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Apple's tax strategy portrayed by Senate subcommittee as a unique 'absurdity'

post #1 of 158
Thread Starter 
In opening remarks of a hearing Tuesday morning, the U.S. Senate Permanent Subcommittee on Investigations accused Apple of being the mastermind of elaborate tax avoidance practices that are unique to the iPhone maker.

Levin
U.S. Sen. Carl Levin gave the opening remarks of Tuesday's hearing on Apple's tax policies.


U.S. Sen. Carl Levin (D-Mich.) took particular issue with Apple Operations International, an Ireland-based entity owned by Apple that he said has paid no taxes. The issue comes from a loophole in U.S. tax law that Levin believes should be closed.

"Apple is exploiting an absurdity, one that we have not seen other corporations use," the senator said. "And the absurdity need not continue."

At issue are incompatibilities between U.S. and Irish tax laws. In Ireland, only companies that are managed and controlled in Ireland are considered tax residents. Apple Operations International is incorporated in Ireland, but is not managed and controlled there."Apple is exploiting an absurdity, one that we have not seen other corporations use. And the absurdity need not continue." ? U.S. Sen. Carl Levin

But in the U.S., tax laws are based on where a company is incorporated, rather than where it is managed and controlled.

Apple has a total of three offshore corporations that allow it to reduce its effective tax rate to just 15 percent, which is less than half the U.S. effective tax rate of 35 percent, Levin said.

In singling out Apple, the senator said the iPhone maker has been a particularly egregious offender in exploiting tax law loopholes. The company currently has more than $100 billion in cash kept overseas.

Levin went as far as to call Apple's offshore tax practices the "holy grail" of tax avoidance. He has taken particular issue with the offshore transfer of "profit generating potential" from intellectual property.

The senator did praise Apple as an "American success story," and noted that he carries an iPhone in his pocket. He also acknowledged that many U.S. multinational corporations beyond avoid taxes by exploiting loopholes in the law.

Slamming Apple's use of "ghost" corporations, Levin called the company's practices a "sham." He said while Apple wants members of the public to focus on the "extraordinary amount" of taxes the company already pays, it does not excuse the taxes he believes the company should be paying.

"The real issue is the billions in taxes that it has not paid, thanks to offshore tax strategies whose purpose is tax avoidance, pure and simple," Levin said.

Joining him in criticizing Apple was U.S. Sen. John McCain (R-Ariz.), who said the company has avoided paying taxes on some $44 billion in income in the last 4 years alone.

"It's unacceptable that corporations like Apple are able to exploit tax loopholes to avoid paying billions in taxes," McCain said.

Taking a dissenting opinion on the subcommittee was U.S. Sen. Rand Paul (R-Ken.), who criticized his colleagues for "bullying, badgering and berating" a great American success story. He said that Apple has broken no laws, and is simply following the rules of an outdated U.S. tax code.U.S. Sen. Rand Paul took his colleagues to task for Tuesday's hearing, suggesting they instead apologize to Apple and thank them for creating American jobs.

"Congress should be on trial for chasing the profits of American companies overseas," he said.

Paul characterized Tuesday's hearing as a waste of time, both for the politicians involved and for Apple executives who were in attendance to testify. He also suggested that other members of the subcommittee do all they can to lower their individual tax rates as well.

Rather than criticizing Apple, Paul said the subcommittee should apologize to the company, and compliment them for their job creation.

"We should have brought in here today a giant mirror, so that we can look at the reflection of Congress, because this problem is created by the awful tax code," he said.

Following the opening remarks on Tuesday, Apple Chief Executive Tim Cook and Chief Financial Officer Peter Oppenheimer are scheduled to testify. AppleInsider will have ongoing coverage throughout the day.
post #2 of 158
That picture captures the perfect iconic image if a life long, fat cat politician.

The state is nothing more than a criminal gang writ large.

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The state is nothing more than a criminal gang writ large.

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post #3 of 158
Is anyone fooled by that comb over? Talk about a bad cover up.
post #4 of 158
So Apple pays 6 billion in taxes and GE pays 0, and Apple is the problem?
post #5 of 158
Our inept, corrupt govt shouldnt be critical of anyone. Just close the loophole and move on.
post #6 of 158
Benefits of a complicated tax system - pre loopholes tax rate of 35% = post loopholes 15%.
post #7 of 158
There isn't a word at just how ridiculous and absurd Levin's comments are. Government troll? Teckstudian politician?

"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

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"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

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post #8 of 158

So, stop bitching about Apple, and fix the tax code.  The problem is the Govt. not the companies they're trying to vilify.  Any company who isn't using every legal means to avoid paying tax isn't acting with due diligence.

post #9 of 158
Instead of investigating why Apple pays less in taxes than it otherwise might, why not investigate why Congress passed tax laws with so many loopholes in them? I notice that the Senator(s) do not suggest that Apple has broken the law: rather, they seem angry that Apple has simply followed the law and used the loopholes that Congress provided. So why get mad at Apple?
post #10 of 158

Senate hearings and committees are all about grandstanding.  What the head guy waffles on about in his opening remarks is essentially meaningless.  

 

We won't have an idea even of how it's going for many days yet.  

post #11 of 158
Quote:
Originally Posted by tkell31 View Post

Our inept, corrupt govt shouldnt be critical of anyone. Just close the loophole and move on.

 

right. they should just laugh at the clueless idiots who keep voting them into office.

post #12 of 158

I'll bet Apple wishes it had GE's tax attorneys and/or politicians. Maybe next year.

post #13 of 158
Quote:
Originally Posted by mytdave View Post

So, stop bitching about Apple, and fix the tax code.  The problem is the Govt. not the companies they're trying to vilify.  Any company who isn't using every legal means to avoid paying tax isn't acting with due diligence.

 

the problem is _not_ the government. the problem _is_ the voters who keep voting in Republicans and Democrats.

post #14 of 158
Just another greedy politician.
post #15 of 158
Quote:
Originally Posted by bullhead View Post

 

the problem is _not_ the government. the problem _is_ the voters who keep voting in Republicans and Democrats.

 

lol.gif

 

1oyvey.gif

 

No. The problem is the government. The politicians and the voting patterns are the symptoms.

The state is nothing more than a criminal gang writ large.

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The state is nothing more than a criminal gang writ large.

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post #16 of 158
If so, can't they get a commendation for original thinking?
post #17 of 158
Rand Paul 2016. The only senator there with an ounce of sense.
post #18 of 158
Quote:
Originally Posted by bullhead View Post

 

the problem is _not_ the government. the problem _is_ the voters who keep voting in Republicans and Democrats.

This ^^

post #19 of 158
Apple should pay more in taxes, but Apple should not be blamed for loop holes that allow it to do what it does.
post #20 of 158
Quote:
Originally Posted by 6ryph3n View Post

Rand Paul 2016. The only senator there with an ounce of sense.

 

 

The purpose of the hearing is to highlight a problem with the tax laws because Senators like Rand Paul filibuster every time Congress tries to close the so called tax loop holes he says are antiquated. 

post #21 of 158
Wow I watched the first half hour of this and all I can say is what a farce. This is a show trial if there ever was one. Everything that Apple has done is perfectly legal yet you'd think they were on trial for murder or something. And the gall of senators blaming Apple because they spend more than they take in...it's appalling. 1oyvey.gif
post #22 of 158

10 U.S. companies paying the least—or no—taxes  (marketwatch.com)

TL;DR:

  1. General Motors (Automotive)
  2. Bank of America (Banking/Finance)
  3. Caesars ("Gaming")
  4. Ameren Corp (Energy)
  5. DR Horton (Builder)
  6. Verizon (Communication)
  7. Lear (Automotive)
  8. American Airlines (Transportation)
  9. JC Penney (Retail)
  10. Alpha (Mining)

   Apple develops an improved programming language.  Google copied Java.  Everything you need to know, right there.

 

  MA497LL/A FB463LL/A MC572LL/A FC060LL/A MD481LL/A MD388LL/A ME344LL/A

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   Apple develops an improved programming language.  Google copied Java.  Everything you need to know, right there.

 

  MA497LL/A FB463LL/A MC572LL/A FC060LL/A MD481LL/A MD388LL/A ME344LL/A

Reply
post #23 of 158

The more interesting question is why these guys allow corporations to incorporate in tax friendly states like Delaware, or banks to locate in states like South Dakota with no usury laws.  Where's the outrage at the state level?

   Apple develops an improved programming language.  Google copied Java.  Everything you need to know, right there.

 

  MA497LL/A FB463LL/A MC572LL/A FC060LL/A MD481LL/A MD388LL/A ME344LL/A

Reply

   Apple develops an improved programming language.  Google copied Java.  Everything you need to know, right there.

 

  MA497LL/A FB463LL/A MC572LL/A FC060LL/A MD481LL/A MD388LL/A ME344LL/A

Reply
post #24 of 158
Quote:
Originally Posted by TBell View Post


The purpose of the hearing is to highlight a problem with the tax laws because Senators like Rand Paul filibuster every time Congress tries to close the so called tax loop holes he says are antiquated. 
Yeah because they want to close loopholes without lowering rates. Basically just want to cram a massive tax increase on the public but have the public's outrage aimed at corporations (when they naturally raise their prices) not the government.
post #25 of 158
Quote:
Originally Posted by 6ryph3n View Post

Rand Paul 2016. The only senator there with an ounce of sense.

 

That's unfair, there are any number of Senators with as little sense as Rand Paul.

post #26 of 158
Quote:
Originally Posted by TBell View Post

Apple should pay more in taxes, but Apple should not be blamed for loop holes that allow it to do what it does.
Apple is estimated to pay $7B in taxes this year. Why should Apple pay more?
post #27 of 158
Quote:
Originally Posted by bullhead View Post

 

the problem is _not_ the government. the problem _is_ the voters who keep voting in Republicans and Democrats.

What else should they vote then?

Tea pots?

post #28 of 158
Quote:
Originally Posted by AppleInsider View Post

Joining him in criticizing Apple was U.S. Sen. John McCain (R-Ariz.), who said the company has avoided paying taxes on some $44 billion in income in the last 4 years alone.

"It's unacceptable that corporations like Apple are able to exploit tax loopholes to avoid paying billions in taxes," McCain said.
 

 

I guess his this helps to show why he performed as he did on his stumble run for the White House.

 

Quote:

Originally Posted by MJ1970 View Post

...The problem is the government. The politicians and the voting patterns are the symptoms.

 

    The disease is the lobbyists and career politicians that are more concerned about keeping their jobs than solving problems.

 

Quote:
Originally Posted by 6ryph3n View Post

Rand Paul 2016. The only senator there with an ounce of sense.

 

At least somebody can see clearly -- unfortunately I believe he is in the minority. Kudos for Mr. Paul.
post #29 of 158
Has anyone heard when Mitt Romney is scheduled to testified?
post #30 of 158
Quote:
Originally Posted by Damn_Its_Hot View Post

    The disease is the lobbyists and career politicians that are more concerned about keeping their jobs than solving problems.

 

No. Those are symptoms. The diseases is the massive concentration of power, control, etc. into a single entity with the "right" to use force to achieve its ends. The result is that you have any number of people vying to get controls of the levers, buttons and dials of that Leviathan.

The state is nothing more than a criminal gang writ large.

Reply

The state is nothing more than a criminal gang writ large.

Reply
post #31 of 158
Quote:
Originally Posted by bullhead View Post

right. they should just laugh at the clueless idiots who keep voting them into office.

You do have a valid point. The problem though is that each election comes down to the lesser of two evils rather than choosing a candidate with strong moral character who won't become greedy and corrupt once in office. If you make the wrong choice then you are stuck for a few years, or more in the case of senators. If you want to see things shake up, there needs to be a cap on the number of terms politicians can run. One term for senators should be it. Two for members of the house. They spend half of their terms attending fund raisers for their re-election campaigns and have way too many recesses. Add this type of useless grandstanding to the mix and it is no wonder they get nothing done. Most of them are old, worthless blowhards that are ineffectual at best.
post #32 of 158

Screw Congress... how about my IT job that was just outsourced to India... They are all whores. They created the loopholes... now they are complaining.... what tards.... Ed

post #33 of 158
Quote:
Originally Posted by 6ryph3n View Post

Rand Paul 2016. The only senator there with an ounce of sense.

Which is why he will never win.
post #34 of 158
Quote:
Originally Posted by iSteelers View Post

You do have a valid point. The problem though is that each election comes down to the lesser of two evils rather than choosing a candidate with strong moral character who won't become greedy and corrupt once in office. If you make the wrong choice then you are stuck for a few years, or more in the case of senators.

 

It's even worse than that. Because you're often forced to vote for (and stuck with) a package of policies and positions, all of which you likely don't agree with, but you kinda have no choice but to pick the package that you mostly sort of agree with (or disagree with the least). And that doesn't even factor in the idea that this package might all be a lie to just get elected.

 

 

Quote:
Originally Posted by iSteelers View Post

If you want to see things shake up, there needs to be a cap on the number of terms politicians can run. One term for senators should be it. Two for members of the house. They spend half of their terms attending fund raisers for their re-election campaigns and have way too many recesses.

 

This would likely create more problems than it solves.

The state is nothing more than a criminal gang writ large.

Reply

The state is nothing more than a criminal gang writ large.

Reply
post #35 of 158
Quote:
Originally Posted by bullhead View Post

 

the problem is _not_ the government. the problem _is_ the voters who keep voting in Republicans and Democrats.

Realistically we have a 2 party system. It is unfortunate but as it currently stands you can't always have an effective say in the outcome of the election (if you vote outside the 2 main parties) because the Republicans and Democrats control the game. A vote for someone in another party (at least in the presidential race) does not allow you to choose from the viable candidates. Maybe it will change. So far it hasn't. I don't think there has been a time in our country where the election was truly close between more than 2 candidates. (I am sure someone will correct me if I am wrong.)

post #36 of 158

What's absurd is that these corrupt jackasses are allowed to have power over americans.

 

Apple makes money outside the USA and doesn't pay taxes on it.... that's only absurd to people who think that we all should be their slaves and should have to pay them everything we earn, even if we earned it outside the country.

 

The only thing Apple's at fault for here, is not putting money behind serious political reform in this country.

 

Throw out the socialist republicans and democrats, throw out and politicians who doesn't support property rights.

 

If ONLY Corporations would use their influence to the degree that leftist idiots claim they do, we'd have a much better country.

 

It's time to shut down the IRS.   Obviously the federal government can't be trusted with this kind of power without abusing it.  Hell, they can't be trusted with any power without abusing it, so we might as well get rid of income and corporate taxes as well.  

 

Reduce the federal budget by %90 and then force them to cut all the corrupt burocrats they employ to shake people down.

 

Suddenly the economy will start getting better.  Oh what a miracle people will exclaim.

 

The reality is, government can't help people.  It can only steal.  When we get the government monkey off of our back ,the economy will start to improve by leaps and bounds.

 

That would REALLY help people.

post #37 of 158
Originally Posted by Damn_Its_Hot View Post
Realistically we have a 2 party system. 

 

No, we have a system that currently has two major parties.


I don't think there has been a time in our country where the election was truly close between more than 2 candidates. (I am sure someone will correct me if I am wrong.)

 

Most of the elections of the early 1800s.

Originally posted by Marvin

Even if [the 5.5” iPhone] exists, it doesn’t deserve to.
Reply

Originally posted by Marvin

Even if [the 5.5” iPhone] exists, it doesn’t deserve to.
Reply
post #38 of 158
Congress is just grandstanding. If it was really an outrage they would have passed new laws to close the loopholes. This isn't a new thing.
post #39 of 158
Quote:
Originally Posted by mytdave View Post

So, stop bitching about Apple, and fix the tax code.  The problem is the Govt. not the companies they're trying to vilify.  Any company who isn't using every legal means to avoid paying tax isn't acting with due diligence.

I feel like we almost need one of those White House petitions. Demanding Obama put an end to the witch hunt and tell Congress that they need to either charge Apple with a provable crime (like falsifying how much money they made in the US) or change the damn laws that created this mess. Trouble is when they change all those loopholes, some of them will have to pay more.

A non tech's thoughts on Apple stuff 

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

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A non tech's thoughts on Apple stuff 

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

Reply
post #40 of 158
I could not agree more with the comments from Rand Paul. This is a disgusting sideshow, political grandstanding at its worst. It is heartening to see so many here supporting a great American company to do what it does best, make money. I have serious doubts that if the story was about Google or Microsoft, some would be acting the same way. Please pay attention to the true story here, that corporate taxes need reform, most people know it, yet nobody in Washington can make it happen. Lower the rates to at or below OECD average, establish reasonable repatriation taxes, or bring back a repatriation holiday at the least. Eliminate tax expenditures. Oh wait that is exactly what the Ryan plan on tax reform calls for, Apple calls for it as well. Basically anybody with a mind for economic growth rather than government growth calls for this.
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