Double_Irish_Arrangement
http://news.cnet.com/8301-30684_3-20020329-265.html

I'm with California here. Either Apple agrees to pay the tax rates owed, or they keep the money overseas.

Besides, such a tax holidays was granted once before. Instead of "spurring the economy" here in the US, as proponents of the holiday will say, companies used the savings to buy back stock and give their CEO bonuses instead of hiring new people or investing in R&D. In fact after a $150 BILLION dollar tax break, the top 15 companies actually laid people off.

http://www.businessweek.com/news/201...et-repeat.html

In an economy where everybody seems worried about where every penny is spent, how about we start looking at where the pennies are getting lost in the system instead of trying to give a $300 billion tax break to companies.

The point you're missing is that Apple is forced to pay the legal taxes in each country. If Ireland wants pro-business tax rules in order to encourage investment, that's their right as a sovereign country. Apple pays what Ireland tells them to pay.

And then the U.S. wants 35% more for simply transferring cash.

Quote:
Originally Posted by TBell View Post

The government doesn't care about the Interest. That issue was decided years ago that is was going to have to pay that. The government really cared about the other issue that Apple lost on. Had the government lost on that, many companies including Apple, would have had to pay significantly less taxes on foreign income. This was a win for the government.

Moreover, if Apple would pay it's taxes, maybe the government could afford to do things quicker. :O)

Apple has paid its taxes - in fact, Apple OVERpaid - which is why the government must refund their money.

As for the rest, you are misunderstanding the argument. It's a matter of timing, not whether Apple should pay taxes or not. To understand the issue, let's make up some numbers:

Let's say that Apple earned $10 B in global profits in 2010. For simplicity, we'll say that $5 B was in the U.S. and $5 B in Japan (obviously, the real situation was more complex, but it won't change the result). Now, since Apple Japan is a separate corporation, they issue dividends AFTER their fiscal year has ended. Let's say that Apple Japan pays $2 B in taxes, reinvests $2 B, and sends $1 B to Apple Inc as a dividend. But that dividend is actually paid in 2011.

Apple wants to pay 2010 taxes on its $5 B in U.S. income plus the $1 B in dividends, so it would pay U.S. taxes on $6 B for 2010. The argument is that since Apple Japan is a wholly owned subsidiary, the income is earned in 2010, even though the dividend isn't paid until later.

The government says "no, dividend income is taxed when it is paid". For example, let's say that you own 10,000 shares of company xyz stock. The company earns a record profit in 2010 and pays a dividend in 2011. That dividend is taxable to you for 2011, NOT 2010 even though the company paid tax on the record profits in 2010.

One could make arguments either way, but I think the government's argument is a little stronger, but can't claim to have done a detailed analysis of the tax laws.

Why does it matter? Because Apple's effective tax rate was higher in one year than in the other for various reasons. If the effective tax rate is higher in 2011 than in 2010 (or 1990 vs 1989 in this case), then you'd obviously prefer for the income to occur in the earlier year.
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
Reply
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
Reply
post #33 of 67
Quote:
Originally Posted by TBell View Post

Really? Fact. Companies today pay lower taxes than any other point of time in our Countries histories.

That is not correct.
http://www.taxpolicycenter.org/taxfa....cfm?Docid=213

Corporate income tax rates were lower than today up until 1932 and also for the period between 1988 and 1992.

That's based on highest tax RATE. If you look at actual corporate taxes paid, your statement is also incorrect:
http://www.nytimes.com/imagepages/20...ml?ref=economy

Total corporate taxes (as a percent of GNP) were lower than today in 2001-02 and 1982-87 and before 1913 when the corporate income tax was implemented (and probably also the periods between 1913 and 1932, although I don't have the data handy).
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
Reply
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
Reply
post #34 of 67
$920K is chump change for Apple, but it's the principle of the matter. Obama's blank checks can cover this with ease!!
Don't flame me for my own opinion, unless you feel it necessary to boost your own ego.
Reply
Don't flame me for my own opinion, unless you feel it necessary to boost your own ego.
Reply
post #35 of 67
Quote:
Originally Posted by SolipsismX View Post

I'm under the impression Apple doesn't employ the double fisted Irish or Dutch oven like MS and Google.

If they aren't, they are doing a disservice to their shareholders by not working to minimize their tax obligations.

It is a shame only a few people on the thread understand the core issue. Even if all the repatriated funds go to the CEOs, it is still money in the US economy as long as they spend a reasonable percentage of it.

The alternative for US and California is more internationally-diversified operations so they can avoid expenditures here and use the cash elsewhere. That eliminates jobs in the most simplistic analysis.

All you can reasonably argue for the double-taxation is that it helps avoid concentration of wealth somewhat.
post #36 of 67
Quote:
Originally Posted by knightlie View Post

And that's fair enough, but if Apple wants to move that money they should pay the taxes that entails. Their customers don't get a "tax holiday," why should they?

totally different kind of taxes.

This would be more like if, for whatever reason, you had a bank account in the UK and the US and you wanted to move it all to your US bank. But the US was calling that 'income' and wanted to change you income tax on it, even though you would have paid the appropriate tax in the UK (which could be nothing). They are trying to do the same thing to companies and while we love to say "yeah still it to the big boys" it means that they won't move the money. And by not moving the money, which is sometimes the bigger part of their cash (such as with Apple) there goes the funds to do things like build factories here in the US which everyone is screaming Apple simply must do.

Now do I think it would be fair to have two rates of interest if they are going to insist on something, sure. How about 10% for a flat move but only 5% if you are actually using the money to benefit the country in some major way, like a factory.

A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

Reply

A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

Reply
post #37 of 67
Quote:
Originally Posted by charlituna View Post

totally different kind of taxes.

This would be more like if, for whatever reason, you had a bank account in the UK and the US and you wanted to move it all to your US bank. But the US was calling that 'income' and wanted to change you income tax on it, even though you would have paid the appropriate tax in the UK (which could be nothing).

Nope. It's more like if you have a job in UK and you pay a lower income tax in UK and then you've to pay the difference btw US and UK tax to the US also. Because, what Apple's earning is income.

Quote:
They are trying to do the same thing to companies and while we love to say "yeah still it to the big boys" it means that they won't move the money. And by not moving the money, which is sometimes the bigger part of their cash (such as with Apple) there goes the funds to do things like build factories here in the US which everyone is screaming Apple simply must do.

You're dreaming if you think Apple or other companies will 'build factories in US' if we give them a break on this tax. They just build factories in the lowest cost countries while getting protection from US military and refuse to pay tax to the US.
post #38 of 67
I don't understand why people think corporations (and individuals) are being taxed "again" when they make profit internationally. They get a tax CREDIT on foreign taxes they already paid!

For example, if Apple made a profit of $100 in a foreign country and that country's tax rate was 10%, Apple would pay that foreign country $10 on profit earned there. Apple then repatriates that profit back to the US that has a tax rate of 35%. Apple would only pay $35 MINUS a $10 tax credit it already paid in taxes to a foreign country. So Apple is being effectively taxed 35% just as if it was a domestic profit. They are just splitting the payment between two different collectors. They aren't being taxed twice, they are only making two payments on what they would otherwise have paid in one payment if that profit was generated locally.

Many people across the US seem to be under the impression that corporations like Apple get taxed 10% from the foreign country AND 35% from the US, effectively a 45% tax rate, which is completely incorrect.

And of course, this is all oversimplified because many corporations make profit in any number of countries where they can offset US taxes with excess tax credits from profits made in countries with higher taxation. Not to mention other loopholes.

So stop spewing this double-tax crap.

SOURCE: http://www.taxpolicycenter.org/brief...ional-work.cfm
When a company stops chasing profit and start chasing the betterment of their products, services, workforce, and customers, that will be the most valuable company in the world.
Reply
When a company stops chasing profit and start chasing the betterment of their products, services, workforce, and customers, that will be the most valuable company in the world.
Reply
post #39 of 67
Quote:
Originally Posted by charlituna View Post

totally different kind of taxes.

This would be more like if, for whatever reason, you had a bank account in the UK and the US and you wanted to move it all to your US bank. But the US was calling that 'income' and wanted to change you income tax on it, even though you would have paid the appropriate tax in the UK (which could be nothing). They are trying to do the same thing to companies and while we love to say "yeah still it to the big boys" it means that they won't move the money. And by not moving the money, which is sometimes the bigger part of their cash (such as with Apple) there goes the funds to do things like build factories here in the US which everyone is screaming Apple simply must do.

Now do I think it would be fair to have two rates of interest if they are going to insist on something, sure. How about 10% for a flat move but only 5% if you are actually using the money to benefit the country in some major way, like a factory.

Except you neglect to mention you get a tax credit of whatever foreign tax you already paid on that money to the UK.
When a company stops chasing profit and start chasing the betterment of their products, services, workforce, and customers, that will be the most valuable company in the world.
Reply
When a company stops chasing profit and start chasing the betterment of their products, services, workforce, and customers, that will be the most valuable company in the world.
Reply
post #40 of 67
Quote:
Originally Posted by jragosta View Post

The point you're missing is that Apple is already paying taxes in all the countries they do business in - according to the laws of that country. The US wants Apple to pay taxes in the foreign country PLUS an additional 35% if they bring the after-tax profits to the U.S. THAT is what is being discussed.

The point you're missing is that Apple is forced to pay the legal taxes in each country. If Ireland wants pro-business tax rules in order to encourage investment, that's their right as a sovereign country. Apple pays what Ireland tells them to pay.

And then the U.S. wants 35% more for simply transferring cash.

But the point you're missing is that Apple gets a tax credit of whatever they already paid to that foreign government. So it's not like they pay 10% to one country and then 35% MORE to the US. When they have to pay the 35% they get a tax credit of the 10% they already paid to the other government. So Apple's tax rate is effectively 35% total paid to all parties, not 45% or something else absurdly astronomical.
When a company stops chasing profit and start chasing the betterment of their products, services, workforce, and customers, that will be the most valuable company in the world.
Reply
When a company stops chasing profit and start chasing the betterment of their products, services, workforce, and customers, that will be the most valuable company in the world.
Reply
New Posts  All Forums:Forum Nav:
  Return Home
  Back to Forum: General Discussion
AppleInsider › Forums › General › General Discussion › Apple wins $920K tax refund from 1989, loses appeal for overseas tax reprieve