Pressure mounts for Apple repatriate $40B in overseas cash - Page 2

You mean paying an income tax and then paying sales tax on top of already taxes gas? I don't really think that's a fair assessment as the various taxes are for different things. Now there have surely been cases where the tax for one thing goes for something completely unrelated. For instance, if your fuel excise tax went to fund art programs in Iceland for exchange student I'd understand it not being a good use of taxation.

 

Seems like "staggeringly successful" banks actually have an "appalling history of destroying capital", but why let historical facts get in the way ...

 

GTR@: "chicks" not "chics" ...

 

Out of control spending has gotten more governments in trouble than the citizens of those countries.

No I'm talking about products or services taxed thus increasing it's price and then having to pay tax on the whole amount. Cigarettes for instance have cost, federal tax, state tax, and sales tax is determined by the price of all 3.

Repatriate is a misnomer. That would imply the money was expatriated. The money was never in the US. Those earning are from overseas operations. Why would they be pressured to bring earnings here in the first place and suffer yet another tex penalty to pay for a bloated government and their pensions. (they're NOT bringing it back, it was never here).

I'll need another example as I care so little about the plight of the smoker that I want their taxes to be increased even higher.

 

It's suicide, really. Should the extendedly suicidal be given tax breaks and warrant insurance for what will happen to them? Ah, but there's the burden of proof, I suppose. Sure, they can certainly be covered for what we know smoking won't do to the body, but the things that it will do can have other causes, to… 

They will get taxed at the (higher) US Tax Rate but will receive a credit for the taxes already paid to the foreign government.  So, no, they won't be getting taxed "twice".  They will be getting taxed in total at the US tax rate.  Not that I approve of the situation, but there it is.

 

Thompson

Gasoline.

US companies are already completely trained in that regard.  Another holiday won't make them any more resistant to bringing home dollars when the tax rate is so high.  They simply aren't going to repatriate and pay the big tax bill because THEY DON'T HAVE TO.  (Sorry about the caps, but I really wanted to emphasize that point.)  The real bottom line is what you indicate:  the tax code (and especially that exorbitant rate) needs significant fixing.

 

Thompson

Everything is suicide, we're killing ourselves one way or another. Did SJ's 'healthy' lifestyle exclude him from getting cancer and dying?

What exorbitant rate? Is it anything close to the 90% the rich used to pay in the 50s and were still able to live lavish lifestyles?

Is the USA the only place where you can be penalized for doing exactly what the law says you are supposed to be doing? 

 

Why should all the foreign profits be taxed? Because our (the USA) government wants a piece of it, why? to pay of the national debt? That's like saying I need to steal a bucket from my neighbor so I can "fix" the flooding in my basement that is caused by (fill in the blank). 

 

The entire story here is that it is much easier to go after a something that you can define than something you cannot and that you think you can do something about. Whether you are talking about drunk driving, or abortion, or gun control, etc, few if any are wiling or able to attack the root cause of the problem because...

 

Those in power have some rules to follow: 

1. The root cause of most of these issues is extremely complicated and exceedingly difficult to define. 

2. Pointing your finger at someone else or some external factor means not having to examine your own behavior. 

3. Changing that external thing means you don't have to change your own behavior. 

4. Getting the public focussed on some easy identifiable target keeps them distracted while you continue to do your own thing. 

 

This is the crux of the problem though.   Most of Apple's profits come from selling phones in the US.  They record most of their profits as having been made in Ireland.

Apple did not sell $130billion worth of phones in Ireland :p  Probably not even $2 billion.  Its legal and just about all multinational corporations do it.

 

If they actually made most of the money in Ireland and were taxed there, there would be no issue.  The problem is they make all their money in the US and get the advantages of being a US corporation, take what they can out of the system, but don't pay in.  Our government spends 'n' dollars every year (where 'n' is a really f'in big number).  They need to take in as close to 'n' in taxes every year from wherever they can get it.  Since the people making most of the money (large corporations), can conveniently opt out of paying, that leaves the rest of us to pay higher taxes.

 

Obviously the government needs to make 'n' a smaller number regardless of who is paying taxes.  But having the people making the most money only pay @ 2% taxes on their income would be a nice thing to fix along the way too.

Here's what I have figured out they can use that money for.

 

1.  Additional Apple Stores or renovating the stores from time to time.

2.   Buying foreign companies such as what Apple did with Anobit.

3.  Data Centers as you mentioned, Call Centers for sales and tech support.

4.  Marketing/advertising.

5.  Litigation.

6.  Investing in mfg.  Apple has supplied lots of cash to foreign component suppliers and assembly companies to build plants and buy equipment to assist in ensuring supply and delivery of product in plants that are specifically for Apple.  I can see Apple reaching a point where they will have assembly of various products in various countries to supply products like iPhones. So, instead of them being made just in China, they might have various plants around the world to get the products out to the customers faster.  I think Apple is supposed to be opening up or looking into making iPhones in Brazil to serve certain markets.

Plus components are made around the world in different factories so they might be supplying funds out of their various cash piles to do this.

 

The whole "hoarding cash" to avoid taxes is just one TINY aspect of using money in the various ways I've described.  It's all about how the media SPINS it.   I wish they would get better journalists that actually had a background in technology, mfg., business background and finance rather than some idiot with very little background in what they are writing about.  Journalists usually only know how to get people's attention, tech savvy people might know about technology, but little about business, finance, money management, etc.  and then finance majors typically don't know much about technology.   I read articles with a LOT OF SALT handy, because a grain of salt may not be enough to swallow the BS.

 

Aside from that being completely and utterly different in every single respect, you're absolutely right on all counts.

 

Also, does this belong in PO? It's taxes and the conversation is starting to lean that way. If the conversation would benefit from the restriction on political talk being lifted, I'll move it over there. 

 

Though I don't remember the last time something good came from moving a thread to PO… 

Just because you mention a much higher number doesn't make the lower number acceptable.

 

Obviously, 35% is exorbitant enough to encourage those companies to keep profits overseas where they were earned.  Do you favor passing a law compelling companies to bring all profits home and pay taxes on it?  If you don't, then I think your next best chance for ever seeing a dime of that profit is to lower the tax rate on it.  Seems obvious, no?

 

35% of nothing is nothing.  Perhaps 15% would result in something, which is, by definition, greater than nothing.

 

Thompson

OK, you are making a good point, but you have some of your basic facts wrong.  Apple has become such a global player that they make less than 40% of their $$$ here in the US.  (This is a seasonal number, of course, due to iPhone releases in the states being huge, but still it gets nowhere near "most" as you indicate.)    Nevertheless, Apple probably does pull some accounting stunts to avoid paying a fraction of US earnings, too.  So you might want to modify your argument in the future.  That way you can still make a good point without getting bashed by someone on a technicality.

 

Thompson

Seriously?! I think you're better than that.

Yes seriously. ALL of our food has been modified, there's less nutrients in the soil, there's more pollution in the air, I can go on and on.

True or not that has nothing to do with your original claim of being taxed "2-3x." I feel taxed by this conversation but I'm not claiming it's "2-3x" despite you now moving your argument to a new topic.

Buy organic. It tastes better¡

That highlights one of the biggest problems with this topic - uninformed people who think that they're experts on tax laws because they've read a couple of headlines.

In fact, corporations can't simply select where they want to pay taxes. In almost every country, you pay taxes where the money is earned. If you earn a profit in Ireland, that's where you pay taxes on the profit.

Now, there are some transfer pricing schemes that you can use to reduce the amount slightly, but the kind of forum shopping that you're describing just doesn't exist.

Paying tax on top of tax is being taxed 2-3X. Organic food comes from seeds of modified foods.

The government gets what it deserves. It makes the rules, so it can't complain if people or entities use the rules to lawfully avoid taxes. The rules were such that I paid $0 in income taxes for 2011. I pissed at myself that I have to pay about 5% for 2012. Obviously, I didn't follow the rules closely enough last year.

They tax your gas to drive to work and then charge you for registering your car with includes taxes, and they make you buy auto insurance, and then they tax your income that you use to pay for the home you live in which is also taxed. And you can't even go buy yourself something pretty to make yourself feel better about it because there are sales tax, and you can't call anyone to complain about it because your phone service is taxed. It's all just so…taxing¡

I understand that there's taxes everywhere in one form or another, I'm specifically talking about taxed tax. When we pay tax on top of tax. Items that have sales tax for the added federal, state and city tax. Furthermore I wasn't the one to change the subject, you and Tallest did.

Just one thought on "Pressure mounts on Apple".  HA HA HA HA HA !!!!!!!  What a load of crap.

Apple will never return this money to the US as long as the tax code in offshore countries is friendlier....   It will never happen.  And all the Political blow-hards on capitol hill can keep on pissing and moaning till they pass out from hypoxia (lack of oxygen).  As long as the tax structure here does not favor repatriation it will never happen.

 

Apple is not alone.  There is not a single company google, amazon, microsoft ect., ect, ect. that will ever capitulate as long as the tax is better in another country.  They all do this.  Apple is not guilty of doing anything illegal.

 

Also a lot of that money needs to stay in the countries that it is in to provide money for operations in those countries.

 

Articles like these do one thing, Create click bate and we just helped

Reminds me of the Beatles song Taxman LOL.

 

 

Isn't that the honest truth lol

Actually from the last quarter results 1st quarter 2013, apple made 20.341 billion in the us.  Yes that is there largest income but when you combine all other countries outside the US from apples own report Apple made 34.171 billion outside the US so Apple did not make all of there money in the US, in fact they made Most of there money outside the US. Apple paid 6 billion in federal corporate income taxes for 2012 in the US which amounted to 1 dollar in every 40 federal dollars collected by the US government  for corporate income tax for 2012.  So I would say that they do pay there fare legal share of corporate tax.  And they DID pay in.

And is it fair that you get taxed 2-3X? No it's not. But the answer isn't to make others suffer something that's unfair to begin with. The answer should be to figure out a way so you aren't taxed 2-3X.

I remember reading somewhere that Apple had accrued the amount of tax liability that they would have to pay if they repatriated their overseas cash. Unfortunately, I don't have a source at the moment. I could be wrong.

And is it fair that you get taxed 2-3X? Because if something isn't fair to you, the answer isn't to wish it on someone else. The answer is to make it so that that unfair action is not visited upon you. Maybe there's a way to make it so that you don't have get taxed 2-3X.

"Studies looking at the tax holiday, though, found no evidence of strong job creation. The companies, instead, used the money to repurchase shares and pay dividends."

How about splitting the difference. Isn't that what Apple and others want to negotiate? Half a holiday -- 17.5% maybe? Some tax revenue, maybe some dividend loot, maybe some jobs to boot.

US citizens who live abroad have to pay US taxes on income above a certain exclusion in addition to the other country's taxes, regardless of where the money is.

 

The fine for not paying is very severe, and if you are really rich and want to renounce your citizenship, well, congress doesn't like that. Remember that Facebook guy? 

 

http://business.time.com/2012/06/22/renouncing-your-citizenship-to-stick-it-to-the-tax-man-not-as-easy-as-it-looks/

 

What about companies?

Edited by Bergermeister - 3/12/13 at 5:19am

 

Thanks for the correction without the usual bashing :)  Should probably word it US is (currently) their biggest market or most of Apples profits are made outside Ireland but most profits are claimed in Ireland.

 

Either way the arguments I hear often are the original one "We shouldn't tax them on profits made outside the US" which I agree with.  But they simply use a 'paper trick' to make their profits outside the US.

 

Reality:

Phone bought in China for $200.......   Phone actually sold in US for $800....     Profit in US $600    Taxes that should be paid to US... $215

 

Paper:

Phone bought in Chaina for $200 by Apples Irish subsidiary.   Apple Irish sub sells to Apple Dutch sub with IP rights for $800...   Apple Irish sub buys back from Dutch sub for $800....    Irish Sub sells to US sub for $800 and deposits the $600 profit in wholly owned Bahamian subsidiary bank.   Since Apple US bought the phone for "$800" and sold it for "$800" they made no profit in the US.   The bahamians are more than happy to give a 1% tax rate to corporations.  They don't support a military to defend the rights of those companies, provide an extensive court system to defend their IP, subsidize their factories with taxpayer money or really anything else....   Its just free money to them.   Profit inside US  $0.   Taxes paid in US $0.   Profits outside US.. $600    Through the various benefits of tax breaks from the dance steps they take they pay some insanely low tax rate.

 

For the US (and the other countries other than Ireland and the Bahamas) it is pretty damaging.  Not only do corporations not pay taxes, they actually get to claim the taxes they do pay offshore as 'foreign taxes paid' as a tax deduction within the US or put it in some accounting limbo 'permanently reinvested fund'.  I think it was GE who pretty famously made several billion in record profits one year and managed to end up with substantial ($1 billion+ ?) tax credit from the US.   The real profits are US dollars coming from US laborers inside the US, but once you buy the product and the profits recorded offshore that money is sucked outside of US circulation and does not return.  

Is it fair for a US citizen to have to pay a dime in taxes to the US on income earned overseas? I don't think it is. And if it is unfair to begin with, why is there talk about making companies pay tax on overseas income? Why not make it so that both individuals and corporations pay tax only on income earned in the US?

 

Why is the US government entitled to one f***ing dime of money earned by companies overseas? At least if it's earned in the US, one could say that they're using US infrastructure so it's fair to pay US taxes. But it was earned overseas. Apple used other countries' infrastructure in order to earn those profits.

 

That was in the article?

Really? The truth is that citizens want the services. Like it or not, those services cost more over time. Everyone takes advantage of those things, the expenditures for which they complain about. Now, some people in countries where they demanded all of those services are thinking that just maybe they can't afford all of it. When economic times are good, people demand much. But when times are bad, they don't want to pay for them. The problem is that when times are bad, they need them more.