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Apple's calls for repatriation tax holiday gain no traction with White House

post #1 of 123
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With some two-thirds of its cash hoard housed overseas, Apple would like a tax holiday to allow it to move that money back to the U.S., but its pleas have fallen on deaf ears at the White House.

With $64 billion in cash remaining offshore, Apple executives said during a conference call on Monday that they have no plans to bring that money back to the U.S. because of taxes. For some time now, Apple has lobbied the U.S. government for a tax holiday that would give the company an incentive to bring that money stateside.

"Repatriating the cash would result in significant tax penalties," Apple Chief Financial Officer Peter Oppenheimer said. "The tax laws currently allow for a significant disincentive. We've expressed our views to Congress and the White House."

But despite Apple's pleas, both behind the scenes and public, White House officials are not interested in offering a "repatriation holiday" for corporations to bring overseas funds stateside, according to Talking Points Memo.

"A White House official told TPN that the Obama Administration specifically chose not to propose a repatriation holiday — a temporary tax break on overseas cash brought back to the U.S., which Apple and other tech companies have sought for years," Carl Franzen reported.

"Instead, the official told TPM that the White house in late February put forth 'a comprehensive corporate tax reform plan that simplifies the code, levels the playing field for American businesses and encourages investment here at home.'"

While Apple's interest in a tax holiday hasn't gained traction at the White House, the iPhone maker has found some support in Congress. Specifically, Democratic Senator Kay Hagan of North Carolina has been a key proponent of the Foreign Earnings Reinvestment Act.

"(This week's) announcement by Apple only highlights the need to pass common-sense legislation that would allow American companies to put $1 trillion of foreign earnings back to work in the U.S. economy," Hagan reportedly said. "our stagnant economy demands practical, creative and bipartisan solutions right now."

Hagan's plan, which has gained support from Republican Senator John McCain, would allow companies to return their profits to the U.S. at a temporarily reduced tax rate. Hagan believes it would trigger the flow of $1 trillion back into the U.S. economy.

[ View article on AppleInsider ]
post #2 of 123
Apple made a LOT of money exporting jobs and manufacturing overseas. It seems fair that some of that money should be taxed on its way back to the U.S.
post #3 of 123
These types of holidays make no sense. In fact they make things considerably worse. If companies know that congress will grab their ankles and grant a tax "holiday" every few years, the companies will *never* bring any cash home during the off years. All revenue would be lost from global corporations forever.
post #4 of 123
Nothing is stopping Apple from investing it's money in the US. How about starting by, I don't know, investing money in the US? One great way to invest money in the US is to bring that money back to the US and paying rightful taxes on it. It's not like they couldn't afford it and it's not money lost either. The states is trillions of dollars in debt in part because companies keep sending jobs overseas due to greed.
post #5 of 123
The current issue here is the HIGH tax rate. Lowing the tax rate on foreign money will encourage domestic investments once companies like Apple bring back profits from overseas.

Two choices:
$0 of the $60,000,000,000 with current tax rate or
$x of the $60,000,000,000 with a lower tax rate

That $x multiplies when it's injected in this nation's economy.

.
Quote:
Originally Posted by Alann View Post

Apple made a LOT of money exporting jobs and manufacturing overseas. It seems fair that some of that money should be taxed on its way back to the U.S.
post #6 of 123
Quote:
Originally Posted by Mystigo View Post

These types of holidays make no sense. In fact they make things considerably worse. If companies know that congress will grab their ankles and grant a tax "holiday" every few years, the companies will *never* bring any cash home during the off years. All revenue would be lost from global corporations forever.

Very true. The real solution is to have a more competitive (lower) corporate tax rate in the first place so they keep their money here (and pay taxes here) instead of overseas. You get more money into the economy, and you even get higher revenue despite the lower tax rate. (A smaller percentage of a much bigger pie.)
post #7 of 123
Quote:
Originally Posted by Alann View Post

Apple made a LOT of money exporting jobs and manufacturing overseas. It seems fair that some of that money should be taxed on its way back to the U.S.

I tell my kids all the time, that life isn't fair.

So, while it may not seem "fair" to you for Apple to move their legally earned money to the U.S. without paying taxes, the fact is that having the money in the U.S. would be beneficial to the economy. They would spend it, they would save it, they would do something with it that would generate employment and taxes.

And, since there is nothing to prevent them from leaving it right where it is, I'd rather they were able to move it here without the "penalty" of taxes.
post #8 of 123
These are going to be fun comments.

(pulls up chair, makes some popcorn)

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post #9 of 123
Quote:
Originally Posted by alienzed View Post

Nothing is stopping Apple from investing it's money in the US. How about starting by, I don't know, investing money in the US? One great way to invest money in the US is to bring that money back to the US and paying rightful taxes on it. It's not like they couldn't afford it and it's not money lost either. The states is trillions of dollars in debt in part because companies keep sending jobs overseas due to greed.

And the other part is because they're spending wildly beyond their tax revenue...
post #10 of 123
Quote:
Originally Posted by Alann View Post

Apple made a LOT of money exporting jobs and manufacturing overseas. It seems fair that some of that money should be taxed on its way back to the U.S.

What jobs were exported? What US company could do what Foxconn does? Where in the US can you get the Sony camera component made? Or the Qualcomm baseband? Of the Toshiba NAND flash? Or any number of components that are designed and made by companies outside the US?

Is it really fair to have all parts of a product shipped to the US to be taxed just to have it shipped back out? Is it really fair that a company has paid taxes in the country for products sold then be required to pay more taxes to a country in which those products were not sold?

There is no law requiring Apple to bring overseas profits back to the US just as there is not law requiring the US government to allow overseas profits to come back to the US untaxed. If the US government doesn't see a benefit from having a $1 trillion influx brought back into the US and getting some taxes instead of no taxes then that is their prerogative, too. I don't think the latter makes sense but it's not my call.

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post #11 of 123
This was a failed policy in 2004, and it would be another colossal failure today:

http://online.wsj.com/article/SB1000...022129888.html
post #12 of 123
Obama wants to rob Apple to pay down his $5 trillion increase in the deficit- no surprise here. Carry on.
One term president- so said Steve Jobs.
post #13 of 123
Quote:
Originally Posted by Alann View Post

Apple made a LOT of money exporting jobs and manufacturing overseas. It seems fair that some of that money should be taxed on its way back to the U.S.

Most industrialized countries do not tax foreign sourced corporate income that has already been taxed in the foreign country. Only the US does that.

This US practice actually discourages job creation at home because it is an incentive for corporations to use foreign incomes to invest in foreign countries rather than in the US.

Unless you are prepared to make it mandatory that US corporations bring home all foreign earnings (and I don't know if that's administratively and politically realistic), then you have to lure these earnings to the US if you want them to be brought here.
post #14 of 123
You do realize the tax rate is so high they'd literally piss away billions right? Apple isn't asking for no taxation, they are asking for the gov not to take a whopping chunk off top. Lowering the tax would most certainly encourage more US side money investment. Sure, companies will still outsource cheap labor oversea's and still save money taht way. but, when companies start building other things there beyond labor, instead of US. then it's a problem. Imagine a financial meeting that goes "well we got more cash sitting over there then here, we could use more servers in US and stores in US, but since that money isn't here, we'll build that stuff over there too using that money".
you get the idea. If you really think it's about corporate greed for everyone you'd be wrong. Some companies will apsolutely exploit a holiday for corporate greed. But honestly, I don't think that's apple's and some other companies intentions at all. I bet they'd love to bring some money back here and get some more US side stuff fired up.
post #15 of 123
Apple's already been taxed on this money. They're an international corporation that operates in multiple countries. The products and services are taxed locally. If they bring the money back into the US, then they'll get taxed *again*, but by a different government entity.

These sales come from non-US consumers. That's part of the global economy. They can go the Microsoft route and purchase a non-US entity like Skype. That means the money still won't go into the US. I'd rather have them get the money into the US and have them use it in the US rather than having it just accumulate outside of it.
post #16 of 123
Quote:
Originally Posted by Alann View Post

Apple made a LOT of money exporting jobs and manufacturing overseas. It seems fair that some of that money should be taxed on its way back to the U.S.

Apple has made a lot of money by selling their products overseas and has been taxed on those earnings. Bringing it back to the US of A would result in additional taxation.
~Tokolosh
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~Tokolosh
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post #17 of 123
Quote:
Originally Posted by Alann View Post

Apple made a LOT of money exporting jobs and manufacturing overseas. It seems fair that some of that money should be taxed on its way back to the U.S.

+1 (except for the "exporting" bit...).

I love Apple, but I have as much sympathy for them on this issue as I do for millionaires complaining about their income taxes. I'll take that dilemma over the alternative, any day...
post #18 of 123
Quote:
Originally Posted by sy1492 View Post

Two choices:
$0 of the $60,000,000,000 with current tax rate or
$x of the $60,000,000,000 with a lower tax rate

In other circumstances this might be considered blackmail.
post #19 of 123
Does anyone know (I am no expert on taxes) if Apple paid taxes on that money in the countries they earned it? If so, they should not be double taxed. If they did not pay taxes on it, then they should have to pay some money. Makes sense, no?

But, if they did pay taxes already (be it in another country), then why on earth should they be penalized if they wish to repatriate it? Again, I am no expert.

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post #20 of 123
Quote:
Originally Posted by sportyguy209 View Post

I tell my kids all the time, that life isn't fair.

So, while it may not seem "fair" to you for Apple to move their legally earned money to the U.S. without paying taxes, the fact is that having the money in the U.S. would be beneficial to the economy. They would spend it, they would save it, they would do something with it that would generate employment and taxes.

And, since there is nothing to prevent them from leaving it right where it is, I'd rather they were able to move it here without the "penalty" of taxes.

Your argument cuts both ways. Apple (like any "person") benefits from our society - rule of law, infrastructure, etc. So it's "fair" that they repatriate cash and pay taxes on it, not park it offshore where it benefits no one except a few already-wealthy money managers.
post #21 of 123
Quote:
Originally Posted by sy1492 View Post

The current issue here is the HIGH tax rate. Lowing the tax rate on foreign money will encourage domestic investments once companies like Apple bring back profits from overseas.

Two choices:
$0 of the $60,000,000,000 with current tax rate or
$x of the $60,000,000,000 with a lower tax rate

That $x multiplies when it's injected in this nation's economy.

.

Or it will encourage shipping more jobs overseas because it turns out you can both jack up profit margins and pay lower taxes to boot.
post #22 of 123
Quote:
Originally Posted by anon7979 View Post

This was a failed policy in 2004, and it would be another colossal failure today:

http://online.wsj.com/article/SB1000...022129888.html

A pure repatriation tax holiday probably wouldn't have different results (other than avoiding the double-taxation in the system which is why repatriation doesn't happen now), but maybe there's another solution.

Special deduction. If a business brings money into the U.S. and uses it for various forms of capital outlays or other investment within the U.S., they can deduct a percentage of the amount spent from the repatriation tax. So, if Apple wants to build a new factory, or a new customer support complex, or a new major server farm, they can bring in the money. If the investment doesn't happen, no deduction.
post #23 of 123
Quote:
Originally Posted by Tokolosh View Post

Apple has made a lot of money by selling their products overseas and has been taxed on those earnings. Bringing it back to the US of A would result in additional taxation.

and this was no secret to them when they we gathering revenue hand over fist. There's no thievery going on here by the government. On the contrary you might say Apple are trying to dodge the public purse.

The shortfall is made is somewhere, and typically Joe Average is the guy they called upon.

No intention to turn this into an ability to pay argument - but these things are (should be) built into the product price and Apple with probably the greatest GM in electronics isn't going to be burnt by repatriating that cash.
post #24 of 123
Quote:
Originally Posted by ronin510 View Post

Apple's already been taxed on this money. They're an international corporation that operates in multiple countries. The products and services are taxed locally. If they bring the money back into the US, then they'll get taxed *again*, but by a different government entity.

These sales come from non-US consumers. That's part of the global economy. They can go the Microsoft route and purchase a non-US entity like Skype. That means the money still won't go into the US. I'd rather have them get the money into the US and have them use it in the US rather than having it just accumulate outside of it.

It seems likely to me that the US Govt operates a double taxation regime. In such cases, wouldn't it onlybe the difference between the foreign rate and US rate of taxation that is levied?
post #25 of 123
Quote:
Originally Posted by Mystigo View Post

These types of holidays make no sense. In fact they make things considerably worse. If companies know that congress will grab their ankles and grant a tax "holiday" every few years, the companies will *never* bring any cash home during the off years. All revenue would be lost from global corporations forever.

You're right, they make no sense for the exact reason you described. However you didn't take your thought to its logical conclusion - that income already taxed overseas should not be taxed again to move it to a different bank account on a different landmass. Politicians eventually always lose their backbone, and corporations have all the money and the power in this situation.

The correct outcome is to stop the ridiculous habit of taxing income that's already been taxed elsewhere.
post #26 of 123
Quote:
Originally Posted by tundraboy View Post

Most industrialized countries do not tax foreign sourced corporate income that has already been taxed in the foreign country. Only the US does that.

This US practice actually discourages job creation at home because it is an incentive for corporations to use foreign incomes to invest in foreign countries rather than in the US.

Unless you are prepared to make it mandatory that US corporations bring home all foreign earnings (and I don't know if that's administratively and politically realistic), then you have to lure these earnings to the US if you want them to be brought here.

I'm not clear how you can be treated as a US company if you aren't going to be a US company. As a citizen working abroad you would have to pay the difference in tax rates, assuming the US rate is higher - there's no magic 'well, I'll keep it in the bank over here'. You have to file with the IRS and declare that income + pay taxes if the foreign rate was lower. If the foreign rate is the higher of the two, then you wouldn't pay taxes again, so there's no double taxing involved.

I'm totally against taxing the same money multiple times as well, but a tax holiday on repatriating foreign earnings really just rewards putting your investments overseas. Actually, most of these tax shelter loopholes are just inherently unfair to those who don't have enough money to play the big money tax games. Just ask Romney about his Bain/Cayman and Swiss accounts if you want to see how it's done.
post #27 of 123
Tax deals are for investment spending.

Apple will hopefully take the hint.
post #28 of 123
Quote:
Originally Posted by Alann View Post

Apple made a LOT of money exporting jobs and manufacturing overseas. It seems fair that some of that money should be taxed on its way back to the U.S.

UH, yeah ya think! And I love Apple products but give me an f'ing break.

Yeah they don't have enough. ONly 98 Billion in CASH. Meanwhile people are out of work and loosing their houses...

I could not agree more. Too bad the entire Republican party thinks it should all be tax free and corporate taxes should be zero. Meanwhile none of these big companies pays taxes anyways. What a joke, and it ain't funny...
post #29 of 123
How much does the Treasury get if Apple never brings the money back?
post #30 of 123
Pay the taxes apple and any other multy billion dollar American company with money internationally. No more Legal tax evasion with holiday breaks when you can afford it, while normal Americans pay their fair chair each year...
post #31 of 123
Quote:
Originally Posted by SolipsismX View Post

... a $1 trillion influx brought back into the US and getting some taxes instead of no taxes...

This is clearly a complex situation. But don't those profits exist overseas because Apple and other companies exported the jobs, and paid for work that yielded no benefits to the US in terms of materials sourcing, jobs, the multiplier effect of wages, or the income taxes that would have been paid by US workers? Like I say--it's complex--but it doesn't seem like good policy to embrace corporate behavior that costs the US in all those ways on the front end, and then lower taxes for the same corporations on the back end. I'll try to keep an open mind.

Quote:
Originally Posted by MysticalOS

I bet they'd love to bring some money back here and get some more US side stuff fired up.

Because Apple's short of cash to finance more "US side stuff"?

Quote:
Originally Posted by Techno

if they did pay taxes already (be it in another country), then why on earth should they be penalized if they wish to repatriate it? Again, I am no expert

Who makes and loses in this scenario? The corporation does ok: It clearly only moves its activity overseas if it can see it'll benefit from doing so. American workers lose jobs. The Treasury loses tax revenues (and remember, that's us, too: one reason personal taxes might need to be increased is if corporate tax billings drop, or are less than they'd be if certain business wasn't sent overseas). Would it change your mind if the corporation "shopped" overseas taxes, and found a haven where it paid lower taxes than it would have in the US, apart from the other cost savings? I worry that to do otherwise (to give a tax holiday) would simply encourage activity with a winner (corporations) and losers--workers, our government.

Complex.
post #32 of 123
And if I had kids, I would tell them, "What's legal isn't always right. Slavery was once legal in this country. Life isn't fair, but that shouldn't prevent the righting of wrongs."

Apple should pay a fair tax.
post #33 of 123
Quote:
Originally Posted by Sierrajeff View Post

Your argument cuts both ways. Apple (like any "person") benefits from our society - rule of law, infrastructure, etc. So it's "fair" that they repatriate cash and pay taxes on it, not park it offshore where it benefits no one except a few already-wealthy money managers.

This money was earned and taxed in other countries, using the infrastructure of those countries, not the USA. Your point is dumb.
post #34 of 123
Quote:
Originally Posted by aBeliefSystem View Post

Tax deals are for investment spending.

Apple will hopefully take the hint.

Wasted investment is just as bad as no investment at all. Refer to all those bridges to nowhere and Hillary Clinton's boneheaded idea that natural disasters are great for the economy because they boost employment.
post #35 of 123
Why is the US government entitled to ANY of this money?
Its all profits from overseas.
post #36 of 123
Quote:
Originally Posted by Mystigo View Post

These types of holidays make no sense. In fact they make things considerably worse. If companies know that congress will grab their ankles and grant a tax "holiday" every few years, the companies will *never* bring any cash home during the off years. All revenue would be lost from global corporations forever.

And... what is happening now? That revenue is lost from global corporations forever WITH our current policy.

I mean... look at what Microsoft does. They SELL BONDS in order to generate cash to distribute their dividends... while tends of billions sit overseas.
post #37 of 123
Why are so many comments here implying that Apple is dodging or evading paying their fair share. On money that they earn in the United States, and that is a huge pile in and of itself, they are paying their taxes as the law requires. This is not an issue of fair share or not. The money they've got parked elsewhere was generated elsewhere.
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post #38 of 123
Quote:
Originally Posted by Tokolosh View Post

Why are so many comments here implying that Apple is dodging or evading paying their fair share. On money that they earn in the United States, and that is a huge pile in and of itself, they are paying their taxes as the law requires. This is not an issue of fair share or not. The money they've got parked elsewhere was generated elsewhere.

Haven't you figured out what "fair share" means? To a certain segment of our population... the literal definition of "fair share" means nothing more than "from those according to their means." Apple has it... so they think they deserve it.
post #39 of 123
Quote:
Originally Posted by bobringer View Post

Haven't you figured out what "fair share" means? To a certain segment of our population... the literal definition of "fair share" means nothing more than "from those according to their means." Apple has it... so they think they deserve it.

Ding ding ding
post #40 of 123
Quote:
Originally Posted by sy1492 View Post

The current issue here is the HIGH tax rate. Lowing the tax rate on foreign money will encourage domestic investments once companies like Apple bring back profits from overseas.

Two choices:
$0 of the $60,000,000,000 with current tax rate or
$x of the $60,000,000,000 with a lower tax rate

That $x multiplies when it's injected in this nation's economy.

The actual tax rate is irrelevant. It the hope of a lower tax rate that is keeping money overseas. If it was half what it is now corporations would still hold out if there was a promise that a hike might be lower still.

What is needed is for the US government to incontrovertibly rule out future tax hikes to remove the incentive for companies to hold money offshore (just in case). Taxation and the government should take steps to avoid becoming a system that can be gamed, both now and in the future.
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