Tim Cook to reportedly testify on offshore tax practices in Senate investigation
Apple CEO Tim Cook will reportedly give testimony to the U.S. Senate Permanent Subcommittee on Investigation pertaining to how the company deals with taxes, a much debated topic as Apple is thought to have about $100 billion in offshore funds.
While it was known that the Senate would be holding a hearing next week Tuesday, POLITICO is reporting that Cook himself will be present to give testimony, possibly answering questions in the same vein as those answered by representatives from Microsoft and HP.
The Senate hearing is a continuation of the panel's investigation into how the practice of keeping profits offshore affects U.S. taxes.
Large domestic corporations like Apple have taken to hoarding cash away from U.S. shores to avoid paying high tax rates on overseas earnings. For example, a recent analysts by The Wall Street Journal found 60 such companies held a combined $166 billion in earnings offshore in 2012. Under U.S. tax law, companies can effectively sidestep paying the government more than 40 percent of their annual profits by not repatriating the money.
Pointing to Apple's huge offshore cash pile, the company chose to take on debt by issuing bonds to finance a planned stock buyback, despite having $150 billion in cash and equivalents. This tactic will allow Apple to avoid an estimated $9.2 billion tax hit if it were to bring the money needed for the buyback into the U.S.
According to the publication, representatives from the Treasury Department, Internal Revenue Service and other tax experts will testify at the hearing. According to the subcommittee's website, a full witness list, which would include Cook if today's report is accurate, will be published on the Friday.
While it was known that the Senate would be holding a hearing next week Tuesday, POLITICO is reporting that Cook himself will be present to give testimony, possibly answering questions in the same vein as those answered by representatives from Microsoft and HP.
The Senate hearing is a continuation of the panel's investigation into how the practice of keeping profits offshore affects U.S. taxes.
Large domestic corporations like Apple have taken to hoarding cash away from U.S. shores to avoid paying high tax rates on overseas earnings. For example, a recent analysts by The Wall Street Journal found 60 such companies held a combined $166 billion in earnings offshore in 2012. Under U.S. tax law, companies can effectively sidestep paying the government more than 40 percent of their annual profits by not repatriating the money.
Pointing to Apple's huge offshore cash pile, the company chose to take on debt by issuing bonds to finance a planned stock buyback, despite having $150 billion in cash and equivalents. This tactic will allow Apple to avoid an estimated $9.2 billion tax hit if it were to bring the money needed for the buyback into the U.S.
According to the publication, representatives from the Treasury Department, Internal Revenue Service and other tax experts will testify at the hearing. According to the subcommittee's website, a full witness list, which would include Cook if today's report is accurate, will be published on the Friday.
Comments
If an American corporation earns money overseas, it's not taxable in the US until it's moved into US-based accounts.
Seems like there is a discrepancy there somewhere...
Quote:
Originally Posted by John.B
If an American citizen earns money overseas, it's taxable in the US.
If an American corporation earns money overseas, it's not taxable in the US until it's moved into US-based accounts.
Seems like there is a discrepancy there somewhere...
If an American citizen earns money overseas, by working at the company as an employee overseas aren't taxes collected or reported on some level?
If an American citizen living in the US, earns overseas income (like doing contract development work), are they reporting it to the US??
If I'm working in Germany, living in Germany, at a German company I can understand paying taxes to Germany. What I think is extortion is the US coming back and saying "We know you don't actually live in the US, but we want a cut of that money even though you don't do anything here in our country."
If Apple sells a product overseas, they are paying taxes to the country it was sold in. So as far as I'm concerned, they met their tax bill.
What the US is saying, "Yes you paid taxes to the country in which the sale was made, but we want an additional 30% simply because you should be honored to be a part of the United States of America" which I think is flat-out wrong and double-dipping. Screw that.
Quote:
Originally Posted by John.B
If an American citizen earns money overseas, it's taxable in the US.
If an American corporation earns money overseas, it's not taxable in the US until it's moved into US-based accounts.
Seems like there is a discrepancy there somewhere...
Disclaimer: I have no clue about the tax laws so this is all question and speculation on my part.
If that American earned money overseas and leaves it there, they still have to pay taxes on it? If I go to Italy for contract work and leave the money in Italy (for a later vacation) then why would the U.S. Government have any claim to taxes just because I am a citizen of the U.S.?
What this will lead companies to do, if the U.S. pushes the point, is to have subsidiaries in other countries so the parent company won't have to claim the income.
Quote:
Originally Posted by sflocal
If Apple sells a product overseas, they are paying taxes to the country it was sold in.
Probably not actually. Apple tend to move their money through tax havens like Luxembourg to reduce the overall amount of tax that they need to pay. Apple (and many of its multinational competitors) pay very little tax on goods sold in the UK, for example.
What I find hypocritical is that Apple is a politically Left leaning company which would make one thing Apple believes in the 'It's patriotic to pay more taxes' and 'the rich can afford to pay more' while all along they are doing everything they can to pay less. Just like those on the political Right want for everyone; pay less.
I wonder if their board member, the ultra progressive Al Gore, thinks it okay for Apple to hide money overseas?
Remove the IRS and install a flat sales tax for everyone and all these problems go away!
I wonder what they'll learn about gov. and how it taxes its people and corporations...
Flat tax or Flat sales tax. Get rid of the IRS. Let's do it already!
No loopholes for you, 1 year, and the year after that, and the year after that......
Quote:
Originally Posted by Richard Getz
What I find hypocritical is that Apple is a politically Left leaning company which would make one thing Apple believes in the 'It's patriotic to pay more taxes' and 'the rich can afford to pay more' while all along they are doing everything they can to pay less. Just like those on the political Right want for everyone; pay less.
I wonder if their board member, the ultra progressive Al Gore, thinks it okay for Apple to hide money overseas?
Remove the IRS and install a flat sales tax for everyone and all these problems go away!
Once again, no one should have to pay more more taxes than legally required. Apple and every company doing it is not doing anything illegal. You would do the exact same thing.
There is also nothing wrong with Apple believing it's a patriotic thing to pay taxes. The two are mutually exclusive. Apple happens to be one of the largest tax payers in the US. That does not mean Apple should pay more to make the government all warm and fuzzy.
A flat sales tax will still not resolve the issue. Should a company that earns revenue overseas, and pays taxes to the country of origin on that revenue be required to pay taxes in the U.S.?? I sure has hell don't think Apple, me, or anyone else should.
Quote:
Originally Posted by Richard Getz
Disclaimer: I have no clue about the tax laws so this is all question and speculation on my part.
If that American earned money overseas and leaves it there, they still have to pay taxes on it? If I go to Italy for contract work and leave the money in Italy (for a later vacation) then why would the U.S. Government have any claim to taxes just because I am a citizen of the U.S.?
What this will lead companies to do, if the U.S. pushes the point, is to have subsidiaries in other countries so the parent company won't have to claim the income.
Isn't that is one of the reasons why Facebook's early investor Eduardo Luiz Saverin renounced his citizenship? He was tired of paying US taxes when he didn't live in the US nor conducted business there. He lives full-time in Singapore. Arguably, I'd have done the same thing.
So if you keep it in that bank account in Italy after you paid your Italian taxes, travel to Italy and spend that money you'd probably be okay because that is essentially what Apple is doing. But if you go to an ATM here in the U.S. and withdraw that money from your Italian account then yes you "technically" have to pay U.S. taxes on earned overseas income I would think. Total BS.
Any confirmation on this?
If the US government wants that money brought back to the US they should look into not charging such a large amount as a de facto import duty.
Quote:
Originally Posted by sflocal
Once again, no one should have to pay more more taxes than legally required. Apple and every company doing it is not doing anything illegal. You would do the exact same thing.
There is also nothing wrong with Apple believing it's a patriotic thing to pay taxes. The two are mutually exclusive. Apple happens to be one of the largest tax payers in the US. That does not mean Apple should pay more to make the government all warm and fuzzy.
A flat sales tax will still not resolve the issue. Should a company that earns revenue overseas, and pays taxes to the country of origin on that revenue be required to pay taxes in the U.S.?? I sure has hell don't think Apple, me, or anyone else should.
Never suggested a law was being violated. Not once. And I take as many write downs as legally possible.
The two are not mutually exclusive as if people really thought that it was patriotic to pay 'more' taxes, they would not use the write downs, or claim taxes as cap gains, but as regular income, thus paying the higher tax. Such as Warren Buffett pays less than his secretary in percent of income paid in taxes and then says his taxes should be more because he can afford to pay more. Well then, simply claiming your income as standard income instead of cap gains would allow you to pay the higher percent in taxes. Also, you could stop taking deductions. All of which is very much within your power to do so. So if Apple believes the same thing, they would bring their money back to the U.S. and pay the taxes and not take deductions. It is really simple. If the rich want to give more of their taxable income to the IRS, it is a extremely straight forward process.
I'm not sure you understand what a sales tax is. You don't pay a sales tax on earned income, but rather on items you purchase. Therefore a sales tax is none-descriminating. When you purchase anything (yes, in the U.S.) you pay a sales tax.
Apple is not a U.S. company in another country but a U.S. citizen is still a U.S. citizen when in another country.
One doesn't pay sales tax on necessary items. Many groceries are sales tax exempt, depending on the state clothing is sales tax exempt. In NY all clothing less than $110 is sales tax exempt.
Quote:
Originally Posted by dasanman69
One doesn't pay sales tax on necessary items. Many groceries are sales tax exempt, depending on the state clothing is sales tax exempt. In NY all clothing less than $110 is sales tax exempt.
Thank you for quoting State sales tax which is not a Federal Sales Tax as I suggested. I do agree that details of this none-existent tax would have to be concluded, but I think the flat, across the board, sales tax would serve the best.
I've never seen a flat tax proposal that wouldn't raise my effective tax rate. But I'm sure it would be great for some people.
Quote:
Originally Posted by sflocal
If an American citizen earns money overseas, by working at the company as an employee overseas aren't taxes collected or reported on some level?
If an American citizen living in the US, earns overseas income (like doing contract development work), are they reporting it to the US??
Quote:
Originally Posted by Richard Getz
If that American earned money overseas and leaves it there, they still have to pay taxes on it? If I go to Italy for contract work and leave the money in Italy (for a later vacation) then why would the U.S. Government have any claim to taxes just because I am a citizen of the U.S.?
Quote:
Originally Posted by sflocal
Any confirmation on this?
Some income can be excluded, up to a ceiling, and some can't. Residency is key. If you're really interested, look up the foreign earned income exclusion and Publication 54 (Tax Guide for US Citizens and Resident Aliens Living Abroad).
And what would happen on a state and city level?
Quote:
Originally Posted by ChristophB
Apple is not a U.S. company in another country but a U.S. citizen is still a U.S. citizen when in another country.
Unless I'm missing your point, Apple was incorporated in the state of California back in the Apple I/II days. It is most certainly a US corporation.
They have satellite 'HQs' throughout the world
Apple subsidiaries are incorporated in other countries and manage international operations from there to take advantage of lower tax rates. Dublin I think for many tech companies. Ireland gets paid for doing quite a lot of nuttin.
U.S. taxes on corporations are pretty high as compared to the rest of the first world. It's a funny thing corporate taxes. Who's really paying those?
Edit: my other implied point was that a US citizen is welcome to renounce and go elsewhere. Having spent half my life abroad and still without Warren Buffet type means, I'm happy with the protections the US provides. I thank the Maker I've not HAD to use the US Embassies but there was comfort knowing they were there.