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Apple publishes execs' opening statements from US Senate testimony - Page 3

post #81 of 89
Quote:
Originally Posted by Marvin View Post

There's a company called Apple Dome Management:

http://www.cro.ie/search/CompanyDetails.aspx?id=336784&type=C

That must be to prevent Apple becoming domed. 

 

lol.gif  very good.

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post #82 of 89
Quote:
Originally Posted by Crowley View Post

lol.gif   very good.

It never gets old ... Apple domed themselves ...
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post #83 of 89
Quote:
Originally Posted by digitalclips View Post

As an Apple retailer my company was given a 33% discount off of retail to resell, a nice healthy margin on which substantial taxes were paid. That was buying directly from Apple. Let us assume Apple Centers owned by Apple work on similar basis

It's going to be very different for Apple resellers. One of the things they point to is the check-the-box rules. From the memo:

"When an offshore subsidiary of a multinational corporation receives dividends, royalties or other fees from a related subsidiary, that income is considered foreign personal holding company (FPHC) income. That passive income, as it is commonly known, is normally subject to immediate taxation under Section 954(c) of Subpart F. However, once again, under check-the-box rules, if a U.S. multinational elects to have lower-tier subsidiaries “disregarded” – i.e., no longer considered as separate entities – and instead treated as part of an upper-tier subsidiary for tax purposes, any passive income paid by the lower-tier subsidiary to the higher- tier parent would essentially disappear. Because those dividends, royalties and fee payments would be treated as occurring within a single entity, the IRS would not treat them as payments between two legally separate entities or as taxable income under Subpart F.

In Apple’s case, in 2011 alone, AOI in Ireland received $6.4 billion in dividends from lower-tier offshore affiliates. Over a four year period, from 2009 to 2012, Apple reported that AOI received a total of $29.9 billion in income, almost exclusively from dividends issued to it by lower-tier CFCs. That dividend income is exactly the type of passive income that Subpart F intended to be immediately taxable. However, by invoking the check-the-box regulations, Apple Inc. was able to designate the lower-tier CFCs as “disregarded entities,” requiring the IRS to view them for tax purposes as part of AOI. Once they became part of AOI, their dividend payments became payments internal to AOI and were no longer taxable passive income.

The check-the-box regulations were never intended to be used to convert taxable, offshore, passive income into nontaxable income."

Apple even submitted information about how much estimated US tax they'd avoided by doing all this - $12.5b (maybe that's when that picture of Tim laughing was taken). Even after the tax reform, they get to keep it all.

In terms of the high prices to subsidiaries, they give the example of Japan:

"in 2011, Apple reported $34 billion in income before taxes; however, just $150 million of those profits, a fraction of one percent, were recorded for Apple’s Japanese subsidiaries, even though Japan is one of Apple’s strongest foreign markets. ASI, meanwhile, reported $22 billion in 2011 net income.Those figures indicate that Apple’s Japanese profits were being shifted away from the United States to Ireland, where Apple had negotiated a minimal tax rate and maintained two non-tax resident corporations."

Another thing they mention is that some of the Irish subs have no bank accounts overseas and the money is kept in the US:

"According to Apple, it currently has about $145 billion in cash, cash equivalents and marketable securities, of which $102 billion is "offshore". As of 2011, Apple held between 75 and 100% of those offshore cash assets in accounts at U.S. financial institutions."

So it's not offshore cash but US cash that is owned by an offshore company managed in the US.
Quote:
Originally Posted by digitalclips View Post

If Ireland offered tax incentives (as they did) to attract business good for them and good for Apple.

The main thing isn't the rate but that Apple is passing money between subsidiaries without treating them as separate entities. They're also not putting the same tax figures in their shareholder reports that they actually pay:

"the Subcommittee asked Apple to report the corporate income taxes it actually paid to the U.S. treasury over a three-year period, from 2009 to 2011. According to Apple, the company actually paid just $2.4 billion in federal taxes in 2011, which is $1.4 billion or 30 percent less than the current federal tax provision and $4.4 billion less than the total tax provision included in the company’s 2011 annual statement."
post #84 of 89
Quote:
Originally Posted by Crowley View Post

 

I have never said that.  I never said that ASI (or AOI for that matter) sold anything to Apple US for sale in the US.  You've repeated that many times and its simply not true, I never said it.  I challenge you to find a single instance of me saying that.

 

Giving you the benefit of the doubt that the "US" was a slip, and replacing it with "UK" for arguments sake (which I have said).  Even so, why is it wrong?  It's a good business tactic.  I think Apple are very clever for doing it.  It's what ASI was set up to do if you read Apple's own description of the company.  How and why am I "blatantly" wrong?  

 

That's a lie.  Over the course of these discussions about Apple's tax I don't think I have once accused Apple of doing anything wrong.  You keep saying that I've done so, but have yet to provide a shred of evidence that I've done so.

 

 

 

EDIT: I realise I said I wouldn't repeat this again just a few posts ago.  I guess that makes me a liar in one respect.  I definitely won't repeat it again, I'll just point back to this post.

Overlook JR. He's simply creating his own imagined argument, nothing unusual. You'll note that even tho Marvin is making many of the same points Jragosta avoids using the same tactics with him.

 

FWIW both you and Marvin have done an exceptional job of familiarizing yourselves with the facts IMO, Kudos to both of you for taking the time to not only research and understand the issues but to go to the efforts you have to share what you've learned with the rest of us,

 

Thank you.

melior diabolus quem scies
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melior diabolus quem scies
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post #85 of 89
Quote:
Originally Posted by Marvin View Post

It's going to be very different for Apple resellers. One of the things they point to is the check-the-box rules. From the memo:

"When an offshore subsidiary of a multinational corporation receives dividends, royalties or other fees from a related subsidiary, that income is considered foreign personal holding company (FPHC) income. That passive income, as it is commonly known, is normally subject to immediate taxation under Section 954(c) of Subpart F. However, once again, under check-the-box rules, if a U.S. multinational elects to have lower-tier subsidiaries “disregarded” – i.e., no longer considered as separate entities – and instead treated as part of an upper-tier subsidiary for tax purposes, any passive income paid by the lower-tier subsidiary to the higher- tier parent would essentially disappear. Because those dividends, royalties and fee payments would be treated as occurring within a single entity, the IRS would not treat them as payments between two legally separate entities or as taxable income under Subpart F.

In Apple’s case, in 2011 alone, AOI in Ireland received $6.4 billion in dividends from lower-tier offshore affiliates. Over a four year period, from 2009 to 2012, Apple reported that AOI received a total of $29.9 billion in income, almost exclusively from dividends issued to it by lower-tier CFCs. That dividend income is exactly the type of passive income that Subpart F intended to be immediately taxable. However, by invoking the check-the-box regulations, Apple Inc. was able to designate the lower-tier CFCs as “disregarded entities,” requiring the IRS to view them for tax purposes as part of AOI. Once they became part of AOI, their dividend payments became payments internal to AOI and were no longer taxable passive income.

The check-the-box regulations were never intended to be used to convert taxable, offshore, passive income into nontaxable income."

Apple even submitted information about how much estimated US tax they'd avoided by doing all this - $12.5b (maybe that's when that picture of Tim laughing was taken). Even after the tax reform, they get to keep it all.

In terms of the high prices to subsidiaries, they give the example of Japan:

"in 2011, Apple reported $34 billion in income before taxes; however, just $150 million of those profits, a fraction of one percent, were recorded for Apple’s Japanese subsidiaries, even though Japan is one of Apple’s strongest foreign markets. ASI, meanwhile, reported $22 billion in 2011 net income.Those figures indicate that Apple’s Japanese profits were being shifted away from the United States to Ireland, where Apple had negotiated a minimal tax rate and maintained two non-tax resident corporations."

Another thing they mention is that some of the Irish subs have no bank accounts overseas and the money is kept in the US:

"According to Apple, it currently has about $145 billion in cash, cash equivalents and marketable securities, of which $102 billion is "offshore". As of 2011, Apple held between 75 and 100% of those offshore cash assets in accounts at U.S. financial institutions."

So it's not offshore cash but US cash that is owned by an offshore company managed in the US.
The main thing isn't the rate but that Apple is passing money between subsidiaries without treating them as separate entities. They're also not putting the same tax figures in their shareholder reports that they actually pay:

"the Subcommittee asked Apple to report the corporate income taxes it actually paid to the U.S. treasury over a three-year period, from 2009 to 2011. According to Apple, the company actually paid just $2.4 billion in federal taxes in 2011, which is $1.4 billion or 30 percent less than the current federal tax provision and $4.4 billion less than the total tax provision included in the company’s 2011 annual statement."

Thanks, great information. I suspect major shifts may have occurred as Apple moved into its direct sales approach (post any involvement I had with them) and no longer had to deal with privately owned resellers so much (if at all in many places it seems these days) . All I can say is simply ... "Wow!" ...

However creative, can I assume all the above is strictly within the tax laws of the US (and elsewhere) and no wrong doing occurred? He asks with fingers crossed 1smile.gif
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post #86 of 89
Quote:
Originally Posted by digitalclips View Post

However creative, can I assume all the above is strictly within the tax laws of the US (and elsewhere) and no wrong doing occurred? He asks with fingers crossed 1smile.gif

It's funny, Bullock was asked that - Johnson said he assumed they'd have the IRS pretty much auditing them full-time like many other large corporations and Bullock confirmed this, then the conversation went:

Johnson: they're looking at all this corporate structure, transfer prices and they're basically giving you the nod saying you're following tax law?
Bullock: *slight pause* They look at it in detail, yes.
Johnson: Ok, uh... Mr Cook...

If the IRS had found law-breaking, they'd most likely have been prosecuted by now so I don't think that's a concern. I get the impression that the IRS is extremely unhappy with it though, hence the push for near-term tax reform. Shareholders should perhaps be concerned about tax reform because if these loopholes are closed then Apple may be liable for significantly increased taxes next year (or more accurately, taxes significantly closer to what they're expected to be paying anyway).

Determining adherence to tax law is obviously made trickier by the fact that these Irish entities have no tax jurisdiction so they'd have to figure out whose law to hold them to first. It's very odd that this was ever allowed to happen. The subs are primarily being managed in the US so common sense would dictate that the US management are beneficiaries of the services provided by US income tax. On top of that, the cash is held in the US and managed by US banks and other financial institutions so obviously protected by the laws surrounding US banking.

I'm not sure when the IRS started auditing them, it seems as though they have been for a while. If they found that it wasn't legal for these entities to have existed and operated without a tax jurisdiction, maybe they can take some action but there's nothing to indicate that.

This seems to me to be like the Chinese labour conditions: most, if not all Apple's competitors do the same things or worse. When the spotlight shines in Apple's direction, they are quick to point this out, they claim (probably rightly) to be more ethical and end up leading by example. The more of these things that come to light, the more it seems they have a very malleable sense of ethics. I don't think that's easily avoidable though and I don't blame them entirely. It's easy to judge these issues from the outside but you get a different perspective from different vantage points.

If I was in Apple's position when paying the 2012 taxes, I'd be looking at the $41b of income knowing that I had nothing to spend it on and I'd think that a $14b tax bill was large but I'd still end up with $26b and still wouldn't know what to spend it on so kind of inconsequential. I'd perhaps like a say in how the tax gets spent beyond electing someone under the promise that it gets spent wisely but that would be the case at any income level. I also think a 25% tax rate is fairer and is what the rest of the world seems to have agreed on. I think that there's going to eventually have to be a new method of taxation or at least measuring it by using transactions instead of relying on companies being honest about their activities.

There needs to be a changed perception around the notion of taxation too. People have an indoctrinated hatred towards anything publicly funded and taxes, sometimes to the point of absurdity whereby some would even have an objection towards a minimum wage nurse working 12 hour shifts being funded by a parasitic entity (public funds) but have the utmost respect for a millionaire who makes a fat dividend from a stock holding being treated for a golfing injury sustained while playing golf all day and proclaim them to be the driving force of industry.

It's mainly because of the idea that any taxable allocation taken from money moving around is theft from a value determined by a free market. If I give someone a gift in exchange for some work and I decide I want the box back, some people would refuse and claim it belongs to them despite the fact that without me setting up the exchange, they wouldn't have a box to give back and I could have taken it prior to the transaction. If the public sector was funded from the central banks based on GDP, there would be no notion of theft at all because it's not personal but because most of the money would have to eventually go into the private sector, that would lead to hyperinflation as the money supply would have to keep growing so it has to keep going round without growing too fast, which means that non-profit organisations have to be subsidised by profit-making ones.

The point of the whole system, which people often forget is not to acquire wealth, it's to maintain a good quality of life. Quality of life isn't granted to everyone equally relative to productivity. The idea that the free market alone could determine life quality just doesn't hold up because human nature dictates otherwise. Everyone needs a form of centrally regulated justice, education and care because competition in certain areas would lead to war and a noticeable drop in life quality and profitability in many cases is opposed to the provision of a service.

So, the problem isn't that something is taken from individuals and businesses as that's essential but how it's taken, how much is taken and what it's being spent on. A lazy economy benefits no one so money has to be encouraged to move around to incentivize work but what's so ironic about the wealthiest people and companies is they don't all move money around. They have billions shored up somewhere separated from human interaction. How much has Apple's $100b sitting in a bank somewhere contributed to anyone's quality of life? Zero because not even shareholders are getting it.

What's the statement being made by not moving it around? That it's better to have a pile of money than a good quality of life? That unless the government offers better taxation rates than some of the poorest people that their only option is to deprive the economy of circulated currency? These are implicit statements made by people who explicitly declare that they aren't driven by money. There's a degree of intellectual dishonesty when someone's actions contradict their disposition like that.

The ability of people and companies to accumulate and freeze out large portions of money from circulation is really damaging to the whole economic model and as the subcommittee noted, the avoidance of taxes shifts the tax burden elsewhere:

"At its post-WWII peak in 1952, the corporate tax generated 32.1% of all federal tax revenue. In that same year the individual tax accounted for 42.2% of federal revenue, and the payroll tax accounted for 9.7% of revenue. Today, the corporate tax accounts for 8.9% of federal tax revenue, whereas the individual and payroll taxes generate 41.5% and 40.0%, respectively, of federal revenue.”

It's right to applaud when they make computers for the rest of us, not when they make tax increases for the rest of us and it even contradicts philosophies promoting the prosperity of self-interest. Why promote something that ultimately works against your own self-interest?

Governments taking too much is harmful too because it weighs down the private sector but the solution to that is for people to use state-provided services less, not to remove the services where there is a need for them.
post #87 of 89
Quote:
Originally Posted by anantksundaram View Post


Uh... What?

I'm saying that Apple's suggestion of lowering the tax rates by 1/3 and slashing the rate to "repatriate" it's money to single digits is ABSURD.

 

They make HUNDREDS of BILLIONS in profits and still want to pay LESS taxes.

 

Don't be fooled - Apple is using gimmicks to shuffle money around to have the maximum benefit for Apple. I won't mind that so much if they'd be honest about it.  "Senators: we follow the law and we are trying to keep as much money in our pocket and not in the U.S. Treasury. We use every legal method to keep our money."

 

I predict that if we did lower the tax rate to 20% and have a 2% tax on bringing money back that Apple would then ask for a 15% tax rate and a 1% repatriation rate. And so on.

post #88 of 89
Quote:
Originally Posted by tomhayes View Post

I'm saying that Apple's suggestion of lowering the tax rates by 1/3 and slashing the rate to "repatriate" it's money to single digits is ABSURD.

They make HUNDREDS of BILLIONS in profits and still want to pay LESS taxes.

I read a news article shortly after viewing this thread earlier on today:

http://online.wsj.com/article/SB10001424127887323296504578396670651342096.html

"British fraud prosecutors in December arrested two R.P. Martin employees and a former UBS trader, Tom Hayes. Authorities allege he played a central role trying to rig Libor."

That name popped out and I couldn't think where I'd seen it before until I saw the thread again. Obviously not the same one.

There's a clear problem when it comes to Apple not using tax avoidance, which is that we know their competitors do the same things so if Apple didn't use these measures, they'd probably be the only ones and be at a disadvantage. The only feasible way for it to stop is to either close the loopholes or take tax some other way. That's partly how I ended up at the above article.

The big problem is how to fund essential government services without impacting the private sector too much but there's a very important problem that came to light with the recession, which is to do with who's controlling the supply of money. The system we use that should be well known by now is debt-based, privatised and banks have been given the authority to lend out many times their assets (fractional reserve banking - http://www.webofdebt.com/articles/ponzi.php ). When banks do certain transactions, the debts/loans rise and that Libor rate mentioned above determines interest rates. But there's little to stop it ballooning out of control as it's a fiat currency and now we have a system where the amount of debt is a fair bit more than any worldly assets to pay for it:

http://blogs.wsj.com/economics/2013/05/11/number-of-the-week-total-world-debt-load-at-313-of-gdp/

When the debt can't be paid, the whole system collapses, which is kinda stupid because it's a man-made system. It's not really a system that can ever become non-volatile and it will get worse the larger scale the economy becomes and the smaller scale the control over it becomes. A common suggestion seems to be to get away from a debt-based currency, which could help fund government services and it could act as a measure for controlling government spending.

If the governments issued the loans, they could fund government services from the interest, so take away most of the requirement to take taxes and the avoidance thereof. Because pretty much all of the money would go into the private sector, it's ultimately non-profit and it should be able to stabilise. How to make that practical is a problem though because of the resources required in managing it so the private banks would have to control operations to some degree. But you can see here how this has the potential to support government services without it seeming like government is stealing from the private sector:

http://webofdebt.wordpress.com/2012/11/08/its-the-interest-stupid-why-bankers-rule-the-world/

Pretty much everyone in the world depends on the banking system by necessity and it's rarely made apparent how insecure it is:

http://www.huffingtonpost.com/ellen-brown/banks-confiscation_b_2957937.html

"Few depositors realize that legally, the bank owns the depositor's funds as soon as they are put in the bank. Our money becomes the bank's, and we become unsecured creditors holding IOUs. But until now, the bank has been obligated to pay the money back as cash on demand. Under the FDIC-BOE plan, our IOUs will be converted into "bank equity." The bank will get the money and we will get stock in the bank. With any luck we may be able to sell the stock to someone else, but when and at what price? Most people keep a deposit account so they can have ready cash to pay the bills.

If our IOUs are converted to bank stock, they will no longer be subject to insurance protection but will be "at risk" and vulnerable to being wiped out, just as the Lehman Brothers shareholders were in 2008.

The deposits are now subject to being wiped out by a major derivatives loss. How bad could that be? $75 trillion and $79 trillion in derivatives! These two mega-banks alone hold more in derivatives each than the entire global GDP (at $70 trillion).

imposing losses on depositors is not a "wealth tax" but is a tax on the poor, since wealthy people don't keep most of their money in bank accounts. They keep it in the stock market, in real estate, in over-the-counter derivatives, in gold and silver, and so forth.

Are you safe, then, if your money is in gold and silver? Apparently not -- if it's stored in a safety deposit box in the bank. Homeland Security has reportedly told banks that it has authority to seize the contents of safety deposit boxes without a warrant when it's a matter of "national security," which a major bank crisis no doubt will be."

Closing down things like 1 infinite tax loophole, Ireland is like whack-a-mole. The companies and competitors will keep fighting a battle that shouldn't exist and only exists because of the way the money system operates, which breeds the notion of theft because you get the money first and it gets explicitly taken.
post #89 of 89
Quote:
Originally Posted by MJ1970 View Post

I so wish he could and would have. The problem is, these guys are a bunch of fucking mafia goons. They would have gone after him and Apple.
TC is not trying to upset the apple cart right now ..iPads and iPhones getting dod
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