Apple CEO talks taxes ahead of hearing: 'We pay every dollar that we owe'

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  • Reply 101 of 132


    Apple has done nothing illegal or even immoral! The profits in question are from legitimate overseas sales...not US sales the company funneled into offshore accounts. As such, Apple has already paid taxes on these profits in the country or countries in which they originated. The reason these funds have not been repatriated back to the US is because of our absurd corporate tax structure in which repatriated overseas profits are taxed at the full 35% corporate rate. NOt only is this double taxation, it makes no sense mathematically because Apple can borrow money at close to 1% interest (for dividends, R&D, etc...) instead of paying 35% on the money they have already earned and paid taxes on overseas! Apple already paid over $6 billion in US corporate taxes last year alone, and they are estimating $7 billion this year! The problem continues to be our archaic tax code! Anyone who is complaining that Apple "is not paying their fair share" is an IDIOT!

  • Reply 102 of 132
    mj1970mj1970 Posts: 9,002member

    Quote:

    Originally Posted by Jordon Eagan View Post


    Apple has done nothing illegal or even immoral!



     


    In fact, they have probably done the most moral thing they could do in this situation: Keep as much money as possible away from the criminals in government who spend it on wasteful and even immoral things.

  • Reply 103 of 132
    websnapwebsnap Posts: 224member


    I see a common misconception here. A lot of people keep using the term "bring money back to the US" or "keeping their money offshore". I think this is the main issue that is breeding the resentment specifically towards Apple but it is not a factual claim. The funds "offshore" were never made in the US (maybe initially when Apple was starting to globalize, but not within the last 15 years or more), so the idea that Apple is hiding its money overseas is incorrect. Apple, as a global company, has offices, retail stores, manufacturing set-ups and general partnerships all over the world that generate cash. That cash goes into accounts locally and gets taxed accordingly to by the local governments. The cash stays there for continued use as global business keeps growing (new retail, R&D, continued partnerships). The cash Apple makes domestically is the cash horde most used to facilitate the day-to-day business (running the headquarters, salaries, retail, R&D, Domestic taxes, ect.). Apple is not taking their domestically earned income and hiding it offshore, they are using it to run the domestic portion of the company and paying all the taxes that requires. Demanding that Apple also bring in foreign cash into the US so that it can be taxed when it had nothing to do with the domestic economy is overstepping the boundaries that the government should be allowed to collect. If those funds were never introduces to the US Economy, then the government has no right to it's taxation. Most of the arguments contrary to this are using the improper numbers. Such as the article in the first reply comparing financial results showing how much Apple makes as a whole (globally) and comparing that to how much they paid in taxes domestically; when that is never going to be an accurate account of both how much they made domestically or how much they paid in taxes globally.



    Don't get me wrong, there ARE a lot of companies that do hide their money offshore from domestic profits and that needs to be cut out. It doesn't benefit the local economy from which the money was taken from. However Apple, being the largest corporate taxpayer, doesn't have that luxury as they are constantly scrutinized. Being the "largest" ironically puts you under a microscope. Domestically, they aren't a tax problem - this is a cacophony of analysts trying to short the stock and politicians looking to have their palm greased. In England and Spain however they are dodging as they have been moving their profits from those countries to Ireland. That's the EU's problem and it's up to them to sort it out.

  • Reply 104 of 132
    mj1970mj1970 Posts: 9,002member

    Quote:

    Originally Posted by websnap View Post


    I see a common misconception here. A lot of people keep using the term "bring money back to the US" or "keeping their money offshore".



     


    There's actually something quite similar with the whole "bring jobs back to the US" and "shipping jobs overseas" as if a) these are things that are "owned" by the US (or even by some individuals) in some way, b) that they are physical goods of some kind, or c) that they "belong" in/to the US.


     


    There's a fairly US-centric (dare I say ego-centric) view of the world he in the US. It is our own version of geocentricism and will look just as foolish 100 years from now (if not sooner.)

  • Reply 105 of 132
    e_veritase_veritas Posts: 248member

    Quote:

    Originally Posted by rickag View Post





    Raise the taxes on corporations and this cost is passed on in the price you and I pay. Corporations don't pay taxes you do, always have always will.


     


    Corporations price their products and services at a point where profit will be maximized, regardless of the tax rate. Raise your price higher, you sell less; lower your price, you sell more. Somewhere in the mix is the optimal price to obtain the highest gross profit. Taxes play no role in this dynamic equation, as it is an expense that comes into play much further downstream.


     


    If companies could increase prices to make more profit, they would have already done so. They certainly don't need the excuse of 'we need to compensate for our higher tax burden'!

  • Reply 106 of 132
    websnapwebsnap Posts: 224member

    Quote:

    Originally Posted by MJ1970 View Post


     


    There's actually something quite similar with the whole "bring jobs back to the US" and "shipping jobs overseas" as if a) these are things that are "owned" by the US (or even by some individuals) in some way, b) that they are physical goods of some kind, or c) that they "belong" in/to the US.


     


    There's a fairly US-centric (dare I say ego-centric) view of the world he in the US. It is our own version of geocentricism and will look just as foolish 100 years from now (if not sooner.)



     


     


    Yeah, it's kind of foolish in one sense - I mean imagine if China decided they wanted to tax the US sales of the products made in there. Ridiculous, I know... it would be double dipping, but to be honest I don't really see a difference between that and taxing foreign-made money that is kept foreign just because the headquarters of the company in is Cupertino.

  • Reply 107 of 132
    mj1970mj1970 Posts: 9,002member

    Quote:

    Originally Posted by websnap View Post


    Yeah, it's kind of foolish in one sense - I mean imagine if China decided they wanted to tax the US sales of the products made in there. Ridiculous, I know... it would be double dipping, but to be honest I don't really see a difference between that and taxing foreign-made money that is kept foreign just because the headquarters of the company in is Cupertino.



     


    Or even income for US citizens even when they DON'T live in the US.

  • Reply 108 of 132
    websnapwebsnap Posts: 224member

    Quote:

    Originally Posted by MJ1970 View Post


     


    Or even income for US citizens even when they DON'T live in the US.



     


     


    See that, I think, is a bit different and really should be looked at by a person by person situation. A person being a citizen, in the sense that at any point all rights and privileges of being a US citizen can be enacted without pause by moving back. You are essentially paying to have one foot in if, for any reason, you want to pull up stakes and move back without applying for status. A company, especially now in the reality of true globalization, may be a national entity (Apple is an american company) it's international parts are still local. There is nothing American about the Store in Barcelona. The employees, managers... their salaries... everything is local. 



    I know corporations are "people" in the states, but the rest of the world doesn't see it that way so they need to be seen as separate and most importantly - held to separate laws. I still think the handling of taxation in regards to income to US citizens abroad should be reviewed. It's not like a recent grad teaching english in Korea should be taxed like someone who owns homes around the world. In that case the difference in tax laws shouldn't come down to just income.

  • Reply 109 of 132
    c4rlobc4rlob Posts: 277member
    I never thought I would think of Mitt Romney when I think of Tim Cook :)
  • Reply 110 of 132
    herbapouherbapou Posts: 2,227member

    Quote:

    Originally Posted by [email protected] View Post


    Apple is using every loophole and trick known to Wall Street and leveraging offshore accounts to "pay every dollar they owe" which is very little.  They used loopholes to pay dividends.


     


    Now, I'm all for business and pro-business but this Apple corporate tax dodging highlights a big problem where average working people like me pay the most into the system


     


    http://www.huffingtonpost.com/2012/04/17/apple-corporate-income-tax-rate_n_1429955.html



     


    Thats a nice pile of BS.  Apple pays its taxes in the countries it makes its sales. The problem is the US wants to charge the difference between the country rates and the US rates when Apple tries to move the cash into the US. The result is the cash stays offshore unless the country has a >= 35% tax rates, in which case Apple can bring the cash to the US without additionnal charge.


     


    For example, if Canada tax rate is at 25%, Apple pays 25% to Canada on sales made in Canada. But if they move the profits made in Canada to the US, the US wants another 10% on top of what Apple already paid (35% - 25% = 10%).  This is where the US system is flawed.


     


    This has absolutly nothing to do with tax dodging. Apple does do it with itunes sales in some cases (example: itunes ireland hub deserved the EU), but not with hardware. Tax dodging with software sales or ads is a major problem with Google and Amazon, but not Apple.

  • Reply 111 of 132
    anantksundaramanantksundaram Posts: 20,368member

    Quote:

    Originally Posted by e_veritas View Post


    Corporations price their products and services at a point where profit will be maximized, regardless of the tax rate. Raise your price higher, you sell less; lower your price, you sell more. Somewhere in the mix is the optimal price to obtain the highest gross profit. Taxes play no role in this dynamic equation, as it is an expense that comes into play much further downstream.


     


    If companies could increase prices to make more profit, they would have already done so. They certainly don't need the excuse of 'we need to compensate for our higher tax burden'!



    It's not so simple. An increase in the corporate tax rate is not like the increase in the cost of an input into your production process that affects some firms/industries and not others.


     


    It is across-the-board, and affects every firm.


     


    That is why the pass-through of its effects to the consumer depends on the industry structure. In an oligopolistic industry, everyone could pass-through this "cost increase" and the consumer is stuck. Sure, industry demand may fall, but the aggregate after-tax industry profit at the new demand level could still exceed the previous after-tax profits (as a result of which, it also depends on the nature of the demand function).

  • Reply 112 of 132
    websnapwebsnap Posts: 224member

    Quote:

    Originally Posted by c4rlob View Post



    I never thought I would think of Mitt Romney when I think of Tim Cook image


     


    You can continue to not think that, too. The issue isn't personal tax, it's Apple's domestic tax as a corporation. No one is calling into question he personal tax, nor is he running for office.

  • Reply 113 of 132
    mj1970mj1970 Posts: 9,002member

    Quote:

    Originally Posted by websnap View Post


    See that, I think, is a bit different and really should be looked at by a person by person situation.



     


    I disagree.


     


     


    Quote:

    Originally Posted by websnap View Post


    A person being a citizen, in the sense that at any point all rights and privileges of being a US citizen can be enacted without pause by moving back. You are essentially paying to have one foot in if, for any reason, you want to pull up stakes and move back without applying for status.



     


    How is that different from any other nation?


     


     


    Quote:

    Originally Posted by websnap View Post


    It's not like a recent grad teaching english in Korea should be taxed like someone who owns homes around the world. In that case the difference in tax laws shouldn't come down to just income.



     


    Right. It should come down to who you think has more than (you think) they "need" or more than (what you think is) their "fair share."


     


    image

  • Reply 114 of 132
    websnapwebsnap Posts: 224member

    Quote:

    Originally Posted by herbapou View Post


     


    Thats a nice pile of BS.  Apple pays its taxes in the countries it makes its sales. The problem is the US wants to charge the difference between the country rates and the US rates when Apple tries to move the cash into the US. The result is the cash stays offshore unless the country has a >= 35% tax rates, in which case Apple can bring the cash to the US without additionnal charge.


     


    For example, if Canada tax rate is at 25%, Apple pays 25% to Canada on sales made in Canada. But if they move the profits made in Canada to the US, the US wants another 10% on top of what Apple already paid (35% - 25% = 10%).  This is where the US system is flawed.


     


    This has absolutly nothing to do with tax dodging. Apple does do it with itunes sales in some cases (example: itunes ireland hub deserved the EU), but not with hardware. Tax dodging with software sales or ads is a major problem with Google and Amazon, but not Apple.



     


     


    Word. This.

  • Reply 115 of 132
    isteelersisteelers Posts: 738member
    Apple is using every loophole and trick known to Wall Street and leveraging offshore accounts to "pay every dollar they owe" which is very little.  They used loopholes to pay dividends.

    Now, I'm all for business and pro-business but this Apple corporate tax dodging highlights a big problem where average working people like me pay the most into the system

    http://www.huffingtonpost.com/2012/04/17/apple-corporate-income-tax-rate_n_1429955.html

    Hate the game not the players. You would do the same thing if you could.
  • Reply 116 of 132
    isteelersisteelers Posts: 738member
    slurpy wrote: »
    Your point? Every single major corporation will use every single loophole available, as long as it's legal. Its what they pay their legal and accounting teams to do. Any company that does not do so is negligent. Yet you want Apple to cripple itself willingly, and pay a higher share of taxes than other corporations..because? You want Apple to play by rules that no other corporation plays by, just to give more money away?

    Oh, and I'm pretty sure you don't pay "the most"-whatever the hell that means.  Apple one of the largest US corporate tax payers in existence. The US gvt gets BILLIONS annually in revenue from them. 

    So just to keep track with what's currently expected to Apple from analysts and investors- they need to sell MORE units, at CHEAPER prices, while making MORE profit, MORE margin, and paying MORE taxes. Got it. 

    I bet the government's mouth is watering just thinking about all of the cash Apple keeps overseas.
  • Reply 117 of 132
    websnapwebsnap Posts: 224member

    Quote:

    Originally Posted by MJ1970 View Post


    I disagree.



     


     


    That is your right, and I am not disputing that. We don't agree.


     


    Quote:


    How is that different from any other nation?



     


    It's not (to my knowledge), though my knowledge of the matter in every country is limited. I am Canadian. If I worked or lived in the US as well, I would retain my Canadian Citizenship (well, I would regardless) and pop back for healthcare or voting or a multitude of reasons (probably why i've never moved out of Canada) and for that right I should be paying for it as I would be utilizing the benefits/general infrastructure paid for and provided by taxes. If someone, to use this example again, has been teaching for five years in Korea and has been back maybe twice for a weekend or two during that time; they shouldn't be paying at the same rate as someone who has multiple homes around the world and stays for varying lengths of time at varying schedules but pays the same rate. Especially if they are making their money regardless of where they are. If they are using American resources (child's education, roads, anything else payed for by taxes), I feel they should be kicking in more than they person that's never there and not using tax-funded services. That's my opinion of what would be fair, but you don't have to share it. My opinion means less than your's in this instance since I'm not in the US nor a citizen. Our tax laws are different.


     


    Quote:


    Right. It should come down you who you think has more than (you think) they "need" or more than (what you think is) their "fair share."


     


    image




     


    No, it has nothing to do with who I think has more than they need. It is not about punishment of success or anything like that. I'm looking at stress on the system and putting in what they take out. Again, I'm not just talking about some imaginary person with more money than god because of the multiple homes comment. The person teaching may have a house they are renting out while they are gone. Not a factor. I'm using that as an example of what facilitates having one foot in the country and one out when finances are in question. Do you want someone using more than you but contributing less when they can pay more? 

  • Reply 118 of 132
    MarvinMarvin Posts: 14,869moderator
    slurpy wrote: »
    I'm not sure who in their right mind would not agree with this. 35% to repatriate is absolutely ridiculous. Corporations would have to be insane or suicidal to throw almost 40% of that money down the toilet for little to no benefit.

    If they got rid of the repatriation tax or lowered it considerably, it incentivizes moving operations abroad. If you think about two businesses, one based in the US and another based in a low tax province, the low tax province would have a competitive advantage over the US business when selling to a common region. For example, their iTunes service based in Luxembourg could have a competitive advantage over a US-based streaming service. If there's no penalty for moving the profits back home to the US then it could easily have a worse effect on US businesses.

    Companies always go on about getting tax breaks and say that it will boost job creation but they don't do it as records show. Jobs are created based on need, not based on charity. When there is no need to expand, companies invest profits in the stock market and because none of it is based on resources any more, it quickly gets very disconnected from what's happening in the resource-based economy.

    Government does very unfair things with taxes of course like bailing out certain companies they decide should be saved - I'm pretty sure they'd have let Apple fail when they were near bankruptcy - so I don't think it can ever be a clean line of pro-government or pro-business. Like I say, having no repatriation tax would negatively affect US businesses but having it means that government takes a large amount of money that they haven't earned and don't spend sensibly.

    Apple wouldn't be paying 35% or more, just the difference between what they paid abroad and the US tax rate, which is fair as that's what they'd be paying if they were based in the US - they actually don't pay that rate on US operations, which is perhaps why they're not happy to pay the repatriation rate because they couldn't avoid the full rate. They are free to leave it abroad but it's unethical to do that if there's a need to use the funds in the US and instead they use alternative means to fund that like they did recently:

    http://www.wired.co.uk/news/archive/2013-05/2/apple-borrowing

    Yes, unethical behaviour is not necessarily unlawful but laws are written to maintain ethical behaviour so if enough unethical behaviour is discovered, laws will be written up to correct it. One such law might be that companies can't borrow at low rates if they have large amounts of cash overseas.

    Apparently they get away without paying the repatriation tax if they record a loss:

    http://www.forbes.com/sites/ericsavitz/2012/11/13/revealed-how-u-s-companies-can-repatriate-cash-tax-free/

    There are probably ways they can record a loss in the US and offset that against their overseas profits to avoid the tax. The agenda either way is to avoid paying taxes that are imposed on other US companies. This isn't as much big business vs government but big business vs small business. A US Apple reseller would have to pay the full tax rate while selling the same goods as Apple which doesn't pay the full rate.
    tsunami78 wrote:
    The US corporate tax rate is damn near 40%. Higher than almost anywhere else in the developed world. Apple is FAR from the only corporation doing this, nor should they be.

    The sales tax is lower though, you can't pick one tax and say it's unfair when others are more fair. All the taxes are balanced out.
    I see no good coming out of this (and hope nothing bad does). Entirely unnecessary

    Governments need to maintain an open dialog with companies to benefit both of them. Big businesses need to be made aware that taxes have to be paid fairly and when a company like Apple is hoarding over $100b overseas, they need to find out a compromise. There may be other incentives that can be offered outside of a direct tax break that makes it more worthwhile for Apple to take on more staff.
    The consumer pays because companies pass-through the effects through their product pricing. Why do they do that? Because what matters at the end of the day for a company's market value is is its **post-tax** (expected) returns.

    I don't think it's very easy for businesses to pass Corporation Taxes onto consumers. That comes directly out of their profits. If you double your profits, government takes double the tax. If you increase your profits too much then the product prices are not competitive.
    mj1970 wrote:
    I think everyone should be paying substantially less in taxes. Everyone.

    So when you knock government services down to a fraction of the size you won't be expecting an emergency service at the other end of the phone line when you need it?
    mj1970 wrote:
    eliminate the (corporate and personal) income tax altogether and go with a national sales tax.

    I'd say the opposite. Eliminate the sales tax and only tax profits. Lower sale prices boost consumer spending and higher profit tax affects people who are making lots of profit, which isn't a problem.
    mj1970 wrote:
    Money is simply a measuring stick. The amount of you you have accumulated, assuming you've done so through voluntary exchanges and absent fraud and theft, does reflect the value you have contributed to society.

    It reflects the amount you've hoarded from a closed monetary system. If you win the lottery, inherit wealth, have stock go up massively, your personal contribution is near zero and your financial hoarding can be immense. It is absolutely not a measure of contribution. The net worth of an individual is in what they give, not what they take and in no way are those proportional to each other in any absolute way. You'd be suggesting that the high salaries of government employees are a direct measure of their contribution to society.
  • Reply 119 of 132
    isteelersisteelers Posts: 738member
    Ther is nothin false about what he said.
    Dear Tim,

    Your ``Apple CEO talks taxes ahead of hearing: 'We pay every dollar that we owe''' wears thin.

    Try this one on for size: Apple CEO talks taxes ahead of hearing: 'We pay only what the present US Tax Code requires.'

    ``Sure, we know it's absurd, but we are well within that absurd set of loop-holes corporate bribery/lobbying has influenced when writing the laws.''

    P.S. As a NeXT/Apple alumnus I never agreed with the way Fred Anderson pushed the boundaries any more than I do with Peter Oppenheimer uses every loop-hole the corporate effective tax rate allows. But to do otherwise would have shareholders proclaiming they weren't doing their jobs.

    When corporations stop bleeding the nation with handouts and then demanding tax shelters then perhaps a sweet spot in the tax revenue curve will happen. It will take a complete gutting of all tax loopholes for corporations before that happens.

    You want to reduce your tax burden, then start reinvesting in your company R&D and technical talent. Sorry, you don't get to artificially raise your stock price by streamlining your tax burdens any longer.

    There is nothing false about what he said. Why don't you forego deducting your mortgage interest, property taxes and any charitable contributions you may have listed on your tax return so that they can be used for the common good. Oh and don't forget to declare any online purchases that you have made throughout the year that had no sales tax imposed on them either.
  • Reply 120 of 132
    mj1970mj1970 Posts: 9,002member

    Quote:

    Originally Posted by websnap View Post


    I'm looking at stress on the system and putting in what they take out.



     


    So you don't know what you're talking about then.

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