Apple accused of sidestepping taxes, company counters by touting job creation - Page 5

Quote:

Originally Posted by Commodification 


Isn't Apple about making the impossible 'possible', yet apparently their 'making a particular product at particular price point' means they must find tax loop holes and use Chinese slave-like labor to do it. I'm not saying Apple broke any laws because they didn't, but neither did southern slave owners before the civil war and what they did was evil but not illegal at time.

Slave-like labor? Southern slave owners? Apple?

I hold a few small positions in AAPL, I request to be formally addressed as MASTA from now on, LOL.

Quote:

Originally Posted by I am a Zither Zather Zuzz 

 

 

OK, Apple itself, the entity, pays Apple's taxes.  Nobody else.

At the simplest level, that's true. If you explore it a bit more deeply, it's not quite so simple.

If Apple paid more taxes, that would mean less money left over. The left over money belongs to the shareholders. So, by charging Apple more taxes, you would be essentially taking money from the shareholders. 

Furthermore, of course, all of the money that Apple does not pay in income taxes eventually gets taxed. Apple could issue the money as a dividend. They could buy companies which increase future profits. Or they could hold onto the money which increases share value - in which case the shareholder pays taxes when the stock is sold.  

But, most importantly, none of that matters one bit. Apple pays the amount that they're obligated to pay. Unless you're paying more of your income in taxes than you are required to, you have no room to complain.

Quote:

Originally Posted by Rogifan 

According to Forbes the tax rate the NY Times quoted in their article is incorrect. Basically they too estimated tax payments against 2011 earnings when most of those estimates we're based on 2010 earnings. In Apple's SEC filing they report a 24.2% effective tax rate, much higher than the 9.8% the Times is reporting.
http://www.forbes.com/sites/timworstall/2012/04/30/apples-9-8-tax-rate-new-york-times-ignorance-again/

Sure, but stelligent will continue to argue that it's a perfectly fair article.....

Quote:

Originally Posted by nagromme 

Let’s hope this is the tip of the iceberg for constant media stories revealing how corporations and the very wealthiest dodge taxes, resulting (inevitably) in a greater share of the load being borne by the rest of us.

Unfortunately I'm sure it will only be the beginning.  This year is an election year and someone "big" has absolutely no chance at re-election unless they can successfully project a massive class warfare.

Quote:

Originally Posted by SpamSandwich 

 

 

An individual could incorporate and there are a number of strategies for minimizing taxes legally. For one thing, have your employer hire you as a consultant and take advantage in that way. In my opinion, a person who does not take advantage of what is available to them to save money is a fool. As they say, "It's not what you make, it's how much you keep".

Quote:

Originally Posted by I am a Zither Zather Zuzz 

Ok.  so Apple does a lot of good things.

 

But it could do one more good thing:  It could pay its fair share of taxes!

Like most of the higher-ups in the Obama administration right?  Since they've set such a good example...

Quote:

Originally Posted by rustyshacklefor 

The hell w/ their job creation.  They weren't creating jobs with billions of dollars in tax revenue.  Like other large multinational corporations, they know damn well they're avoiding paying taxes with their activities. 

To hell with job creation?  In this economy?  They aren't creating new jobs?  I think you need to tai a look at things like data centers, head quarters, developers, etc. and rethink your statement.

Quote:

Originally Posted by hmm 

 

 

You need to consider something here. Apple is a big company, so even a small percentage is a lot of money. It wouldn't matter what percentage California charges. Apple would avoid it if possible simply because you're talking about a lot of money. All your statement indicates is that you typed the first thing that came to mind. Apple is trying to avoid taxes, so taxes must be too high, right? California does have some issues, but your solution wouldn't change anything. 

Some issues?  Seriously?  California is a disaster when it comes to taxes and regulations.  FInally the budget shortfalls are starting to show just how bad of shape it is in.

Quote:

Originally Posted by whatyouneed 

 

I assume that you own Apple products since you post here. What do you think will happen if the government raises taxes on corporations? They will raise prices. That's all corporate taxation does - makes goods more expensive for consumers. 

 

Apple pays way too much in tax. Apple is a great company that has gotten where they are by hard work and innovation. The media should focus on how our government and Fed collude with the military-industrial complex, medical-industrial complex, and Wall St. to waste all of our tax dollars.

 

Apple is being used as a scape-goat for the massive debt-bomb that is blowing up the country. THEY ARE PAYING BILLIONS INTO THE SYSTEM, let's focus on those who suck trillions out of the system. Bailouts?

I'm beginning to think Steve really pissed Obama off at that meeting they all had about a year ago.  With everything else going on in the economy, all this attention on Apple all of a sudden is laughable at best.

Quote:

Originally Posted by Rogifan 

I'm still waiting for the New York Times to do an analysis on GE's taxes, or the billions in back taxes that Berkshire Hathway, aka Warren Buffett are refusing to pay. Of course that's not good click bait like Apple is.

This is true on so many levels it makes me sick to read some of the "righteous" posts here.

I started reading these posts, marking a few to comment on before it became obviously clear there are groups of people here who have real jobs and/or own companies (large or small it does not matter), and then there are those who live in a phantasy land.  The second group should sue their schools for their sever lack of understanding of economics.  How someone can argue that even though Apple is doing nothing illegal or different from any other global company, they are still wrong, is beyond me.  Stop "us versus them" mentality and look at the whole picture.  As much as I despise GE, I applaud them for not paying taxes.  I'd rather them keep and use the money they earned for something better than what the government could do with it.  Our current tax scheme is incredibly out of date and should be rebuilt from the ground up.  I don't agree with Ron Paul on a lot of stuff however he's right on taxes...

Quote:

Originally Posted by I am a Zither Zather Zuzz 

 

 

 

Apple's owners pay them.  70% or more are institutional investors.

 

To say anything else is a stretch.

Nonsense. It is factored into the prices Apple charges its consumers.

Quote:

Originally Posted by I am a Zither Zather Zuzz 

 

 

OK, Apple itself, the entity, pays Apple's taxes.  Nobody else.

Clueless.

First off, read joyoftech.com this morning... that pretty much sums up the motivations of the print media industry.

Second, 'sidestepping' sounds like 'illegally underpaid,"  It is not, so it's not that bad.

And yes, everyone is doing it.  I read the same thing about Amazon's and Google's Offshore accounts (the Double Irish Double Dutch Cayman connection) last year.

As for Nevada.  Wow.  Who'd a thunk it.  Apple created jobs in the State of Nevada? and California is complaining... Oh wait, the jobs are about setting up a storefront and claiming that store holds all the profits... Bad Bad Apple...  Oh, 

Except... I bet you can't name a Bank or Credit Card issues that isn't incorporated in Delaware.  Heck most corporations (60% of the F500) incorporate in Delaware.  On the first count... why?  Because Delaware has relaxed Usury laws (why is that 24.99% rate for missing one payment legal... Delaware law?).  Otherwise all the rest of the laws are there to protect the corporation from a shareholder revolt.

Oh and one more thing... income 'earned' outside of Delaware is not subject to corporate income tax, so it's not double taxed.

Anyone writing articles about Goldman Sachs?

Anyone writing about JP Morgan Chase?

No.

Apple... incorporated in California.  So, that angle couldn't stick

Does anyone write articles or march to Olympia WA or Washington DC and make USBank incorporate in Washington state to support the REIVisa card which 'looks' like it's part of REI, based in Seattle?  

Nah... because they aren't THE BIGGEST FASTEST GROWING MEGANASTYCORPORATION THAT HAS IT'S PRODUCTS IN EVERY POCKET OF EVERY PERSON ON THE PLANET, USING SLAVE LABOR TO ASSEMBLE POISONOUS COMPONENTS IN CHINA, AND FLEECING STATES AND LITTLE OLD LADIES OF THEIR HARD EARNED TAX MONIES (because you know, if Apple isn't paying it, some old lady on the pension has to).

I personally think that Exxon sort of likes having Apple at #1.... ;-)

Quote:

Originally Posted by Rogifan 

According to Forbes the tax rate the NY Times quoted in their article is incorrect. Basically they too estimated tax payments against 2011 earnings when most of those estimates we're based on 2010 earnings. In Apple's SEC filing they report a 24.2% effective tax rate, much higher than the 9.8% the Times is reporting.
http://www.forbes.com/sites/timworstall/2012/04/30/apples-9-8-tax-rate-new-york-times-ignorance-again/

Excellent find. The Forbes guy is spot on. (Apple's "Provision for Taxes" based on estimated 2011 income is $8.3B, not the reported "Cash Taxes Paid" of $3.3B, which reflects the actual earnings from 2010).

The NYT article also makes three other assertions that are plainly wrong or incendiary:

(i) It says that Apple does not provide data on US versus foreign taxes paid. Wrong. Apple does so, in Table 22 (see its footnote under "Income Taxes");

(ii) It quotes an "ex-Treasury department expert" as saying that Apple's allocated earnings for the US should be closer to 50% (than Apple's claim of 30%). Quite apart from the fact that no analysis or explanation is offered for why this should be the case, this is tantamount to implying that the largest firm in the world (by mkt cap) and its auditors are engaged in a massive tax fraud -- a pretty incendiary implication;

(iii) The article makes a claim that taxes can be deferred indefinitely -- that is a ridiculous assertion. Any executive that belives that runs the risk of ending up in jail.

Apple created a cottage industry with thousands of developers who earn a living and pay taxes off the apps they make. Is Apple credited with job creation? No! 

Quote:

Originally Posted by Slang4Art 

 

 

Maybe I'm reading this post wrong, but it sounds like you're arguing with yourself.

How so? Maybe I'm trying to state too tersely what to me are obvious points. I'm simply making the point that it's not an all or nothing proposition when it comes to state taxes.  States set their rates (and types of things taxed) with a view towards satisfying their budgeted needs as perceived by the representatives (and eventually the people who elect them).  But they also must consider the impacts of their tax structures with respect to other states, with which they are in competition for businesses and people.  

And I'm trying to highlight the reality of the situation.  If you are a business (or a person) you have various factors leading you towards residing in one state or another.  All other things being equal, would you choose a state that says to you "you should pay more because that's fair"?  Just like would you as an individual choose a vendor of a service who says that to you?  

Maybe you'd pay something extra because there are things that attract you to that state, or you're already there and there is a cost to moving.  But maybe not as much as you're being taxed. That is my point.  

I will add a couple of things here:

a)  The POV that says that if a successful corporation like Apple isn't paying their "fair share" because they choose to move some of their operations or finances to other states, leads you down a bad path.  There is an unstated assumption as to what's "fair", meaning what the blue states would like to do (expand government, fund union payrolls and pensions, do more transfer payments aka "spread the wealth", etc.).  Putting this under the "fair" moniker is your basic relabeling ploy which makes you think that "fair" == "good and desirable".  Just like, who wouldn't be "pro-life" until you find out it really means they want to make abortions and even contraception illegal?  It's important to talk about things AS THEY ARE without these tendentious relabelings.  

And, the blue states hate the red states for not "playing fair" and therefore attracting more businesses and people.  And, they'd like to force (and I use that word advisedly) all the states into the same mindset that they are in.  Their favorite ways to force that are (a) federal government taking over more and more of what used to be state programs and decisions, (b) federal government regulating what's left of state programs and decisions, and (c) attempts to sway public opinion (which this NYT article is a good example of).  

b)  Ran across this story today which is germane.  http://www.bizjournals.com/austin/blog/morning_call/2012/04/texas-cities-add-more-jobs-than-bay-area.html

A lot of people move to states that have lower tax rates. They undertake all sorts of measures to reduce their taxes as much as possible within the bounds of the law. Outsmarting Uncle Sam has been a national pastime for decades. 

Many individuals have tried tax saving strategies such as gifting some of their income to their kids as a way to avoid taxes. Since kids have no income, they have no income tax, so parents would be able to get some of their come tax-free. This only scratches the surface of the innovative tax-saving strategies individuals have tried to employ before the IRS put its foot down.

You people who are standing on your soapbox vilifying Apple should ask yourselves if you would reject a strategy that your tax accountant gave you that would lop off tons of money from your tax bill or if you would voluntarily pay more. All of you would pay exactly what you had to pay and not a fraction of a penny more. 

What's wrong if Apple does the same? If governments aren't getting enough revenue because of dozes of bigshot companies employing this strategy, then the governments aren't doing their job. The tax is clearly lacking. As I see it, Apple has a fiduciary duty to its shareholders. 

Quote:

Originally Posted by MJ Web 

Apple created a cottage industry with thousands of developers who earn a living and pay taxes off the apps they make. Is Apple credited with job creation? No! 

Of course Apple is credited with job creation.  There are many news stories about municipalities trying to entice Apple to locate facilities in their town.  Why?  In large part, because of job creation.

Yeah - Apple is the poor whipping boy, mistreated, misunderstood and scapegoated for the sins of the world.  

But they most certainly are credited with job creation.  You hear about it all the time.

Quote:

Originally Posted by anantksundaram 

 

 

Nonsense. It is factored into the prices Apple charges its consumers.

Nonsense. That's not how prices are set at any company. To believe otherwise shows a misunderstanding of everything from market analysis, product management to taxes.

Quote:

Originally Posted by jragosta 

 

 

At the simplest level, that's true. If you explore it a bit more deeply, it's not quite so simple.

If Apple paid more taxes, that would mean less money left over. The left over money belongs to the shareholders. So, by charging Apple more taxes, you would be essentially taking money from the shareholders. 

Furthermore, of course, all of the money that Apple does not pay in income taxes eventually gets taxed. Apple could issue the money as a dividend. They could buy companies which increase future profits. Or they could hold onto the money which increases share value - in which case the shareholder pays taxes when the stock is sold.  

But, most importantly, none of that matters one bit. Apple pays the amount that they're obligated to pay. Unless you're paying more of your income in taxes than you are required to, you have no room to complain.

 

 

Sure, but stelligent will continue to argue that it's a perfectly fair article.....

If the article is wrong, then it's wrong and I wouldn't support it.

And I've agreed with you all along that Apple is not doing anything wrong. Just because I see two sides of the story does not mean I'm trying to paint Apple as a villain in this scenario.

Quote:

Originally Posted by I am a Zither Zather Zuzz 

Apple's owners pay them.  70% or more are institutional investors.

 

To say anything else is a stretch.

Your knowledge of public ownership of corporations is inadequate.

Apple Inc. pays its own taxes. It's right there in their SEC filings, just look at their cash flow statements. Taxes are a line item. Naturally, now much taxes Apple pays influences their cash on hand and their balance sheet.

Shareholders of public corporations do not pay corporate taxes. Here are the first two sentences of Wikipedia's definition of equity:

"In accounting and finance, equity is the residual claim or interest of the most junior class of investors in assets, after all liabilities are paid. If liability exceeds assets, negative equity exists. In an accounting context, Shareholders' equity (or stockholders' equity, shareholders' funds, shareholders' capital or similar terms) represents the remaining interest in assets of a company, spread among individual shareholders of common or preferred stock."

I've underlined the pertinent phrase "after all liabilities are paid" which includes taxes.

Basically, the board of directors hires a senior management team that is tasked with the daily operations of the business. It's up to that management team to make sure that Apple pays their bills, employees, creditors, etc. Shareholders are not involved in the daily operations of the company. It is not their duty to make sure the landscaping company gets paid, order t-shirts for the new retail staffers, pay their NAND flash memory bill from Toshiba, or pay taxes.

Shareholder equity is the value of the company's assets (cash & securities, buildings, inventory, accounts receivable, etc.) minus its liabilities (debt, accounts payable, etc.).

Quote:

Originally Posted by cvaldes1831 

 

 

Apple Inc. pays its own taxes. It's right there in their SEC filings, just look at their cash flow statements. Taxes are a line item. Naturally, now much taxes Apple pays influences their cash on hand and their balance sheet.

 

Shareholders of public corporations do not pay corporate taxes. Here are the first two sentences of Wikipedia's definition of equity:

 

"In accounting and finance, equity is the residual claim or interest of the most junior class of investors in assets, after all liabilities are paid. If liability exceeds assets, negative equity exists. In an accounting context, Shareholders' equity (or stockholders' equity, shareholders' funds, shareholders' capital or similar terms) represents the remaining interest in assets of a company, spread among individual shareholders of common or preferred stock."

 

I've underlined the pertinent phrase "after all liabilities are paid" which includes taxes.

A day late, dude. A day late.

Quote:

Originally Posted by stelligent 
A day late, dude. A day late.

And a dollar short?

*rimshot*

*crickets*

Quote:

Originally Posted by anantksundaram 

 

 

Excellent find. The Forbes guy is spot on. (Apple's "Provision for Taxes" based on estimated 2011 income is $8.3B, not the reported "Cash Taxes Paid" of $3.3B, which reflects the actual earnings from 2010).

 

The NYT article also makes three other assertions that are plainly wrong or incendiary:

 

(i) It says that Apple does not provide data on US versus foreign taxes paid. Wrong. Apple does so, in Table 22 (see its footnote under "Income Taxes");

 

(ii) It quotes an "ex-Treasury department expert" as saying that Apple's allocated earnings for the US should be closer to 50% (than Apple's claim of 30%). Quite apart from the fact that no analysis or explanation is offered for why this should be the case, this is tantamount to implying that the largest firm in the world (by mkt cap) and its auditors are engaged in a massive tax fraud -- a pretty incendiary implication;

 

(iii) The article makes a claim that taxes can be deferred indefinitely -- that is a ridiculous assertion. Any executive that belives that runs the risk of ending up in jail.

The New York Times is a joke. They haven't done serious journalism for years - if not decades.

First they tried to convict Apple in the court of public opinion over working conditions in China. It was found that Daisey was flat out lying (but no retraction from the NYT).

Then, they tried to convict Apple in the court of public opinion over Greenpeace's claims that Apple was a 'dirty' company. It was found that Greenpeace was lying (but no retraction from the NYT).

Now, they publish bogus tax information to try to convict Apple in the court of public opinion. As Forbes showed, they're lying this time, too (but, again, no retraction).

See a trend? I wonder which NYT official is short Apple.

Quote:

Originally Posted by stelligent 

A day late, dude. A day late.

Which is appropriate for the person to whom I was responding.

Quote:

Originally Posted by muppetry 

Quote:

Originally Posted by I am a Zither Zather Zuzz 

 

Quote:

Originally Posted by stelligent 

 

 

What is Apple failing to comply with?

 

 

They do not pay the amount of taxes intended by the various tax codes.  

 

Instead, they slice and dice otherwise innocuous provisions and set up huge inefficient edifices in order to exploit provisions in a manner never intended when they were drafted.

 

But you knew that.

That's not what he asked.

But you knew that.

He asked what they are failing to comply with.

I answered thta they are failing to comply with the intentions of the various tax codes.

He and you may not have thought that the spirit and intentions of laws matter for much.  But to some, the spirit of the law is to be followed as well as the letter.  To do otherwise is to exploit unintended loopholes.

Quote:

Originally Posted by anantksundaram 

 

Quote:

Originally Posted by I am a Zither Zather Zuzz 

 

 

 

Apple's owners pay them.  70% or more are institutional investors.

 

To say anything else is a stretch.

 

Nonsense. It is factored into the prices Apple charges its consumers.

Supply and demand are the factors that determine retail prices.  

Quote:

Originally Posted by stelligent 

 

 

Nonsense. That's not how prices are set at any company. To believe otherwise shows a misunderstanding of everything from market analysis, product management to taxes.

Groan.

You've obviously never heard of basic ideas such as free cash flow (an after-corporate tax concept), its relation to ROIC (an after-corporate tax concept), cost of capital -- i.e., returns expected by investors (an after-corporate tax concept), and their links to cost-plus pricing.

Please keep your ignorance to yourself.

Quote:

Originally Posted by I am a Zither Zather Zuzz 

 

 

Supply and demand are the factors that determine retail prices.  

At this point, you (along with a couple of others) are simply basking in your ignorance. Please stop with your pointless, platitudinous one-liners.

My preference is (honestly) to not respond to the inane -- and almost always anti-Apple -- stuff that you regularly keep posting in this Forum. But when mentioned by name, I have no choice. I do not like putting people on the "ignore" list.

Quote:

Originally Posted by I am a Zither Zather Zuzz 

 

 

He asked what they are failing to comply with.

 

I answered thta they are failing to comply with the intentions of the various tax codes.

 

He and you may not have thought that the spirit and intentions of laws matter for much.  But to some, the spirit of the law is to be followed as well as the letter.  To do otherwise is to exploit unintended loopholes.

Please explain how Apple is supposed to comply with the 'spirit' of the tax code. Tell us specifically what sections of the code Apple is following the letter of rather than the spirit and what they should do to change it. Do you realize how inane your suggestion sounds? The tax law is written in a way that is meant to be followed. You can't say "well, it says this is what I should pay, but the spirit of the law is different". And what if the spirit of the law is for Apple to pay LESS than the letter of the law says? Should Apple start underpaying?

And please tell us how much more of your income you're going to be donating to the Federal Government because you think you should pay more than what the law requires.

This is ironic, since Apple is fine about charging us consumers the "Apple Tax".

Quote:

Originally Posted by I am a Zither Zather Zuzz 

He asked what they are failing to comply with.

 

I answered thta they are failing to comply with the intentions of the various tax codes.

 

He and you may not have thought that the spirit and intentions of laws matter for much.  But to some, the spirit of the law is to be followed as well as the letter.  To do otherwise is to exploit unintended loopholes.

You are wrong.

Apple's tax returns are being accepted by the various agencies (e.g, IRS, Franchise Tax Board). The tax code says stuff like "Here is the basic tax rate. Here are things that will change your taxes. Are you married? Do you have children? A house with a mortgage?" Et cetera. If you take your mortgage interest as a deduction, you aren't "cheating the system." The system was created to encourage home ownership. Lots of medical bills? Well, you can write some of those off, but only if it's a fairly large percentage of your income.

Same with corporations. 

The loopholes and exceptions were created by people for a reason.

Remember that Apple pays big bucks to have someone look at their books. When Apple goes to pay their taxes, they don't just make up a number and say, "yeah, that's what we feel like paying this year." Their external auditors say, "hey Apple, show us your tax return and we'll let you know if complies to current tax code before you file it."

Quote:

Originally Posted by xxSampleXX 
This is ironic, since Apple is fine about charging us consumers the "Apple Tax".

Let's see, since you joined your posts have been:

"A phone is not a real computer", the phrase "Apple polishers" has been used, and now you're on about something that hasn't been true since the 1990s.

It's like someone did a seance to revive slapppy but was caught by the feds halfway through so only part of the essence came back.

Quote:

Originally Posted by anantksundaram 

 

 

Groan.

 

You've obviously never heard of basic ideas such as free cash flow (an after-corporate tax concept), its relation to ROIC (an after-corporate tax concept), cost of capital -- i.e., returns expected by investors (an after-corporate tax concept), and their links to cost-plus pricing.

 

Please keep your ignorance to yourself.

The old "throw some jargon" trick may work on some people. But in this instance, it simply shows you do not participate in pricing decisions in any company.

BTW, to say cost of capital implies returns expected by investors might be the most stupid thing ever written here. But I'll give you a break on that because this is more likely a case of poor writing rather than ignorance (but who knows given your history).  And FYI, rate of returns is NOT strictly an after-tax concept (I can't help you if you insist otherwise).

There are no accusations of any wrong doing.  Apple has structured it's business to minimize taxes just like every other company.  Last time I check there is no duty to pay more taxes than you owe. Maybe the story is that laws need to change.  Apple would not be acting in the best interest of it's shareholders if it ignored the advise of it tax lawyers and accountants.

Quote:

Originally Posted by I am a Zither Zather Zuzz 

 

 

Supply and demand are the factors that determine retail prices.  

Quite honestly, dude, that is neither meaningful nor accurate. But, as a vague and general concept, it's an improvement over the notion that tax considerations are key to setting prices.

Quote:

Originally Posted by halhiker 

 

 

Or maybe they should just legalize gambling and prostitution.  Screw Nevada.

You forgot following the will of the voters and also legalizing cannibas. California is a real mess politically, but even with the majority Democrat leanings of the state hasn't provided them with enough foresight or rationale to allow such measures. I think it probably has more to do with police unions and prison guard unions than common sense.

Quote:

Originally Posted by Hunabku 

Wow the country which once revolted because of being taxed is now the heaviest taxer in the world!  Today we revolt when others don't do as they should and bend over, as it were, for the King and his military.

 

I'm sure our forefathers are spinning in their graves.

Quote:

Originally Posted by SpamSandwich 


Like twisters.

Hey would that be considered clean energy?