Apple's bond offering will allow it to avoid $9.2B in US taxes

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Comments

  • Reply 61 of 105


    Why do so many people view a large portion of a companies post tax profits somehow belonging to the US gov't, this is insane.  Does a large portion of your you post tax savings account belong to the US gov't?   I think not.

  • Reply 62 of 105
    MacProMacPro Posts: 19,787member
    1) Presidents have the right to veto. At no time was the Democratic control of Congress sufficient to overcome a veto.

    2) Why don't you compare spending in Congresses under the two parties, compare, and come back and tell us what you find empirically. (Hint: You might be surprised).

    As a Brit who moved to the US I did just that and was surprised. When first moving from UK I was pretty clueless about the system here and was keen to take a balanced, long look at everything and that particular point was unexpected based on the rhetoric from much of the media not to mention 'conventional wisdom', your inferred answer in 'hint' is entirely true. (This is me not being political). :D
  • Reply 63 of 105
    macgurumacguru Posts: 35member

    Quote:

    Originally Posted by JCC View Post



    This is dumb. Steve Jobs is rolling over in his grave. Unless they feel that they can repatriate that cash at a lower tax rate later, they have not only NOT save $9.4 bil but they've also just wasted hundreds of millions that they have to pay in servicing the debt.



    For what? So they can please bottom feeding, scum sucking hedge funds? I wish Steve were alive to tell these bone heads where to stick their damn dividend. This cash is the lifeblood of the company and they're draining it. WTF is Cook thinking?


    Non investors never fail to miss the point about these kinds of things. I am an owner of Apple, along with all the other holders of Apple stock. That's the reality, and that's the decision Steve himself made (to issue stock) early on when Apple needed capital. Most of us Apple owners wanted management to put our cash to better use instead of simply letting it lay dormant. The pressure was certainly high and Cook had to do something. Remember, he has a legal responsibility to manage Apple and it's cash in the best interest of Apple owners, NOT Apple fans nor Apple employees and executives. Both of your points reveal a woeful lack of understanding. And the fact that Apple's overall value has risen by tens of $billions$ since this action, and as a direct result of it, should have given you pause. But somehow you think it was a huge failure. Bad call, man.


     


    I will give you one thing though, sort of. I don't like the Hedge Fund investment companies either. They seem a bit like pick-pockets to me. All those people who make their living out of playing the market are, to some extent, feeding off of hard working people like me who are trying to built up our retirement savings. Investing in a company is one thing. But using the world's most advanced computers and investment know-how to buy and sell and get the jump on all us honest investors seems like putting the fox in charge of the hen house.

  • Reply 64 of 105
    macgurumacguru Posts: 35member


    deleted duplicate.

  • Reply 65 of 105
    anantksundaramanantksundaram Posts: 20,407member

    Quote:

    Originally Posted by digitalclips View Post



    As a Brit who moved to the US I did just that and was surprised. When first moving from UK I was pretty clueless about the system here and was keen to take a balanced, long look at everything and that particular point was unexpected based on the rhetoric from much of the media not to mention 'conventional wisdom', your inferred answer in 'hint' is entirely true. (This is me not being political). image


    I wasn't being political either (I hate politics with a passion! image).


     


    Here's a nice academic -- non-political -- study on Democratic v. Republican spending: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1740767

  • Reply 66 of 105
    cnocbuicnocbui Posts: 3,613member

    Quote:

    Originally Posted by jragosta View Post





    That would be insanely stupid - and violate virtually every trade law on the books.

     


     


    Would you care to cite an example of a 'trade' law that would be violated?  This is about taxation, not trade.  What might be at issue are international agreements on double taxation.  These are just agreements, though and are not laws.


     


    Quote:


    The money overseas was earned overseas. The expenses were paid overseas and whatever was left over is profit that was earned overseas. The US has absolutely no jurisdiction over things that occur in other countries.

     



     


    It does when it comes to taxation of entities resident in the US.


     


    I can give you a personal example.  I live in Ireland.  I have investments in Australia.  The Australian taxation rate on the income earned from those investments is far less than the Irish taxation rate.  I pay the Australian tax to the Australian government.  The Irish Government taxes my income from those investments at it's far higher rate, but gives me a credit on the tax already paid so as to avoid double taxation.  I have to pay the Irish Government it's pound of flesh, irrespective of whether I repatriate the income to Ireland or not.


     


    Forgive me for not being sympathetic to Apple for being able avoid what I can not.


     


    I could give you multiple examples of the US government applying it's laws to individuals in other countries who are abiding by the laws of those countries. Here is one particularly egregious example: http://www.bbc.co.uk/news/uk-scotland-tayside-central-14496805


     


    Basically, the guy had a legal and legitimate business supplying chemicals which were perfectly legal to trade in in the UK.  The US has sought to extradite him to the US to prosecute him for violating US laws - un &^%$  believable.

  • Reply 67 of 105
    jragostajragosta Posts: 10,473member
    trumptman wrote: »
    It isn't wrong and perhaps you should get your information from someplace other than MSNBC and Huffington Post. Spending comes from Congress. The Democrats controlled Congress during most Republican presidential terms. Even during the latest Republican president, George W. Bush, the Senate was controlled by Democrats during 4 of the 8 years. To compare spending by party, you have to look at control of Congress, not just the presidency.

    Then if I accept your premise, will you stop the Obama bashing that you and your faux news friends throw around?

    cnocbui wrote: »
    I can give you a personal example.  I live in Ireland.  I have investments in Australia.  The Australian taxation rate on the income earned from those investments is far less than the Irish taxation rate.  I pay the Australian tax to the Australian government.  The Irish Government taxes my income from those investments at it's far higher rate, but gives me a credit on the tax already paid so as to avoid double taxation.  I have to pay the Irish Government it's pound of flesh, irrespective of whether I repatriate the income to Ireland or not.

    If you don't understand the differences between an individual and a multinational corporation, you have no business even participating in this discussion.
  • Reply 68 of 105
    macgurumacguru Posts: 35member


    For all those who think Apple screwed up with this bond deal, you should read this:


    http://seekingalpha.com/article/1400231-apple-bonds-are-good-for-the-economy?source=yahoo

  • Reply 69 of 105
    bugsnwbugsnw Posts: 717member


    Taxes create incentives/disincentives. Repatriation of income earned elsewhere creates a huge tax liability for Apple. Hence the money stays where it was earned. Right now they can earn more than it costs to service the debt they are taking on.


     


    There is enormous room to clean out the tax code, in my opinion. I like the flat tax idea. Anything that lowers the rate (incentivizing economic activity and growth) and broadens the base gets my vote.


     


    On parties, I see both sides. But I'd rather have Reagan and Bush II's economies than Carter and Obama's. It might just be me, but Obama has no limit to what he wants to spend. He has said in a debate that he would raise cap gains to 28% even if it reduced treasury revenue (to create fairness). And I see the debt skyrocketing under Obama like never before and still the creation of yet another multi-trillion dollar entitlement program.


     


    Apple is doing what is advantageous to Apple given the current tax code. We could change it and perhaps more would flow in from every corporation and every person without stifling growth. Bush lowered taxes and despite CBO projections, treasury revenue skyrocketed to record levels. Maybe seeking ever higher taxation is not the answer. Tax rates and treasury receipts are not the same thing. Increasing one does not always lead to and increase in the other.

  • Reply 70 of 105
    cnocbuicnocbui Posts: 3,613member

    Quote:

    Originally Posted by jragosta View Post



    If you don't understand the differences between an individual and a multinational corporation, you have no business even participating in this discussion.


    I understand the difference perfectly. Of what relevance is it in the context of my suggestion that the US govt. just do what the Irish govt does?  I am still awaiting an example of the trade laws you were spouting off about being violated and your explanation as to why trade laws have anything to do with my original suggestion you lost the plot on.

  • Reply 71 of 105
    smallwheelssmallwheels Posts: 584member


    Someone please explain to me how offering bonds that must be repaid to the buyers will get the $100 billion in value that is parked overseas back to the USA without being taxed.

  • Reply 72 of 105
    jragostajragosta Posts: 10,473member
    cnocbui wrote: »
    I understand the difference perfectly. Of what relevance is it in the context of my suggestion that the US govt. just do what the Irish govt does?  I am still awaiting an example of the trade laws you were spouting off about being violated and your explanation as to why trade laws have anything to do with my original suggestion you lost the plot on.

    You obviously don't understand the difference.

    As an Irish citizen, you are subject to the laws of Ireland and the tax structure - even if you earn it elsewhere.

    A multinational corporation has no 'citizenship' and is not subject to US taxes outside the US.

    The proof is in the pudding. If the US government could legally grab a portion of the money stored by Apple and other multinationals overseas, why haven't they done it? Obviously, they can't.
    Someone please explain to me how offering bonds that must be repaid to the buyers will get the $100 billion in value that is parked overseas back to the USA without being taxed.

    Technically, it doesn't get the $100 B overseas back to the US. It does, however, allow them to get essentially the same result as if they did - but without paying taxes.
  • Reply 73 of 105
    igrivigriv Posts: 1,177member

    Quote:

    Originally Posted by Smallwheels View Post


    Someone please explain to me how offering bonds that must be repaid to the buyers will get the $100 billion in value that is parked overseas back to the USA without being taxed.



     


    The idea is that Apple's operating income over the next N years will be enough to repay the principal and the coupon without touch the offshore money (which, of course, can be repatriated if the premise is not true).

  • Reply 74 of 105
    froodfrood Posts: 771member

    Quote:

    Originally Posted by nollam View Post



    There seems to be a lot of misunderstanding (or just misrepresentation) on this topic. Apple *has* paid tax on its overseas earnings, it pays tax in each of the jurisdictions in which it operates. What AAPL is wisely trying to avoid, is a double-taxation situation where it will have to pay *again* on revenues it returns to the US.



    You may be of the opinion that AAPL should pay tax multiple times on its profits, but that will put APPL in an unfair position when competing in the global market.

     


     


    Actually, that whole portion of your post shows a big misunderstanding of how offshoring works.  Apple sold over 40% of its products in the US.  They did not claim anywhere near 40% of their profits in the US.


     


    Apple makes things on the cheap in China.  They sell them for a hefty price in the US.  They should be taxed on that profit in the US.


     


    A simplistic version of what they do is this. 


     


    1) Figure out what country and tax breaks are the most beneficial possible.  (Ireland->Netherlands->Ireland->Bahamas currently has a 'winning' combo)


    2) Set up essentially dummy subsidiaries in all those countries


    3) Claim those subsidiaries are where you are making all your profits


     


    So Apple Ireland essentially 'buys' the cheap phones from China on 'paper'


    Apple Ireland than sells itself those same phones for a much higher price


    Apple Ireland than sells those 'expensive' phones to Apple America for a high price


    Apple America then sells the majority of the product in America at a high price, but for little profit on paper.


    All the profit on paper was made in Ireland and the Netherlands and stored in the Bahamas.


    If you combine the entire sales of phones in the Netherlands, Ireland, and the Bahamas it is diddly squat compared to the rest of the world.  Yet those are the countries Apple records the majority of its profits and where it keeps most of the money.


     


    It is smart and it is legal.  Our laws need to not be dumb.   There are a lot of companies paying our leaders a lot of money to keep our laws dumb.  They pay the media a lot of money to make it seem like the government is the problem.


     


    'A lower corporate tax rate!' is a common slogan.  Apple paid about 2% in taxes on its US earning using its offshore method.  So we'd have to beat that....

  • Reply 75 of 105
    jragostajragosta Posts: 10,473member
    frood wrote: »
    Actually, that whole portion of your post shows a big misunderstanding of how offshoring works.  Apple sold over 40% of its products in the US.  They did not claim anywhere near 40% of their profits in the US.

    Apple makes things on the cheap in China.  They sell them for a hefty price in the US.  They should be taxed on that profit in the US.

    A simplistic version of what they do is this. 

    1) Figure out what country and tax breaks are the most beneficial possible.  (Ireland->Netherlands->Ireland->Bahamas currently has a 'winning' combo)
    2) Set up essentially dummy subsidiaries in all those countries
    3) Claim those subsidiaries are where you are making all your profits

    So Apple Ireland essentially 'buys' the cheap phones from China on 'paper'
    Apple Ireland than sells itself those same phones for a much higher price
    Apple Ireland than sells those 'expensive' phones to Apple America for a high price
    Apple America then sells the majority of the product in America at a high price, but for little profit on paper.
    All the profit on paper was made in Ireland and the Netherlands and stored in the Bahamas.
    If you combine the entire sales of phones in the Netherlands, Ireland, and the Bahamas it is diddly squat compared to the rest of the world.  Yet those are the countries Apple records the majority of its profits and where it keeps most of the money.

    It is smart and it is legal.  Our laws need to not be dumb.   There are a lot of companies paying our leaders a lot of money to keep our laws dumb.  They pay the media a lot of money to make it seem like the government is the problem.

    'A lower corporate tax rate!' is a common slogan.  Apple paid about 2% in taxes on its US earning using its offshore method.  So we'd have to beat that....

    That is, of course, all nonsense. Apple does not buy its US phones via Ireland, for example. Apple does not claim that the subsidiaries are making all the profits - they paid $6 B in taxes in the US. And your 2% figure is ridiculous. Last year, Apple's total income from their 10K was $55 B. They paid $6 B in US tax last year on something like $25 B in US net income. That's a far cry from your silly 2% claim.

    There is some flexibility in transfer pricing, but it's nowhere near as bizarre as you claim. When the US subsidiary buys products from China, the transfer price must be a fair one. The IRS is not going to let them get away with a ridiculous transfer price.
  • Reply 76 of 105
    igrivigriv Posts: 1,177member

    Quote:

    Originally Posted by Frood View Post


     


    Actually, that whole portion of your post shows a big misunderstanding of how offshoring works.  Apple sold over 40% of its products in the US.  They did not claim anywhere near 40% of their profits in the US.


     


    Apple makes things on the cheap in China.  They sell them for a hefty price in the US.  They should be taxed on that profit in the US.


     


    A simplistic version of what they do is this. 


     


    1) Figure out what country and tax breaks are the most beneficial possible.  (Ireland->Netherlands->Ireland->Bahamas currently has a 'winning' combo)


    2) Set up essentially dummy subsidiaries in all those countries


    3) Claim those subsidiaries are where you are making all your profits


     


    So Apple Ireland essentially 'buys' the cheap phones from China on 'paper'


    Apple Ireland than sells itself those same phones for a much higher price


    Apple Ireland than sells those 'expensive' phones to Apple America for a high price


    Apple America then sells the majority of the product in America at a high price, but for little profit on paper.


    All the profit on paper was made in Ireland and the Netherlands and stored in the Bahamas.


    If you combine the entire sales of phones in the Netherlands, Ireland, and the Bahamas it is diddly squat compared to the rest of the world.  Yet those are the countries Apple records the majority of its profits and where it keeps most of the money.


     


    It is smart and it is legal.  Our laws need to not be dumb.   There are a lot of companies paying our leaders a lot of money to keep our laws dumb.  They pay the media a lot of money to make it seem like the government is the problem.


     


    'A lower corporate tax rate!' is a common slogan.  Apple paid about 2% in taxes on its US earning using its offshore method.  So we'd have to beat that....



     


    An excellent explanation. As for the laws, notice that for this scheme to be cost effective, the perpetrator has to be of a certain size, and so this has the additional advantage of putting a barrier to entry for small startups.

  • Reply 77 of 105
    igrivigriv Posts: 1,177member

    Quote:

    Originally Posted by jragosta View Post





    That is, of course, all nonsense. Apple does not buy its US phones via Ireland, for example. Apple does not claim that the subsidiaries are making all the profits - they paid $6 B in taxes in the US. And your 2% figure is ridiculous. Last year, Apple's total income from their 10K was $55 B. They paid $6 B in US tax last year on something like $25 B in US net income. That's a far cry from your silly 2% claim.



    There is some flexibility in transfer pricing, but it's nowhere near as bizarre as you claim. When the US subsidiary buys products from China, the transfer price must be a fair one. The IRS is not going to let them get away with a ridiculous transfer price.


     


    You don't know what you are talking about, and Frood does. See:


     


    http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html?_r=0


     


    "Double irish with a dutch sandwich".

  • Reply 78 of 105
    tallest skiltallest skil Posts: 43,388member


    Originally Posted by cnocbui View Post

    …retrospective…


     


    Horrifying insanity. Nothing more needs said.






    National debt reduced slightly.





    For a few hours of one day.

  • Reply 79 of 105
    dysamoriadysamoria Posts: 3,430member
    jungmark wrote: »
    Speeding is illegal. Keeping $$$ offshore isn't.
    So I guess you don't take any deductions or tax credits when you did your taxes.

    I'm poor. My taxes are a non-issue. I essentially have nothing to file. I don't count. What I'm complaining about is how imbalanced the system is and how slanted it is toward the benefit of big corporations. These entities should be contributing more to the country they exist in. Instead, they steal from it by exporting as much employment as possible, so that they're essentially getting all the benefits of conducting business in the USA without actually contributing to the economic infrastructure, taking advantage of the country where they're getting the industrial labor, and getting endless tax loopholes that regular people don't have access to. Why is it still a problem for people to grasp the idea that a larger income should mean greater tax contribution?
  • Reply 80 of 105
    richlrichl Posts: 2,213member
    Apple could just pay the tax and help pay for the education of the next generation of Apple engineers.
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