Tax havens wouldn't exist any more if they taxed income based on the buyer's location. It wouldn't matter where you moved the money, the tax would be due to the country the sale was made in. When you have a group of countries and some of them are tiny like Montenegro with 620k people then their public expenditure is low. It's 1.56b euros vs $3.6t for the US, £1.5t UK. If Apple passed $40b through Montenegro in a year, Apple alone could cover their budget with a less than 4% tax rate. The problem with this is they've taken advantage of the infrastructure in every other country and not put a portion of their income towards it. They are supporting employees who pay income tax and they are convincing customers to spend money who pay sales tax so just being in operation is helping but tax only works effectively when it takes a portion of all income - sales, employees and corporate profits.
It's so obvious, you just bankrupt the country and you shut down schools and hospitals and everybody's happy. As you've pointed out many times, people act in their self-interest. If you give them tax cuts and they have no need to grow the business, they simply pocket the extra. Apple can't spend its cash fast enough that even after massive buybacks, it has $200b in assets. If giving them tax breaks would result in spending, why hasn't that already happened? Tim said that they have nothing to spend their money on, they looked at big acquisitions and none of them looked particularly attractive. Companies would also just fund things that benefit themselves directly, stable economies need to fund far more than the interests of individual companies.
You can cut taxes, but you can't continue to spend. Kansas, like most states has a huge public employee problem with unfunded pensions and other liabilities.
In the article it states, "Tax experts lament that the cuts were poorly structured", however it's also clear in the article cited that these cuts were only really intended for connected businesses, a common practice. When the inherent corruptions of politics combines with laws written for "friends and neighbors", crap happens.
That article was from 2012. Let's look at what the situation was in 2014:
You can cut taxes, but you can't continue to spend. Kansas, like most states has a huge public employee problem with unfunded pensions and other liabilities.
So what is the solution to that, just bankrupt everyone in the state? Repossess the homes of people relying on pensions?
The people who worked all their lives paying taxes did so to support the older generation while they worked. Now that they are old, they rely on the next generation to pay taxes to support them. Pensions are paid out from money they themselves paid to the state at a different period of time. This tax revenue needs to exist.
In the article it states, "Tax experts lament that the cuts were poorly structured", however it's also clear in the article cited that these cuts were only really intended for connected businesses, a common practice. When the inherent corruptions of politics combines with laws written for "friends and neighbors", crap happens.
So politicians shouldn't apply taxes nor should they apply tax cuts. Leaves a bit of a catch-22 really. The taxes can't be removed because old people aren't able to work so the system where the younger generation pays tax to support the older generation will exist forever.
You mentioned that you find Republicans and Libertarians similar, which makes sense if one accepts Glenn Beck and his ilk as being Libertarians (I don't accept this premise). There are a lot of neo-conservative Republicans who claim they are Libertarian, but I believe many fail to adopt basic liberty principles. If one is socially liberal AND fiscally conservative, that's the most basic test which gets a thumbs-up from me.
Neo-conservatives and progressives/socialists use force to make people follow their dictates. I believe BOTH major parties are responsible for plowing the country under because each has plainly violated the letter and the spirit of the Constitution (in my opinion) in the pursuit of votes and power. I'm in favor of across-the-board term limits, for reining in the unconstitutional powers that were given to the president under Bush and expanded under Obama, and I'm for drastically cutting the power and reach of the Federal government, to levels more in line with the original intent of the Constitution.
There is a gulf between our political beliefs, but I don't consider you anything less than a friend and value your opinions.
I certainly appreciate, and agree with, your last sentence.
Remember the term "Imperial Presidency"? That was under Nixon, whom I voted for twice, in the first election I was old enough to vote in. Today, the Republican Party would consider him to be socialistic. Same thing for Eisenhower. I voted for Reagan twice, not because I agreed with much of his policies, but to get away from the debacle before. And I voted for G Bush Senior, in whom I was deeply disappointed. When he was running against Reagan in the primaries, it was he who, with his team, that came up with the slogan "Voodoo Economics" to describe the trickle down theory (which has since been disproven as a viable economic theory). When he ran later, after Reagan, I was expecting him to move back to the center, instead, he moved further to the right. The last Rebublican I voted for, and very likely, the last one I will ever vote for.
Low rates and other incentives are given in return for jobs etc. What I find hard to believe is that not having any tax jurisdiction would have been intentional. That essentially means allowing a corporation to exist with no tax authority at all, forever and it requires using the laws of two countries against each other.
It depends if GE's subsidiaries are incorporated somewhere in the EU.
It's a mutual agreement, the US can block anti-competitive mergers of foreign companies too:
"Spurred by the adoption of the European Merger Regulation in 1989, the U.S. agencies and the European Commission recognized that they would have to work together more often and more closely because large, multinational mergers would commonly come under their simultaneous review."
Every merger is different and they won't all be found to be anti-competitive.
If the loophole hadn't existed, Apple would have paid the tax rate and nobody would have minded. It's not like Apple's setup was an honest mistake, the setup is very elaborate with the intention of avoiding paying tax. The IRS is involved with Apple too, it's not just an EU issue:
If some of Apple's Irish subsidiaries are found to have US tax jurisdiction then they pay taxes to the US, not Ireland. I wouldn't agree with backdating if Apple had paid say 5% due to some explicit incentive that was later removed and they requested the full 12.5%. Using the laws of two countries against each other to avoid tax is an entirely different issue.
It would be very interesting if the world worked the way your post supposes. However, it doesn't. The US rarely bocks an European merger, whereas the Europeans have blocked a number of ours. The Europeans not only rarely block mergers of European companies, but countries often force mergers between companies to keep them from being bought by US companies. This is against EU law, but it happens anyway.
In Ireland, Apple is subject to their tax code, anyone who says otherwise doesn't understand it. But Ireland wants investment and Jobs very bad,y, so they do what is done everywhere else. If the laws allow companies to keep assets in a country with low taxes, and allow special rates for companies opening contruction, and Jobs.mthen it's legal. If later on, other countries decide they don't want that to continue, as we see here, then they will move to stop it, as we see here. That doesn't make it illegal. In the EU, countries have the status to develop their own corporate ownership rules, and well as their own tax rules. If the EU wasn't I such bad shape, they never would be doing this. It was never an issue before.
The point is, none of what Apple is doing is illegal by any laws in the EU, or here. But they are moving to make it illegal, or, at least, against policy. That's a change. They knew what was happening for a long time.
It would be very interesting if the world worked the way your post supposes. However, it doesn't. The US rarely bocks an European merger, whereas the Europeans have blocked a number of ours. The Europeans not only rarely block mergers of European companies, but countries often force mergers between companies to keep them from being bought by US companies. This is against EU law, but it happens anyway.
I've never heard of a government forcing companies to merge. The number of mergers blocked doesn't look all that high, most seem to be EU mergers:
In Ireland, Apple is subject to their tax code, anyone who says otherwise doesn't understand it. But Ireland wants investment and Jobs very bad,y, so they do what is done everywhere else. If the laws allow companies to keep assets in a country with low taxes, and allow special rates for companies opening contruction, and Jobs.mthen it's legal. If later on, other countries decide they don't want that to continue, as we see here, then they will move to stop it, as we see here. That doesn't make it illegal. In the EU, countries have the status to develop their own corporate ownership rules, and well as their own tax rules. If the EU wasn't I such bad shape, they never would be doing this. It was never an issue before.
The point is, none of what Apple is doing is illegal by any laws in the EU, or here. But they are moving to make it illegal, or, at least, against policy. That's a change. They knew what was happening for a long time.
Some members of the Irish government would have known Apple's tax setup but that's not to say anyone else would have. They want to make changes to ensure there's more transparency in future:
"Currently, Member States share very little information with one another about their tax rulings. It is at the discretion of the Member State to decide whether a tax ruling might be relevant to another EU country. As a result, Member States are often unaware of cross-border tax rulings issued elsewhere in the EU which may impact their own tax bases. The lack of transparency on tax rulings is being exploited by certain companies in order to artificially reduce their tax contribution.
To redress this situation, the Commission proposes to remove this margin for discretion and interpretation. Member States will now be required to automatically exchange information on their tax rulings. The Commission proposes to set a strict timeline: every three months, national tax authorities will have to send a short report to all other Member States on all cross-border tax rulings that they have issued. Member States will then be able to ask for more detailed information on a particular ruling.
The automatic exchange of information on tax rulings will enable Member States to detect certain abusive tax practices by companies and take the necessary action in response. Moreover, it should also encourage healthier tax competition, as tax authorities will be less likely to offer selective tax treatment to companies once this is open to scrutiny by their peers."
Tax avoidance has always been an issue for all tax authorities. It contributes to budget deficits so naturally when debts pile up as a result of losing as much as 1 trillion euros per year then they need to act on it. Budgets are setup based on estimated expenses and GDP under the assumption that the tax laws are working as intended. When people go out of their way to make sure the laws don't work as intended then it causes a problem that needs to be fixed and people can rationalize when there's been wrongdoing and address it appropriately.
^ I think force may be a strong word, but the EU, and/or EU states have certainly strongly encouraged some mergers, and used what political leverage they have to push them. Dailymotion and Orange was one I was reading about recently, which was a merger encouraged for protectionist (or local interest, depending on which way you see it) reasons within France.
^ I think force may be a strong word, but the EU, and/or EU states have certainly strongly encouraged some mergers, and used what political leverage they have to push them. Dailymotion and Orange was one I was reading about recently, which was a merger encouraged for protectionist (or local interest, depending on which way you see it) reasons within France.
It looks like Orange bought out the majority of Dailymotion but couldn't find a buyer for the remainder so bought it all:
The government is blocking them selling it to outside interests (you might need to paste the WSJ article titles into Google to get round the paywall), blocking a Yahoo sale, a Vivendi sale and PCCW:
Forcing them to find a European buyer isn't coercing the sale, it's limiting who the buyer is. There are security issues to consider with some company deals:
If Chinese or Russian companies tried to buy up large US telecoms companies, that would be cause for concern because they'd have the ability to track communications.
"Currently, Member States share very little information with one another about their tax rulings. It is at the discretion of the Member State to decide whether a tax ruling might be relevant to another EU country. As a result, Member States are often unaware of cross-border tax rulings issued elsewhere in the EU which may impact their own tax bases. The lack of transparency on tax rulings is being exploited by certain companies in order to artificially reduce their tax contribution.
To redress this situation, the Commission proposes to remove this margin for discretion and interpretation. Member States will now be required to automatically exchange information on their tax rulings. The Commission proposes to set a strict timeline: every three months, national tax authorities will have to send a short report to all other Member States on all cross-border tax rulings that they have issued. Member States will then be able to ask for more detailed information on a particular ruling.
The automatic exchange of information on tax rulings will enable Member States to detect certain abusive tax practices by companies and take the necessary action in response. Moreover, it should also encourage healthier tax competition, as tax authorities will be less likely to offer selective tax treatment to companies once this is open to scrutiny by their peers."
Tax avoidance has always been an issue for all tax authorities. It contributes to budget deficits so naturally when debts pile up as a result of losing as much as 1 trillion euros per year then they need to act on it. Budgets are setup based on estimated expenses and GDP under the assumption that the tax laws are working as intended. When people go out of their way to make sure the laws don't work as intended then it causes a problem that needs to be fixed and people can rationalize when there's been wrongdoing and address it appropriately.
Perhaps you guys should take a minute, and type national champion mergers into Google. After the junk about the National Football League, you will find a lot of information about this. Here's just two examples. I'll let you find the rest.
As far as the new rulings on taxes go, we'll just need to see how well that works. As usual there, it's written in the favor of the large countries, at the expense of the small ones. But what else is new there?
^ I think force may be a strong word, but the EU, and/or EU states have certainly strongly encouraged some mergers, and used what political leverage they have to push them. Dailymotion and Orange was one I was reading about recently, which was a merger encouraged for protectionist (or local interest, depending on which way you see it) reasons within France.
I've read your two links, and while there are significant carrots and significant sticks in play, I'm still not seeing much evidence of force. Were the companies in question legislatively obliged to merge, or were they given big encouragements to do so? Offering my kid a cookie to clean his room isn't an act of force. Telling him no TV until he cleans his room isn't force either.
I've read your two links, and while there are significant carrots and significant sticks in play, I'm still not seeing much evidence of force. Were the companies in question legislatively obliged to merge, or were they given big encouragements to do so? Offering my kid a cookie to clean his room isn't an act of force. Telling him no TV until he cleans his room isn't force either.
They were told to merge, period.
You also need to know how governments and corporations are owned, and managed, in Europe. Very often, governments own a percentage of the company, and have representatives on the boards, and sometimes, even in management. It's very different than here.
I know what a government stake in a corporation looks like. Doesn't amount to force.
I don't know how many different ways I have to say this to you, but a number of company's were told—merge! And with government ownership of a minority of some of them, the government had even less trouble in getting that done.
But... what? You haven't said it in any different ways, you've only said it in one way. Telling someone to do something is not forcing them to do it. Telling them to do something and threatening them with disproportionate punishment if they don't would be tantamount to force, but you haven't mentioned anything like that. Hell, telling someone to do something with an implied threat could possibly stretch to being force, but you haven't said that either. You've just said they "told" them, like that's anything significant.
You keep using this word force, and maybe you're using it rightly, but you're really not convincing me of that. Force is applied with a stick, not by being "told" to do something.
And if the government had partial ownership then they may have been party to an overall shareholder majority that wanted a merger, hence not force at all, but democratic ownership in action.
Comments
Tax havens wouldn't exist any more if they taxed income based on the buyer's location. It wouldn't matter where you moved the money, the tax would be due to the country the sale was made in. When you have a group of countries and some of them are tiny like Montenegro with 620k people then their public expenditure is low. It's 1.56b euros vs $3.6t for the US, £1.5t UK. If Apple passed $40b through Montenegro in a year, Apple alone could cover their budget with a less than 4% tax rate. The problem with this is they've taken advantage of the infrastructure in every other country and not put a portion of their income towards it. They are supporting employees who pay income tax and they are convincing customers to spend money who pay sales tax so just being in operation is helping but tax only works effectively when it takes a portion of all income - sales, employees and corporate profits.
Can't imagine why:
http://money.cnn.com/2015/01/11/pf/taxes/kansas-tax-cuts/
It's so obvious, you just bankrupt the country and you shut down schools and hospitals and everybody's happy. As you've pointed out many times, people act in their self-interest. If you give them tax cuts and they have no need to grow the business, they simply pocket the extra. Apple can't spend its cash fast enough that even after massive buybacks, it has $200b in assets. If giving them tax breaks would result in spending, why hasn't that already happened? Tim said that they have nothing to spend their money on, they looked at big acquisitions and none of them looked particularly attractive. Companies would also just fund things that benefit themselves directly, stable economies need to fund far more than the interests of individual companies.
You can cut taxes, but you can't continue to spend. Kansas, like most states has a huge public employee problem with unfunded pensions and other liabilities.
In the article it states, "Tax experts lament that the cuts were poorly structured", however it's also clear in the article cited that these cuts were only really intended for connected businesses, a common practice. When the inherent corruptions of politics combines with laws written for "friends and neighbors", crap happens.
That article was from 2012. Let's look at what the situation was in 2014:
http://wichitaliberty.org/kansas-government/myth-kansas-tax-cuts-havent-boosted-economy/
That article was dated 2015, as shown in the URL. Here's another from 2015:
http://www.theatlantic.com/politics/archive/2015/04/kansass-failed-experiment/389874/
So what is the solution to that, just bankrupt everyone in the state? Repossess the homes of people relying on pensions?
The people who worked all their lives paying taxes did so to support the older generation while they worked. Now that they are old, they rely on the next generation to pay taxes to support them. Pensions are paid out from money they themselves paid to the state at a different period of time. This tax revenue needs to exist.
So politicians shouldn't apply taxes nor should they apply tax cuts. Leaves a bit of a catch-22 really. The taxes can't be removed because old people aren't able to work so the system where the younger generation pays tax to support the older generation will exist forever.
I certainly appreciate, and agree with, your last sentence.
Remember the term "Imperial Presidency"? That was under Nixon, whom I voted for twice, in the first election I was old enough to vote in. Today, the Republican Party would consider him to be socialistic. Same thing for Eisenhower. I voted for Reagan twice, not because I agreed with much of his policies, but to get away from the debacle before. And I voted for G Bush Senior, in whom I was deeply disappointed. When he was running against Reagan in the primaries, it was he who, with his team, that came up with the slogan "Voodoo Economics" to describe the trickle down theory (which has since been disproven as a viable economic theory). When he ran later, after Reagan, I was expecting him to move back to the center, instead, he moved further to the right. The last Rebublican I voted for, and very likely, the last one I will ever vote for.
It would be very interesting if the world worked the way your post supposes. However, it doesn't. The US rarely bocks an European merger, whereas the Europeans have blocked a number of ours. The Europeans not only rarely block mergers of European companies, but countries often force mergers between companies to keep them from being bought by US companies. This is against EU law, but it happens anyway.
In Ireland, Apple is subject to their tax code, anyone who says otherwise doesn't understand it. But Ireland wants investment and Jobs very bad,y, so they do what is done everywhere else. If the laws allow companies to keep assets in a country with low taxes, and allow special rates for companies opening contruction, and Jobs.mthen it's legal. If later on, other countries decide they don't want that to continue, as we see here, then they will move to stop it, as we see here. That doesn't make it illegal. In the EU, countries have the status to develop their own corporate ownership rules, and well as their own tax rules. If the EU wasn't I such bad shape, they never would be doing this. It was never an issue before.
The point is, none of what Apple is doing is illegal by any laws in the EU, or here. But they are moving to make it illegal, or, at least, against policy. That's a change. They knew what was happening for a long time.
I've never heard of a government forcing companies to merge. The number of mergers blocked doesn't look all that high, most seem to be EU mergers:
http://www.reuters.com/article/2013/02/27/eu-mergers-prohibitions-idUKL1544962120130227
Some members of the Irish government would have known Apple's tax setup but that's not to say anyone else would have. They want to make changes to ensure there's more transparency in future:
http://europa.eu/rapid/press-release_IP-15-4610_en.htm
"Currently, Member States share very little information with one another about their tax rulings. It is at the discretion of the Member State to decide whether a tax ruling might be relevant to another EU country. As a result, Member States are often unaware of cross-border tax rulings issued elsewhere in the EU which may impact their own tax bases. The lack of transparency on tax rulings is being exploited by certain companies in order to artificially reduce their tax contribution.
To redress this situation, the Commission proposes to remove this margin for discretion and interpretation. Member States will now be required to automatically exchange information on their tax rulings. The Commission proposes to set a strict timeline: every three months, national tax authorities will have to send a short report to all other Member States on all cross-border tax rulings that they have issued. Member States will then be able to ask for more detailed information on a particular ruling.
The automatic exchange of information on tax rulings will enable Member States to detect certain abusive tax practices by companies and take the necessary action in response. Moreover, it should also encourage healthier tax competition, as tax authorities will be less likely to offer selective tax treatment to companies once this is open to scrutiny by their peers."
Tax avoidance has always been an issue for all tax authorities. It contributes to budget deficits so naturally when debts pile up as a result of losing as much as 1 trillion euros per year then they need to act on it. Budgets are setup based on estimated expenses and GDP under the assumption that the tax laws are working as intended. When people go out of their way to make sure the laws don't work as intended then it causes a problem that needs to be fixed and people can rationalize when there's been wrongdoing and address it appropriately.
countries often force mergers between companies to keep them from being bought by US companies. This is against EU law, but it happens anyway.
I've never heard of this happening.
Do you have any examples?
^ I think force may be a strong word, but the EU, and/or EU states have certainly strongly encouraged some mergers, and used what political leverage they have to push them. Dailymotion and Orange was one I was reading about recently, which was a merger encouraged for protectionist (or local interest, depending on which way you see it) reasons within France.
It looks like Orange bought out the majority of Dailymotion but couldn't find a buyer for the remainder so bought it all:
https://www.rudebaguette.com/2013/01/29/orange-now-reluctantly-owns-100-of-dailymotion-whats-next/
http://www.businessinsider.com/dailymotion-orange-deal-2011-1
The government is blocking them selling it to outside interests (you might need to paste the WSJ article titles into Google to get round the paywall), blocking a Yahoo sale, a Vivendi sale and PCCW:
http://en.wikipedia.org/wiki/Dailymotion
http://www.wsj.com/articles/orange-in-exclusive-talks-to-sell-80-in-dailymotion-to-vivendi-1428424135
http://www.wsj.com/articles/hong-kongs-pccw-wont-bid-for-stake-in-dailymotion-1428317694
http://www.forbes.com/sites/jeanbaptiste/2015/04/07/dailymotion-how-france-is-killing-youtubes-main-competitor/
Forcing them to find a European buyer isn't coercing the sale, it's limiting who the buyer is. There are security issues to consider with some company deals:
http://www.washingtonpost.com/world/national-security/house-panel-wants-us-china-telecom-mergers-blocked/2012/10/07/9fad5aaa-0f60-11e2-bd1a-b868e65d57eb_story.html
If Chinese or Russian companies tried to buy up large US telecoms companies, that would be cause for concern because they'd have the ability to track communications.
They likely wouldn't apply to Dailymotion but they would in other mergers like telecoms.
Perhaps you guys should take a minute, and type national champion mergers into Google. After the junk about the National Football League, you will find a lot of information about this. Here's just two examples. I'll let you find the rest.
http://www.ft.com/intl/cms/s/0/be8f09bc-6c60-11dc-a0cf-0000779fd2ac.html#axzz3aDEfNEDV
http://en.m.wikipedia.org/wiki/National_champions
As far as the new rulings on taxes go, we'll just need to see how well that works. As usual there, it's written in the favor of the large countries, at the expense of the small ones. But what else is new there?
Forced is exactly what has happened. Look it up.
They were told to merge, period.
You also need to know how governments and corporations are owned, and managed, in Europe. Very often, governments own a percentage of the company, and have representatives on the boards, and sometimes, even in management. It's very different than here.
What "force" does this "telling" entail?
I know what a government stake in a corporation looks like. Doesn't amount to force.
I don't know how many different ways I have to say this to you, but a number of company's were told—merge! And with government ownership of a minority of some of them, the government had even less trouble in getting that done.
^
But... what? You haven't said it in any different ways, you've only said it in one way. Telling someone to do something is not forcing them to do it. Telling them to do something and threatening them with disproportionate punishment if they don't would be tantamount to force, but you haven't mentioned anything like that. Hell, telling someone to do something with an implied threat could possibly stretch to being force, but you haven't said that either. You've just said they "told" them, like that's anything significant.
And if the government had partial ownership then they may have been party to an overall shareholder majority that wanted a merger, hence not force at all, but democratic ownership in action.