It could be good only if it is forbidden to hold cash in tax heavens in the future, else it will become a popular tax evading scheme (move all overseas and wait for next tax break).
There's a difference between tax evading and tax avoiding. Evading taxes owed is illegal and the IRS will get you for it. Avoiding taxes is perfectly legal and the IRS can't do a thing about it. Moving profits made in the US to overseas account, without paying US tax on it, is evading taxes and illegal. Keeping oversea profit overseas to avoid paying US tax on it is legal.
"To qualify as “offshore” for tax purposes, U.S. corporate money must be controlled by a foreign subsidiary, but it does not have to be invested abroad. In fact, for many corporations, these foreign profits already sit in Manhattan, in accounts in American banks. For example, as of last May, Apple had $102 billion in “permanently invested overseas” income not subject to the U.S. corporate tax. On Apple’s books, this untaxed profit is “offshore” because it is controlled by two Irish subsidiaries—even though these subsidiaries park their funds in bank accounts in New York. This $102 billion that has yet to be subject to U.S. taxation is already in the United States, not trapped in Ireland. Apple cannot use this money directly for American real estate acquisitions, dividends, share buybacks, or funding for operations in Cupertino, but the money is being loaned out in the American economy by American banks, funding American mortgages and small-business loans just like any other American deposit."
Truth is: 35% isn't really that high or that difficult to plan for as a business, but corporations know that if they sit tight and lobby Congress, they'll eventually get their wish of paying next to nothing.
Paying 35% tax on the profits you make in the US is fair, considering all the infrastructures the the US supplies and were taken advanage of when making those US profits. But when profits are made overseas, very little of the US infrastructures were used to make those profits and thus those profit shouldn't be taxed at the same 35% rate. And really shouldn't be taxed at all, when brought back into the US to be spent here.
So we can assume that you have never nor will you ever claim deductions when you file your taxes?
If they happened to be a billionaire, it's an entirely different set of circumstances than if they happened to be struggling to support a family and keep a business afloat. Tax relief is there to help upwards mobility, not to help the super-rich grow assets they don't even know how to spend, which just promotes income inequality.
"Fair share" is a term a jealous toddler uses when they didn't get as big of cookie as someone else.
Not complying with the same rules that apply to everyone is something an insolent toddler does when they think there should be different rules just for them because they are rich.
If you made $10k overseas and had to pay 35%, is it fair that someone making $140b pays 6.5%? Of course not and if the tax rate gets dramatically changed then it won't be backdated and the rules were unfair to people who paid 35% last year. It's also anti-competitive because it has given Apple a massive tax advantage over another business that they may be in direct competition with.
Imagine the outrage if the government tried to tell normal citizens what things they can and can't spend their money on. You made 100k this year but you can't buy a new car with the money or you need to wait 3 years before you can use that money for a vacation.
Personal income for employees is taxed before they get it. If people are self-employed then the same rules apply to businesses. They don't get to spend their revenue on personal expenses whenever they please because they will be due taxes at the end of the year.
The real issue here is not the repatriation rate, it's the fact that Apple has avoided taxes abroad. They are looting other countries' tax revenue and returning it to the US. The repatriation rate is reduced by however much they pay elsewhere. If the repatriation rate was 6.5%, Apple would pay very little to the US because they already paid in low single digits abroad. If they paid 4% abroad, the US would get 2.5% of $140b = $3.5b, assuming they moved it all back and by moving it, that means a legal movement as the money is in US financial institutions already.
If Apple already paid 6.5% abroad, the US would get zero tax revenue. If Apple had paid the expected rates abroad that are close to ~25%, they'd be due 10% at the full US rate but if it was set to 25%, Apple would pay zero.
Jony Ive was raised and educated in the UK through publicly funded institutions, his father was even a lecturer. Tax revenue pays for that to happen.
"his Christmas gift to me would be one day of his time in his college workshop, during the Christmas break when no one else was there, helping me make whatever I dreamed up"
Everybody likes to take things that benefit themselves but it's interesting how people who become successful are so reluctant to support the same system they took advantage of. Not that it's Jony Ive's decision to make nor really Tim Cook's, they are answerable to shareholders. What needs to change is the idea that tax avoidance is something to promote when it is unpatriotic. The people at Apple are proud to put 'made in the USA' on the products but don't want to contribute to US infrastructure costs, they are eager to promote diversity but don't want to support infrastructure costs abroad to allow diverse people to succeed; the same costs someone else paid for to allow their current executives to be where they are now.
If they happened to be a billionaire, it's an entirely different set of circumstances than if they happened to be struggling to support a family and keep a business afloat. Tax relief is there to help upwards mobility, not to help the super-rich grow assets they don't even know how to spend, which just promotes income inequality.
Not complying with the same rules that apply to everyone is something an insolent toddler does when they think there should be different rules just for them because they are rich.
If you made $10k overseas and had to pay 35%, is it fair that someone making $140b pays 6.5%? Of course not and if the tax rate gets dramatically changed then it won't be backdated and the rules were unfair to people who paid 35% last year. It's also anti-competitive because it has given Apple a massive tax advantage over another business that they may be in direct competition with.
Personal income for employees is taxed before they get it. If people are self-employed then the same rules apply to businesses. They don't get to spend their revenue on personal expenses whenever they please because they will be due taxes at the end of the year.
The real issue here is not the repatriation rate, it's the fact that Apple has avoided taxes abroad. They are looting other countries' tax revenue and returning it to the US. The repatriation rate is reduced by however much they pay elsewhere. If the repatriation rate was 6.5%, Apple would pay very little to the US because they already paid in low single digits abroad. If they paid 4% abroad, the US would get 2.5% of $140b = $3.5b, assuming they moved it all back and by moving it, that means a legal movement as the money is in US financial institutions already.
If Apple already paid 6.5% abroad, the US would get zero tax revenue. If Apple had paid the expected rates abroad that are close to ~25%, they'd be due 10% at the full US rate but if it was set to 25%, Apple would pay zero.
Jony Ive was raised and educated in the UK through publicly funded institutions, his father was even a lecturer. Tax revenue pays for that to happen.
"his Christmas gift to me would be one day of his time in his college workshop, during the Christmas break when no one else was there, helping me make whatever I dreamed up"
Everybody likes to take things that benefit themselves but it's interesting how people who become successful are so reluctant to support the same system they took advantage of. Not that it's Jony Ive's decision to make nor really Tim Cook's, they are answerable to shareholders. What needs to change is the idea that tax avoidance is something to promote when it is unpatriotic. The people at Apple are proud to put 'made in the USA' on the products but don't want to contribute to US infrastructure costs, they are eager to promote diversity but don't want to support infrastructure costs abroad to allow diverse people to succeed; the same costs someone else paid for to allow their current executives to be where they are now.
That's not right. If Apple already paid 6.5% corporate tax abroad, they have to pay 28.5% if they want to bring that profit in to the US today. If this bill passes, all they would pay is another 6.5%. And really, it you look at the foreign corporate tax rate, Apple most likely already paid about 20% to 25% taxes to foreign countries. So their tax rate would only be about 10% to 15% if they brought that money back into the US today.
And another thing, many of Apple competitors are foreign companies paying a corporate tax rate of only 20% to 25%. So Apple would be the one that is at a massive disavantage if they had to pay 35% on all their profits.
There''s a reason why Apple can't take overseas money and use it to competed against US companies here. (Without paying more taxes on it.) That would give Apple the unfair advanage that you alluded to. But don't kid yourself into thinking that Apple is somehow going to be only paying 6.5% on overseas profits, if this bill passes.
"None of the funds would be eligible for use in executive compensation, shareholder dividends, or stock buybacks for three years after the repatriation scheme ends."
Most shareholder dividends would be taxed a second time at minmum 15%. Why not allow that?
Most executive compensation lands in America and is also taxed a second time, usually averaging more then 15% as well. Only stock buybacks escape secondary taxation. That is the only thing they should be worried about.
I don't understand how the other uses of the money mentioned in the article above are not also subject to tax at each transfer of ownership. This isn't being taxed a second time. An executive's personal income tax is not equivalent to their company's corporate income tax. If Apple uses the money to pay for infrastructure, it will be subject to sales tax. If they raise wages or hire more workers, it will be subject to income tax at a much higher rate than 15%. If anything, giving it away as shareholder dividends that gets taxed at capital gains rates that are less than personal income tax decreases tax revenue. The comment above seems to imply not allowing these activities somehow reduces tax revenue. I don't see how that's the case at all. Apple is certainly not taxed a second time, unless you consider Apple's executives and shareholders to be equivalent with the company itself. I own shares of AAPL. I am not Apple.
Taking a wider view of the situation, all Americans would ultimately be better served by scrapping the tax code and replacing it with the FairTax and shut down the IRS, an organization that has grown far beyond its purpose.
And Apple is already being taxed TWICE. When Apple pays dividends those dividends get taxed on the indivdual. When an investor sell his Apple shares he gets taxed. So now you want Apple to get taxed THREE TIMES? Once in the country the sale is made (China), second in USA corporate tax, and third the investor dividend tax.
Actually, it's the investor who pays the taxes, not the company.
Note that consumers have the option of setting up a Roth IRA account which is tax free (dividends, interest, capital gains, etc.).
I don't understand how the other uses of the money mentioned in the article above are not also subject to tax at each transfer of ownership. This isn't being taxed a second time. An executive's personal income tax is not equivalent to their company's corporate income tax. If Apple uses the money to pay for infrastructure, it will be subject to sales tax. If they raise wages or hire more workers, it will be subject to income tax at a much higher rate than 15%. If anything, giving it away as shareholder dividends that gets taxed at capital gains rates that are less than personal income tax decreases tax revenue. The comment above seems to imply not allowing these activities somehow reduces tax revenue. I don't see how that's the case at all. Apple is certainly not taxed a second time, unless you consider Apple's executives and shareholders to be equivalent with the company itself. I own shares of AAPL. I am not Apple.
The bill being introduced would prevent corporations from distributing the money to shareholders. The comment was stating that distributing the money to shareholders would incur another tax, which is correct.
Most likely Democrats wouldn't support the bill if money went to shareholders, because shareholders are 'rich', and Democrats would lose face by helping the 'rich'.
The bill being introduced would prevent corporations from distributing the money to shareholders. The comment was stating that distributing the money to shareholders would incur another tax, which is correct.
Most likely Democrats wouldn't support the bill if money went to shareholders, because shareholders are 'rich', and Democrats would lose face by helping the 'rich'.
For three years, not 'forever'. Rest assured the crappy parts of this proposal were compromises with Boxer.
I don't understand how the other uses of the money mentioned in the article above are not also subject to tax at each transfer of ownership. This isn't being taxed a second time. An executive's personal income tax is not equivalent to their company's corporate income tax. If Apple uses the money to pay for infrastructure, it will be subject to sales tax. If they raise wages or hire more workers, it will be subject to income tax at a much higher rate than 15%. If anything, giving it away as shareholder dividends that gets taxed at capital gains rates that are less than personal income tax decreases tax revenue. The comment above seems to imply not allowing these activities somehow reduces tax revenue. I don't see how that's the case at all. Apple is certainly not taxed a second time, unless you consider Apple's executives and shareholders to be equivalent with the company itself. I own shares of AAPL. I am not Apple.
Quote:
Originally Posted by slickdealer
The bill being introduced would prevent corporations from distributing the money to shareholders. The comment was stating that distributing the money to shareholders would incur another tax, which is correct.
Most likely Democrats wouldn't support the bill if money went to shareholders, because shareholders are 'rich', and Democrats would lose face by helping the 'rich'.
How would distributing the money to shareholders incur another tax for Apple? Wouldn't the shareholders pay the taxes? Shareholder's personal income tax is not equivalent to Apple's corporate income tax. It isn't reported by Apple and does not affect their bottom line. Wages paid to workers are also taxed (and at a higher rate). Any identification shareholders have with the company is an illusion (ownership is not identity and shareholder income is not corporate income). Just as strong of a class-biased case could be made that the employees are the company, and it too would be erroneous, but seductive to workers. Shareholders and employees are not the company, and taxing their incomes is not double taxation on Apple. The federal government gets more money if Apple spends it on workers than on shareholders, not less.
Centrally planned economies don't work, they inevitably result in malinvestment and failure.
I'm not talking about that at all. If Apple wants to repatriate, Apple would have to use the earnings for the creation of new manufacturing jobs - not the government.
I'm not talking about that at all. If Apple wants to repatriate, Apple would have to use the earnings for the creation of new manufacturing jobs - not the government.
And that would be central planning. If Apple cannot make a business case now to bring manufacturing to the US, what sense would it make merely because they had even more money? No, it would be a poor use of the money. And by the way, the small amount of manufacturing or assembly that happens here now are limited to items like the Mac Pro, which is expensive and depends on rapid customization for a limited number of buyers relative to other Apple products.
if you look at the foreign corporate tax rate, Apple most likely already paid about 20% to 25% taxes to foreign countries. So their tax rate would only be about 10% to 15% if they brought that money back into the US today.
They didn't pay those rates abroad because they funnelled profits through Ireland, which is why they are being called out for tax avoidance, among others like Google, Starbucks and Amazon. They use transfer pricing to charge their own subsidiaries higher costs to lower their profits in countries with ~25% rates and they get taxed in Ireland but the setup in Ireland is such that it has no tax jurisdiction due to a legal loophole about tax jurisdiction depending on where the operation is managed from. Their effective rate abroad is in the low single digits, some reports said 2%, which isn't surprising when you don't have a tax jurisdiction.
Customers pay sales tax on Apple's products, Apple employees have income tax taken out of their salary before they get it and what remains is corporate profits, which they are avoiding tax on abroad. They pay it in the US but don't want to pay it anywhere else and that blocks their repatriation of the profit.
This is a political move to try and claim pre-election victories in contributing to a sustainable economy:
'Hey see that last guy in office that had trouble paying for infrastructure; look what I did, I accepted a bribe (i.e do what I say and get something, otherwise you get nothing) from a wealthy corporation to bring in ill-gotten tax proceeds from other countries and now you have a new road'. That's government corruption, giving special treatment to the super-rich for their own political interests. Rand Paul who has proposed this bill was on the committee who asked Apple to account for tax avoidance and defended Apple for it. You could see he was scheming this sort of thing up and is going to time it so that he can claim it as a success just at the right time. It will contribute to private sector jobs growth which they will claim and it will only last in the short-term.
They didn't pay those rates abroad because they funnelled profits through Ireland, which is why they are being called out for tax avoidance, among others like Google, Starbucks and Amazon. They use transfer pricing to charge their own subsidiaries higher costs to lower their profits in countries with ~25% rates and they get taxed in Ireland but the setup in Ireland is such that it has no tax jurisdiction due to a legal loophole about tax jurisdiction depending on where the operation is managed from. Their effective rate abroad is in the low single digits, some reports said 2%, which isn't surprising when you don't have a tax jurisdiction.
Customers pay sales tax on Apple's products, Apple employees have income tax taken out of their salary before they get it and what remains is corporate profits, which they are avoiding tax on abroad. They pay it in the US but don't want to pay it anywhere else and that blocks their repatriation of the profit.
This is a political move to try and claim pre-election victories in contributing to a sustainable economy:
'Hey see that last guy in office that had trouble paying for infrastructure; look what I did, I accepted a bribe (i.e do what I say and get something, otherwise you get nothing) from a wealthy corporation to bring in ill-gotten tax proceeds from other countries and now you have a new road'. That's government corruption, giving special treatment to the super-rich for their own political interests. Rand Paul who has proposed this bill was on the committee who asked Apple to account for tax avoidance and defended Apple for it. You could see he was scheming this sort of thing up and is going to time it so that he can claim it as a success just at the right time. It will contribute to private sector jobs growth which they will claim and it will only last in the short-term.
LOL at the use of the word "scheming". WHAT ABOUT BARBARA BOXER? I posed the same question to Mel.
What about the Democrats and the president who "schemed" and even changed the rules so they could ram through the ACA? Wow, Marvin. Come on.
Companies with "overseas" profits can easily leverage them for bond offerings used to partially finance share buybacks. Apple and Microsoft have both used their very large "overseas" profit to get extremely low bond rates…in some cases, rates that are even lower than the expected rate of inflation, which means they're essentially being paid not to repatriate their money.
The federal government gets more money if Apple spends it on workers than on shareholders, not less.
That might not be true. The amount of money Apple spends on their employees is tax deductable as a cost of doing business. This reduces the tax Apple has to pay to the Feds. Dividends on the other hand is not a cost of doing business and is taken from Apple's profits, after taxes. But The Feds do gain in payroll taxes, but SS and medicare is not a real tax as the employees are suppose to get that money back when they retire in the form of SS check and health benefits.
Plus, if most of Apple employees are like me, they will pay an effective tax rate on their income (after taking all allowable deductions) that is less than the 15% / 20% capital gain tax on dividends. (Don't forget that the 15% / 20% only applies to long term holdings) The average effective tax rate of a home owner, that is still paying a mortgage, is less than 12%.
I think we need to figure out how to fix this broken part of the tax code, but I'm all for frequent tax holidays until we figure out a better solution. As long as companies are onboard and will use this, lets do it. I think these tax holidays are more strongly supported by the Republican party, but there is a fair amount of bi-partisan support. Obama has generally been against these, so there may need to be a compromise. Maybe some of the taxes go to mass transit or programs to reduce greenhouse gases to help bring democrats on board.
Well, it sounds like you didn't bother to read the original article which states that the revenue generated from this tax holiday would be earmarked for the currently underfunded Highway Trust Fund.
A similar tax repatriation holiday had been proposed about a year ago, but at a lower rate of 5.5%, so at 6.5% the new proposal would generate more tax revenue than last year's proposal.
Apple's Tim Cook -- like many other U.S. CEOs -- has lobbied hard for a simplified tax code, not just a tax repatriation holiday (the latter is a workaround for a broken tax code).
The current administration has previously voiced its preference for a "revenue-neutral" corporate tax reform, meaning simplifying the corporate tax code, closing the loopholes, but in a manner when the government doesn't see a decline in the overall corporate tax revenue.
The United States has the highest overall corporate tax rate in the world and the federal government is loathe to give up that cash cow.
Comments
It could be good only if it is forbidden to hold cash in tax heavens in the future, else it will become a popular tax evading scheme (move all overseas and wait for next tax break).
There's a difference between tax evading and tax avoiding. Evading taxes owed is illegal and the IRS will get you for it. Avoiding taxes is perfectly legal and the IRS can't do a thing about it. Moving profits made in the US to overseas account, without paying US tax on it, is evading taxes and illegal. Keeping oversea profit overseas to avoid paying US tax on it is legal.
Anyone interested in how "overseas" profits and taxation ACTUALLY works should read this link...
https://www.americanprogress.org/issues/tax-reform/report/2014/01/09/81681/offshore-corporate-profits-the-only-thing-trapped-is-tax-revenue/
FROM THE ARTICLE:
"To qualify as “offshore” for tax purposes, U.S. corporate money must be controlled by a foreign subsidiary, but it does not have to be invested abroad. In fact, for many corporations, these foreign profits already sit in Manhattan, in accounts in American banks. For example, as of last May, Apple had $102 billion in “permanently invested overseas” income not subject to the U.S. corporate tax. On Apple’s books, this untaxed profit is “offshore” because it is controlled by two Irish subsidiaries—even though these subsidiaries park their funds in bank accounts in New York. This $102 billion that has yet to be subject to U.S. taxation is already in the United States, not trapped in Ireland. Apple cannot use this money directly for American real estate acquisitions, dividends, share buybacks, or funding for operations in Cupertino, but the money is being loaned out in the American economy by American banks, funding American mortgages and small-business loans just like any other American deposit."
Truth is: 35% isn't really that high or that difficult to plan for as a business, but corporations know that if they sit tight and lobby Congress, they'll eventually get their wish of paying next to nothing.
Paying 35% tax on the profits you make in the US is fair, considering all the infrastructures the the US supplies and were taken advanage of when making those US profits. But when profits are made overseas, very little of the US infrastructures were used to make those profits and thus those profit shouldn't be taxed at the same 35% rate. And really shouldn't be taxed at all, when brought back into the US to be spent here.
If they happened to be a billionaire, it's an entirely different set of circumstances than if they happened to be struggling to support a family and keep a business afloat. Tax relief is there to help upwards mobility, not to help the super-rich grow assets they don't even know how to spend, which just promotes income inequality.
Not complying with the same rules that apply to everyone is something an insolent toddler does when they think there should be different rules just for them because they are rich.
If you made $10k overseas and had to pay 35%, is it fair that someone making $140b pays 6.5%? Of course not and if the tax rate gets dramatically changed then it won't be backdated and the rules were unfair to people who paid 35% last year. It's also anti-competitive because it has given Apple a massive tax advantage over another business that they may be in direct competition with.
Personal income for employees is taxed before they get it. If people are self-employed then the same rules apply to businesses. They don't get to spend their revenue on personal expenses whenever they please because they will be due taxes at the end of the year.
The real issue here is not the repatriation rate, it's the fact that Apple has avoided taxes abroad. They are looting other countries' tax revenue and returning it to the US. The repatriation rate is reduced by however much they pay elsewhere. If the repatriation rate was 6.5%, Apple would pay very little to the US because they already paid in low single digits abroad. If they paid 4% abroad, the US would get 2.5% of $140b = $3.5b, assuming they moved it all back and by moving it, that means a legal movement as the money is in US financial institutions already.
If Apple already paid 6.5% abroad, the US would get zero tax revenue. If Apple had paid the expected rates abroad that are close to ~25%, they'd be due 10% at the full US rate but if it was set to 25%, Apple would pay zero.
Jony Ive was raised and educated in the UK through publicly funded institutions, his father was even a lecturer. Tax revenue pays for that to happen.
"his Christmas gift to me would be one day of his time in his college workshop, during the Christmas break when no one else was there, helping me make whatever I dreamed up"
Everybody likes to take things that benefit themselves but it's interesting how people who become successful are so reluctant to support the same system they took advantage of. Not that it's Jony Ive's decision to make nor really Tim Cook's, they are answerable to shareholders. What needs to change is the idea that tax avoidance is something to promote when it is unpatriotic. The people at Apple are proud to put 'made in the USA' on the products but don't want to contribute to US infrastructure costs, they are eager to promote diversity but don't want to support infrastructure costs abroad to allow diverse people to succeed; the same costs someone else paid for to allow their current executives to be where they are now.
If they happened to be a billionaire, it's an entirely different set of circumstances than if they happened to be struggling to support a family and keep a business afloat. Tax relief is there to help upwards mobility, not to help the super-rich grow assets they don't even know how to spend, which just promotes income inequality.
Not complying with the same rules that apply to everyone is something an insolent toddler does when they think there should be different rules just for them because they are rich.
If you made $10k overseas and had to pay 35%, is it fair that someone making $140b pays 6.5%? Of course not and if the tax rate gets dramatically changed then it won't be backdated and the rules were unfair to people who paid 35% last year. It's also anti-competitive because it has given Apple a massive tax advantage over another business that they may be in direct competition with.
Personal income for employees is taxed before they get it. If people are self-employed then the same rules apply to businesses. They don't get to spend their revenue on personal expenses whenever they please because they will be due taxes at the end of the year.
The real issue here is not the repatriation rate, it's the fact that Apple has avoided taxes abroad. They are looting other countries' tax revenue and returning it to the US. The repatriation rate is reduced by however much they pay elsewhere. If the repatriation rate was 6.5%, Apple would pay very little to the US because they already paid in low single digits abroad. If they paid 4% abroad, the US would get 2.5% of $140b = $3.5b, assuming they moved it all back and by moving it, that means a legal movement as the money is in US financial institutions already.
If Apple already paid 6.5% abroad, the US would get zero tax revenue. If Apple had paid the expected rates abroad that are close to ~25%, they'd be due 10% at the full US rate but if it was set to 25%, Apple would pay zero.
Jony Ive was raised and educated in the UK through publicly funded institutions, his father was even a lecturer. Tax revenue pays for that to happen.
"his Christmas gift to me would be one day of his time in his college workshop, during the Christmas break when no one else was there, helping me make whatever I dreamed up"
Everybody likes to take things that benefit themselves but it's interesting how people who become successful are so reluctant to support the same system they took advantage of. Not that it's Jony Ive's decision to make nor really Tim Cook's, they are answerable to shareholders. What needs to change is the idea that tax avoidance is something to promote when it is unpatriotic. The people at Apple are proud to put 'made in the USA' on the products but don't want to contribute to US infrastructure costs, they are eager to promote diversity but don't want to support infrastructure costs abroad to allow diverse people to succeed; the same costs someone else paid for to allow their current executives to be where they are now.
That's not right. If Apple already paid 6.5% corporate tax abroad, they have to pay 28.5% if they want to bring that profit in to the US today. If this bill passes, all they would pay is another 6.5%. And really, it you look at the foreign corporate tax rate, Apple most likely already paid about 20% to 25% taxes to foreign countries. So their tax rate would only be about 10% to 15% if they brought that money back into the US today.
http://www.kpmg.com/global/en/services/tax/tax-tools-and-resources/pages/corporate-tax-rates-table.aspx ;
And another thing, many of Apple competitors are foreign companies paying a corporate tax rate of only 20% to 25%. So Apple would be the one that is at a massive disavantage if they had to pay 35% on all their profits.
There''s a reason why Apple can't take overseas money and use it to competed against US companies here. (Without paying more taxes on it.) That would give Apple the unfair advanage that you alluded to. But don't kid yourself into thinking that Apple is somehow going to be only paying 6.5% on overseas profits, if this bill passes.
Good idea but this part sucks:
"None of the funds would be eligible for use in executive compensation, shareholder dividends, or stock buybacks for three years after the repatriation scheme ends."
Most shareholder dividends would be taxed a second time at minmum 15%. Why not allow that?
Most executive compensation lands in America and is also taxed a second time, usually averaging more then 15% as well. Only stock buybacks escape secondary taxation. That is the only thing they should be worried about.
I don't understand how the other uses of the money mentioned in the article above are not also subject to tax at each transfer of ownership. This isn't being taxed a second time. An executive's personal income tax is not equivalent to their company's corporate income tax. If Apple uses the money to pay for infrastructure, it will be subject to sales tax. If they raise wages or hire more workers, it will be subject to income tax at a much higher rate than 15%. If anything, giving it away as shareholder dividends that gets taxed at capital gains rates that are less than personal income tax decreases tax revenue. The comment above seems to imply not allowing these activities somehow reduces tax revenue. I don't see how that's the case at all. Apple is certainly not taxed a second time, unless you consider Apple's executives and shareholders to be equivalent with the company itself. I own shares of AAPL. I am not Apple.
www.FairTax.org
And Apple is already being taxed TWICE. When Apple pays dividends those dividends get taxed on the indivdual. When an investor sell his Apple shares he gets taxed. So now you want Apple to get taxed THREE TIMES? Once in the country the sale is made (China), second in USA corporate tax, and third the investor dividend tax.
Actually, it's the investor who pays the taxes, not the company.
Note that consumers have the option of setting up a Roth IRA account which is tax free (dividends, interest, capital gains, etc.).
I don't understand how the other uses of the money mentioned in the article above are not also subject to tax at each transfer of ownership. This isn't being taxed a second time. An executive's personal income tax is not equivalent to their company's corporate income tax. If Apple uses the money to pay for infrastructure, it will be subject to sales tax. If they raise wages or hire more workers, it will be subject to income tax at a much higher rate than 15%. If anything, giving it away as shareholder dividends that gets taxed at capital gains rates that are less than personal income tax decreases tax revenue. The comment above seems to imply not allowing these activities somehow reduces tax revenue. I don't see how that's the case at all. Apple is certainly not taxed a second time, unless you consider Apple's executives and shareholders to be equivalent with the company itself. I own shares of AAPL. I am not Apple.
The bill being introduced would prevent corporations from distributing the money to shareholders. The comment was stating that distributing the money to shareholders would incur another tax, which is correct.
Most likely Democrats wouldn't support the bill if money went to shareholders, because shareholders are 'rich', and Democrats would lose face by helping the 'rich'.
For three years, not 'forever'. Rest assured the crappy parts of this proposal were compromises with Boxer.
I'd like to see that law allow repatriated earnings used for the creation of new manufacturing jobs in the U.S.
I don't understand how the other uses of the money mentioned in the article above are not also subject to tax at each transfer of ownership. This isn't being taxed a second time. An executive's personal income tax is not equivalent to their company's corporate income tax. If Apple uses the money to pay for infrastructure, it will be subject to sales tax. If they raise wages or hire more workers, it will be subject to income tax at a much higher rate than 15%. If anything, giving it away as shareholder dividends that gets taxed at capital gains rates that are less than personal income tax decreases tax revenue. The comment above seems to imply not allowing these activities somehow reduces tax revenue. I don't see how that's the case at all. Apple is certainly not taxed a second time, unless you consider Apple's executives and shareholders to be equivalent with the company itself. I own shares of AAPL. I am not Apple.
Quote:The bill being introduced would prevent corporations from distributing the money to shareholders. The comment was stating that distributing the money to shareholders would incur another tax, which is correct.
Most likely Democrats wouldn't support the bill if money went to shareholders, because shareholders are 'rich', and Democrats would lose face by helping the 'rich'.
How would distributing the money to shareholders incur another tax for Apple? Wouldn't the shareholders pay the taxes? Shareholder's personal income tax is not equivalent to Apple's corporate income tax. It isn't reported by Apple and does not affect their bottom line. Wages paid to workers are also taxed (and at a higher rate). Any identification shareholders have with the company is an illusion (ownership is not identity and shareholder income is not corporate income). Just as strong of a class-biased case could be made that the employees are the company, and it too would be erroneous, but seductive to workers. Shareholders and employees are not the company, and taxing their incomes is not double taxation on Apple. The federal government gets more money if Apple spends it on workers than on shareholders, not less.
Centrally planned economies don't work, they inevitably result in malinvestment and failure.
I'm not
Centrally planned economies don't work, they inevitably result in malinvestment and failure.
I'm not talking about that at all. If Apple wants to repatriate, Apple would have to use the earnings for the creation of new manufacturing jobs - not the government.
And that would be central planning. If Apple cannot make a business case now to bring manufacturing to the US, what sense would it make merely because they had even more money? No, it would be a poor use of the money. And by the way, the small amount of manufacturing or assembly that happens here now are limited to items like the Mac Pro, which is expensive and depends on rapid customization for a limited number of buyers relative to other Apple products.
They didn't pay those rates abroad because they funnelled profits through Ireland, which is why they are being called out for tax avoidance, among others like Google, Starbucks and Amazon. They use transfer pricing to charge their own subsidiaries higher costs to lower their profits in countries with ~25% rates and they get taxed in Ireland but the setup in Ireland is such that it has no tax jurisdiction due to a legal loophole about tax jurisdiction depending on where the operation is managed from. Their effective rate abroad is in the low single digits, some reports said 2%, which isn't surprising when you don't have a tax jurisdiction.
Customers pay sales tax on Apple's products, Apple employees have income tax taken out of their salary before they get it and what remains is corporate profits, which they are avoiding tax on abroad. They pay it in the US but don't want to pay it anywhere else and that blocks their repatriation of the profit.
This is a political move to try and claim pre-election victories in contributing to a sustainable economy:
https://cei.org/blog/invest-transportation-act-2015-violates-fiscally-conservative-transportation-principles
'Hey see that last guy in office that had trouble paying for infrastructure; look what I did, I accepted a bribe (i.e do what I say and get something, otherwise you get nothing) from a wealthy corporation to bring in ill-gotten tax proceeds from other countries and now you have a new road'. That's government corruption, giving special treatment to the super-rich for their own political interests. Rand Paul who has proposed this bill was on the committee who asked Apple to account for tax avoidance and defended Apple for it. You could see he was scheming this sort of thing up and is going to time it so that he can claim it as a success just at the right time. It will contribute to private sector jobs growth which they will claim and it will only last in the short-term.
LOL at the use of the word "scheming". WHAT ABOUT BARBARA BOXER? I posed the same question to Mel.
What about the Democrats and the president who "schemed" and even changed the rules so they could ram through the ACA? Wow, Marvin. Come on.
Companies with "overseas" profits can easily leverage them for bond offerings used to partially finance share buybacks. Apple and Microsoft have both used their very large "overseas" profit to get extremely low bond rates…in some cases, rates that are even lower than the expected rate of inflation, which means they're essentially being paid not to repatriate their money.
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The federal government gets more money if Apple spends it on workers than on shareholders, not less.
That might not be true. The amount of money Apple spends on their employees is tax deductable as a cost of doing business. This reduces the tax Apple has to pay to the Feds. Dividends on the other hand is not a cost of doing business and is taken from Apple's profits, after taxes. But The Feds do gain in payroll taxes, but SS and medicare is not a real tax as the employees are suppose to get that money back when they retire in the form of SS check and health benefits.
Plus, if most of Apple employees are like me, they will pay an effective tax rate on their income (after taking all allowable deductions) that is less than the 15% / 20% capital gain tax on dividends. (Don't forget that the 15% / 20% only applies to long term holdings) The average effective tax rate of a home owner, that is still paying a mortgage, is less than 12%.
I think we need to figure out how to fix this broken part of the tax code, but I'm all for frequent tax holidays until we figure out a better solution. As long as companies are onboard and will use this, lets do it. I think these tax holidays are more strongly supported by the Republican party, but there is a fair amount of bi-partisan support. Obama has generally been against these, so there may need to be a compromise. Maybe some of the taxes go to mass transit or programs to reduce greenhouse gases to help bring democrats on board.
Well, it sounds like you didn't bother to read the original article which states that the revenue generated from this tax holiday would be earmarked for the currently underfunded Highway Trust Fund.
A similar tax repatriation holiday had been proposed about a year ago, but at a lower rate of 5.5%, so at 6.5% the new proposal would generate more tax revenue than last year's proposal.
Apple's Tim Cook -- like many other U.S. CEOs -- has lobbied hard for a simplified tax code, not just a tax repatriation holiday (the latter is a workaround for a broken tax code).
The current administration has previously voiced its preference for a "revenue-neutral" corporate tax reform, meaning simplifying the corporate tax code, closing the loopholes, but in a manner when the government doesn't see a decline in the overall corporate tax revenue.
The United States has the highest overall corporate tax rate in the world and the federal government is loathe to give up that cash cow.