With 93% being held overseas, guess who gets to make up the multi- billion (trillion?) $$ difference that Apple and other corporations are taking from the tax fund?
That's right: you, me, and the rest of the middle and working class. Open up your wallets, suckers!
USA!
There are reasons why most advanced economies have abandoned (or otherwise don't employ) extraterritorial taxation. For one thing, extraterritorial taxation can be counterproductive and deleterious for domestic economies. It's bad economic policy. For another, it's just wrong. A nation should not feel entitled to tax economic activity that (legitimately) occurs in other nations. That some nations still do is incredibly arrogant. Other nations should get to set tax policy and rates for economic activity that occurs within them just as we here in the U.S. should get to set tax policy and rates for economic activity that occurs in the United States. If they, e.g., want to have really low rates or rules which allow economic activity which occurs there to go largely untaxed, then that's their prerogative. They should get the benefits or suffer the consequences of those policy choices. It's not for the U.S. to, in effect, say: Your tax rate isn't high enough (or your policies are otherwise improper), so we're going to collect income taxes on some of the economic activity that occurs there on top of whatever you choose to collect. Extraterritorial taxation is head-shake-worthy imprudent and just wrong in a generic sense.
When it comes to business that Apple does in the United States, it pays an extraordinary amount of income tax. Apple has paid (not counting the deferred taxes it accounts for in its reporting) over $30 billion in U.S. income taxes over the last 3 fiscal years. That's nearly $100 for each man, woman, and child living in the United States. So using your static notion for the total amount of income taxes that need to (or should) be paid, we each get to pay (more than) $30 less per year in income taxes because of the huge amount that Apple pays. (That's of course not how it actually works, I'm working off of your notion of things.)
That's not including all of the other tax revenue that Apple helps to create: Income tax on its employees' compensation, income tax on other businesses which supply products or services to Apple, income taxes on other businesses which Apple has facilitated, sales tax. And, of course, Apple's owners have to pay another round of taxes when they actually get the profits which Apple creates (and which have already been taxed). Apple has created more than $800 billion in wealth (some still 'on paper') over the last 40 years. Much of that hasn't been realized as income by Apple's owners yet, but much of it has. But when it is realized in the U.S., which much of it is, typically it gets taxed.
When it comes to foreign nations, there may be reasonable arguments to be made that Apple hasn't been paying its fair share of taxes (I'd likely disagree with those arguments, but they might be made). But when it comes to the domestic situation, I don't see where there's a reasonable argument to be made that Apple hasn't been paying its fair share of U.S. taxes.
To put things more in perspective consider this: Apple books a profit of roughly $1B US every single week (not including undistributed earnings which is another story). In three years that's 150 weeks plus. In those 150 weeks plus Apple paid around around 30 weeks worth in taxes.
So Apple would claim they paid an effective tax-rate of 26% and a smidgeon. Well, not actually paid from a cash standpoint.
"On a cash basis, it has spent about 18 percent of its pre-tax profit on taxes in the last three financial years. The rest of the expenses the company accounted for swelled the tax liability on its balance sheet. When its 2015 financial year ended, the company had a net deferred liability of $16.2 billion sitting on its books."
I'm aware that a significant portion of Apple's reported (U.S.) tax liability comes from deferred taxes. I think I've pointed that out before, though I'm not sure whether it was on this forum. That's why I referred to what it has paid on a cash basis. For the last 3 fiscal years, Apple paid over $31 billion in U.S. income taxes with $28 billion of that being federal. That does not count deferred tax liabilities.
For those 3 years Apple made over $187 billion in global pre-tax profit. But relevant to the point I was making, if we look at the profit Apple made which is attributable to its U.S. sales and add that to Apple's net investment income (all of it), we get around $65 billion. We can't nail that last number down, that's a ballpark. It could perhaps be considered to be $70 billion.
Now, as accounting rules work, more profit than that is actually attributed to the United States. So Apple pays U.S. income taxes (on a cash basis, not just on a deferred basis) on a (somewhat) higher base than that $65 billion. But those numbers give us an idea of how much income tax Apple pays in the U.S. relative to how much business it does here: $31 billion in income taxes, $65 billion-ish in profit.
Beyond that, for the most part, we're talking about extraterritorial taxation. It is that which I'm suggesting is not only wrong in a general sense but also net-economically-harmful.
And that DOES NOT include the approx. $32B Apple estimates it would owe on their undistributed foreign earnings if they had paid at the 12.5% statutory rate that Irish law provides for. In 2014 alone their foreign earnings (profits in essence) amounted to nearly $34B US. That's accounts for the vast majority of Apple's net foreign profits in all of Europe, Latin America, Asia and South America that year which for the most part flowed entirely thru those Irish subsidiaries even if the sales themselves weren't physically made in Ireland or even Europe for that matter.
Last year they booked another $41B+ in undistributed earnings, profits for which Apple has no repatriation plans under any foreseeable circumstances. I've not seen Apple's estimate of taxes if they were required to pay corporate taxes on last year's foreign earnings at the already low 12.5% irish rate, much less than if they had paid in the countries where the sales had physically occurred.
And don't think Apple is the Lone Ranger when it comes to creative tax avoidance. Google. Amazon, Facebook, GE, big Pharma etc all play that game. The chickens are coming home to roost for Facebook already with an IRS investigation, and Google is likely close behind. Apple isn't singled out.
So... I think you've misunderstood some of what Apple reports in its SEC filings. Apple hasn't estimated that it would owe $32 billion on undistributed foreign earnings if it paid Ireland's 12.5% rate on those undistributed foreign earnings.
No sir Apple very specifically and purposefully stated that approx. $30B would be owed if the Irish-held largely un-taxed profits were brought back to the US. That was in 2015. I don't believe I have misunderstood at all. If you can't find that for yourself I can do it for you. Start with Apple's 2015 Annual Report.
And no Apple has not paid $31B in cash for US Corporate taxes on their profits from the past three years. That would be obvious by doing the math. Apple itself only claims a 26% effective tax rate give or take, and factually it comes out to 19% or less on a purely cash basis, and certainly not the 50% you would claim they have.
EDIT: I see our bone of contention. I see that I did not originally write my thoughts as clearly as I should have.
With 93% being held overseas, guess who gets to make up the multi- billion (trillion?) $$ difference that Apple and other corporations are taking from the tax fund?
That's right: you, me, and the rest of the middle and working class. Open up your wallets, suckers!
USA!
That's like saying, guess who gets to make up the difference that all those with a 401(k) are taking from the tax fund? You do realize it's substantially the same, right? You do understand that corporations holding their revenues earned overseas offshore is a tax deferral situation, not a tax avoidance situation. In THAT ASPECT the effect is EXACTLY the same as a worker stashing part of his pre-tax income in a 401(k) account, to defer paying taxes until a later date. Are you implying Americans with 401(k) accounts need to open up our wallets in opposition to the laws that allow us to defer taxes on our income, and in defiance of common sense and astute financial planning? Because if you are, then you are showcasing the real problem; that such people as yourself aren't savvy about finances. I would hope the vast majority of people understand personal finances better than that. Please tell us you do.
Yeah. But you don't get to lobby for a tax holiday like a company. Which is why all the money is off shore. It will stay there until holiday appears. Because it creates jobs and all. Trickle down effect and some such.
Dont be disingenuous.
I believe that you've just clearly defined the term 'moving the goal posts.' That's a poor way of defending an earlier point, which had nothing to do with lobbying for a tax holiday. Apple is not taking from the tax fund by obeying existing laws, and, to your new argument, actually, we all collectively have just as much opportunity to lobby for a tax holiday or reduction in individual income taxes as a company does. Just ask anyone who voted for Reagan. Or Trump. Or any other president or member of congress who promised to lower taxes on individuals. So, yes, we do get to lobby for anything we want.
With 93% being held overseas, guess who gets to make up the multi- billion (trillion?) $$ difference that Apple and other corporations are taking from the tax fund?
That's right: you, me, and the rest of the middle and working class. Open up your wallets, suckers!
USA!
That's like saying, guess who gets to make up the difference that all those with a 401(k) are taking from the tax fund? You do realize it's substantially the same, right? You do understand that corporations holding their revenues earned overseas offshore is a tax deferral situation, not a tax avoidance situation. In THAT ASPECT the effect is EXACTLY the same as a worker stashing part of his pre-tax income in a 401(k) account, to defer paying taxes until a later date. Are you implying Americans with 401(k) accounts need to open up our wallets in opposition to the laws that allow us to defer taxes on our income, and in defiance of common sense and astute financial planning? Because if you are, then you are showcasing the real problem; that such people as yourself aren't savvy about finances. I would hope the vast majority of people understand personal finances better than that. Please tell us you do.
You're not completely accurate in this case. There is a significant portion of Apple's "cash stash" that is NOT subject to deferred taxes, considered permanently invested overseas. That amounted to approx $100 Billion US as of two years ago, and that's according to direct Apple statements and not some 3rd party.
So yes there's a chunk for which Apple has no plans to ever pay US taxes on whether tax reform happens or not.
But that's a chunk that they therefore owe no US tax on in the first plsce, as at least one other commenter has well outlined.
With 93% being held overseas, guess who gets to make up the multi- billion (trillion?) $$ difference that Apple and other corporations are taking from the tax fund?
That's right: you, me, and the rest of the middle and working class. Open up your wallets, suckers!
USA!
There are reasons why most advanced economies have abandoned (or otherwise don't employ) extraterritorial taxation. For one thing, extraterritorial taxation can be counterproductive and deleterious for domestic economies. It's bad economic policy. For another, it's just wrong. A nation should not feel entitled to tax economic activity that (legitimately) occurs in other nations. That some nations still do is incredibly arrogant. Other nations should get to set tax policy and rates for economic activity that occurs within them just as we here in the U.S. should get to set tax policy and rates for economic activity that occurs in the United States. If they, e.g., want to have really low rates or rules which allow economic activity which occurs there to go largely untaxed, then that's their prerogative. They should get the benefits or suffer the consequences of those policy choices. It's not for the U.S. to, in effect, say: Your tax rate isn't high enough (or your policies are otherwise improper), so we're going to collect income taxes on some of the economic activity that occurs there on top of whatever you choose to collect. Extraterritorial taxation is head-shake-worthy imprudent and just wrong in a generic sense.
When it comes to business that Apple does in the United States, it pays an extraordinary amount of income tax. Apple has paid (not counting the deferred taxes it accounts for in its reporting) over $30 billion in U.S. income taxes over the last 3 fiscal years. That's nearly $100 for each man, woman, and child living in the United States. So using your static notion for the total amount of income taxes that need to (or should) be paid, we each get to pay (more than) $30 less per year in income taxes because of the huge amount that Apple pays. (That's of course not how it actually works, I'm working off of your notion of things.)
That's not including all of the other tax revenue that Apple helps to create: Income tax on its employees' compensation, income tax on other businesses which supply products or services to Apple, income taxes on other businesses which Apple has facilitated, sales tax. And, of course, Apple's owners have to pay another round of taxes when they actually get the profits which Apple creates (and which have already been taxed). Apple has created more than $800 billion in wealth (some still 'on paper') over the last 40 years. Much of that hasn't been realized as income by Apple's owners yet, but much of it has. But when it is realized in the U.S., which much of it is, typically it gets taxed.
When it comes to foreign nations, there may be reasonable arguments to be made that Apple hasn't been paying its fair share of taxes (I'd likely disagree with those arguments, but they might be made). But when it comes to the domestic situation, I don't see where there's a reasonable argument to be made that Apple hasn't been paying its fair share of U.S. taxes.
To put things more in perspective consider this: Apple books a profit of roughly $1B US every single week (not including undistributed earnings which is another story). In three years that's 150 weeks plus. In those 150 weeks plus Apple paid around around 30 weeks worth in taxes.
So Apple would claim they paid an effective tax-rate of 26% and a smidgeon. Well, not actually paid from a cash standpoint.
"On a cash basis, it has spent about 18 percent of its pre-tax profit on taxes in the last three financial years. The rest of the expenses the company accounted for swelled the tax liability on its balance sheet. When its 2015 financial year ended, the company had a net deferred liability of $16.2 billion sitting on its books."
I'm aware that a significant portion of Apple's reported (U.S.) tax liability comes from deferred taxes. I think I've pointed that out before, though I'm not sure whether it was on this forum. That's why I referred to what it has paid on a cash basis. For the last 3 fiscal years, Apple paid over $31 billion in U.S. income taxes with $28 billion of that being federal. That does not count deferred tax liabilities.
For those 3 years Apple made over $187 billion in global pre-tax profit. But relevant to the point I was making, if we look at the profit Apple made which is attributable to its U.S. sales and add that to Apple's net investment income (all of it), we get around $65 billion. We can't nail that last number down, that's a ballpark. It could perhaps be considered to be $70 billion.
Now, as accounting rules work, more profit than that is actually attributed to the United States. So Apple pays U.S. income taxes (on a cash basis, not just on a deferred basis) on a (somewhat) higher base than that $65 billion. But those numbers give us an idea of how much income tax Apple pays in the U.S. relative to how much business it does here: $31 billion in income taxes, $65 billion-ish in profit.
Beyond that, for the most part, we're talking about extraterritorial taxation. It is that which I'm suggesting is not only wrong in a general sense but also net-economically-harmful.
And that DOES NOT include the approx. $32B Apple estimates it would owe on their undistributed foreign earnings if they had paid at the 12.5% statutory rate that Irish law provides for. In 2014 alone their foreign earnings (profits in essence) amounted to nearly $34B US. That's accounts for the vast majority of Apple's net foreign profits in all of Europe, Latin America, Asia and South America that year which for the most part flowed entirely thru those Irish subsidiaries even if the sales themselves weren't physically made in Ireland or even Europe for that matter.
Last year they booked another $41B+ in undistributed earnings, profits for which Apple has no repatriation plans under any foreseeable circumstances. I've not seen Apple's estimate of taxes if they were required to pay corporate taxes on last year's foreign earnings at the already low 12.5% irish rate, much less than if they had paid in the countries where the sales had physically occurred.
And don't think Apple is the Lone Ranger when it comes to creative tax avoidance. Google. Amazon, Facebook, GE, big Pharma etc all play that game. The chickens are coming home to roost for Facebook already with an IRS investigation, and Google is likely close behind. Apple isn't singled out.
So... I think you've misunderstood some of what Apple reports in its SEC filings. Apple hasn't estimated that it would owe $32 billion on undistributed foreign earnings if it paid Ireland's 12.5% rate on those undistributed foreign earnings.
No sir Apple very specifically and purposefully stated that approx. $30B would be owed to Ireland if taxes were paid at their statutory rate of 12.5%.That was in 2015. I don't believe I have misunderstood at all. If you can't find that for yourself I can do it for you. Start with Apple's 2015 Annual Report.
The foreign provision for income taxes is based on foreign pre-tax earnings of $47.6 billion, $33.6 billion and $30.5 billion in 2015, 2014 and 2013, respectively. The Company’s consolidated financial statements provide for any related tax liability on undistributed earnings that the Company does not intend to be
indefinitely reinvested outside the U.S. Substantially all of the Company’s undistributed international earnings intended to be indefinitely reinvested in operations
outside the U.S. were generated by subsidiaries organized in Ireland, which has a statutory tax rate of 12.5%. As of September 26, 2015, U.S. income taxes
have not been provided on a cumulative total of $91.5 billion of such earnings. The amount of unrecognized deferred tax liability related to these temporary
differences is estimated to be $30.0 billion.
If so, that's what I suspected. If not, perhaps you can show me what your understanding is based on.
That passage describes exactly what I was explaining, except with numbers from the end of the previous fiscal year. I gave the numbers Apple reported for the end of FY 2016, the numbers above are from the end of FY 2015.
At that time, Apple had $91.5 billion in undistributed foreign earnings which it intended to indefinitely reinvest outside of the United States. Substantially all of those undistributed earnings were generated by Irish subsidiaries - i.e., they relate to sales which Apple accounts for through those Irish subsidiaries. Apple had not provided for deferred U.S. income taxes on those undistributed earnings. Apple estimated that unrecognized deferred U.S. income tax liability to be $30 billion. That would come from applying the U.S corporate tax rate of 35% to that $91.5 billion, subtracting whatever foreign taxes had already been paid on those earnings (a small amount), and perhaps adding state income taxes which would also be owed.
At that time Apple's foreign subsidiaries held another $95 billion or so on which deferred U.S. income tax liability had been provided.
And no Apple has not paid $31B in cash for US Corporate taxes on their profits from the past three years. That would be obvious by doing the math. Apple itself only claims a 26% effective tax rate give or take, and factually it comes out to 19% or less on a purely cash basis, and certainly not the 50% you would claim they have.
That reported 26% effective rate is based on Apple's global profits. If you add all of Apple's reported taxes (U.S., state, and foreign; and including deferred taxes accounted for) for the last 3 years it comes to $48.8 billion. Apple's total pre-tax profit for those three years was $187.4 billion. That's where an aggregate effective tax rate of 26% comes from. That isn't an effective tax rate for U.S. taxes only, and it isn't based on only profits from U.S. sales. That's not how Apple would compute such a reported effective tax rate - it wouldn't be consistent with applicable accounting standards.
It's definitely time for a Willy Wonka style gold card promotion to celebrate the 10th anniversary of the iPhone.
Something that would leave the winners with something special and the opportunity to choose where Apple should donate a small chunk of its fortune. For example, areas of health, science, social initiatives etc.
I case you're not familiar with how a publicly traded corporation works, that fortune belongs to all the AAPL shareholders. Apple first duty is to its shareholders and that money should first be spent on things that benefits AAPL shareholders.
Gates, Buffet and Zuckerberg are giving away their own personal fortune to health, science social initiatives, etc., they are not donating a small chunk of Microsoft or Berkshire Hathaway or Facebook fortune.
I am not only familiar with how they work. I work with some on weekly basis and have worked for some in the past.
Your affirmation is not correct in this case. Please do a quick search on the donations made by publicly listed companies.
A "small chunk" of Apple fortune would be in the tune of what? …… 20% and $50B …..10% and $25B? ….. 5% and $12.5B ……. 1% and $2.5B …… .5% and 1.25B
1% and $2.5B seems like a "small chunk". In fact it's a lot smaller than a "small chunk", it's more like an itsy bitsy teeny weenie chunk.
Apple has donated to many worthy causes but in the tune of 10's of millions not billions. And a lot of the money donated are from Apple employees donating thru a special program where Apple may matches the donation. Apple have donated a percentage of the proceeds from sales of Apple products to worthy causes. But the total amount is no where near what would be considered a "small chunk" of its fortune. It would probably require shareholder approval if Apple wanted to donate a "small chunk" of their fortune to chartable causes.
Plus since most of Apple fortune is overseas, they must donate those profits to overseas causes, as bringing in those profits into the US would still most likely incur a 40% tax liability, even if they donate it. Think about it. If Apple brought back $5B into the US and donated half of it, would than mean that Apple wouldn't have to pay any taxes on the other half because they can use the tax deduction from the donated half, to offset any taxes owed on the other half. I don't think the IRS would like that. And neither would any of Apple US competitors. As Apple donating a "small chunk" of their fortune to charitable and worthy causes in the US would cast a very favorable light on Apple and it's products. Thus Apple would receive a huge benefit from donating overseas profits in the US and not having to pay US taxes on that money.
With 93% being held overseas, guess who gets to make up the multi- billion (trillion?) $$ difference that Apple and other corporations are taking from the tax fund?
That's right: you, me, and the rest of the middle and working class. Open up your wallets, suckers!
USA!
That's like saying, guess who gets to make up the difference that all those with a 401(k) are taking from the tax fund? You do realize it's substantially the same, right? You do understand that corporations holding their revenues earned overseas offshore is a tax deferral situation, not a tax avoidance situation. In THAT ASPECT the effect is EXACTLY the same as a worker stashing part of his pre-tax income in a 401(k) account, to defer paying taxes until a later date. Are you implying Americans with 401(k) accounts need to open up our wallets in opposition to the laws that allow us to defer taxes on our income, and in defiance of common sense and astute financial planning? Because if you are, then you are showcasing the real problem; that such people as yourself aren't savvy about finances. I would hope the vast majority of people understand personal finances better than that. Please tell us you do.
Yeah. But you don't get to lobby for a tax holiday like a company. Which is why all the money is off shore. It will stay there until holiday appears. Because it creates jobs and all. Trickle down effect and some such.
Dont be disingenuous.
I believe that you've just clearly defined the term 'moving the goal posts.' That's a poor way of defending an earlier point, which had nothing to do with lobbying for a tax holiday. Apple is not taking from the tax fund by obeying existing laws, and, to your new argument, actually, we all collectively have just as much opportunity to lobby for a tax holiday or reduction in individual income taxes as a company does. Just ask anyone who voted for Reagan. Or Trump. Or any other president or member of congress who promised to lower taxes on individuals. So, yes, we do get to lobby for anything we want.
Wow. You make the equivalence of tax planning for retirees with Apple keeping its profits offshore and I extend the analogy. Some I'm shifting the goal posts?
the only reason the money isn't coming back to the us is because it will be taxed. They're "deferring" tax. Just like your 401K investors defer tax. I mean, that was your point, right?
the difference I point out is that the retiree is using the existing tax framework, whilst Apple and other companies (I'm not singling them out) are waiting for some wrinkle in the tax continuum to repatriate their money. There are no existing provisions for them to bring that money home at a lower rate, now or into the future. So these companies have to sell the idea to government that a lower rate would encourage them to bring the money home.
Im putting aside a perhaps valid point that the taxes themselves should not be levied in the first place. What is in place is in place and none of it jumped out from behind a bush to surprise anyone. So I don't get the sour grapes.
as a side note, the collective ability to lobby is there I guess, in your vote. But you don't have the scale or the influence through fair means or foul that corporations do.
It's definitely time for a Willy Wonka style gold card promotion to celebrate the 10th anniversary of the iPhone.
Something that would leave the winners with something special and the opportunity to choose where Apple should donate a small chunk of its fortune. For example, areas of health, science, social initiatives etc.
I case you're not familiar with how a publicly traded corporation works, that fortune belongs to all the AAPL shareholders. Apple first duty is to its shareholders and that money should first be spent on things that benefits AAPL shareholders.
Gates, Buffet and Zuckerberg are giving away their own personal fortune to health, science social initiatives, etc., they are not donating a small chunk of Microsoft or Berkshire Hathaway or Facebook fortune.
I am not only familiar with how they work. I work with some on weekly basis and have worked for some in the past.
Your affirmation is not correct in this case. Please do a quick search on the donations made by publicly listed companies.
A "small chunk" of Apple fortune would be in the tune of what? …… 20% and $50B …..10% and $25B? ….. 5% and $12.5B ……. 1% and $2.5B …… .5% and 1.25B
1% and $2.5B seems like a "small chunk". In fact it's a lot smaller than a "small chunk", it's more like an itsy bitsy teeny weenie chunk.
Apple has donated to many worthy causes but in the tune of 10's of millions not billions. And a lot of the money donated are from Apple employees donating thru a special program where Apple may matches the donation. Apple have donated a percentage of the proceeds from sales of Apple products to worthy causes. But the total amount is no where near what would be considered a "small chunk" of its fortune. It would probably require shareholder approval if Apple wanted to donate a "small chunk" of their fortune to chartable causes.
Plus since most of Apple fortune is overseas, they must donate those profits to overseas causes, as bringing in those profits into the US would still most likely incur a 40% tax liability, even if they donate it. Think about it. If Apple brought back $5B into the US and donated half of it, would than mean that Apple wouldn't have to pay any taxes on the other half because they can use the tax deduction from the donated half, to offset any taxes owed on the other half. I don't think the IRS would like that. And neither would any of Apple US competitors. As Apple donating a "small chunk" of their fortune to charitable and worthy causes in the US would cast a very favorable light on Apple and it's products. Thus Apple would receive a huge benefit from donating overseas profits in the US and not having to pay US taxes on that money.
Can we just conclude that you are being pedantic? A large chunk of your post has little or nothing to do with my original or follow up post. What I said stands, regardless of your interpretation of 'small'.
It's always amusing to hear giant corporations whining about corporate tax rates as a "burden". Sure...try making that money in a non-industrialized country with no central government and no consumers. They always want to pretend that their success is due entirely to themselves and they don't owe anyone anything. Meanwhile, the largest segment of the U.S. economy is the CONSUMER side, not the business side. Corporations aren't the ones driving the economic bus.
But there would be no consumer side without the other side. What would consumers be consuming? What would State collect sales tax on? How would consumers collect a pay check from which to pay income taxes on? How many consumers are employed by big businesses and corporations? How would many of the rich, who happens to pay about 80% of the income taxes collected on the consumer side, become rich without being able to invest in stocks, bonds and property on the corporation side? How many consumers are counting on their corporate investment, with the money in their IRA, to help finance them through retirement? How many retirees depends on corporate dividend stocks to help finance their retirement? How many State workers pension funds are counting on their corporate investments to help fund it? How much of the taxable income of the rich is due to capital gains and dividends on investment? Payroll tax is the next largest source of tax revenue for the Feds and the employers pays half of it for their employees.
How much you think the cost of consumers goods would go up by if corporations were taxed more they are now? FYI- corporations do not pay taxes, they merely collect it from the consumers that buys their products and turn it over to the government.
Consumers may be the driver of the economic bus, but corporations are supplying the fuel. Otherwise that bus is a trailer. There's a reason why most other developed countries in the World have a very low corporate tax rate and don't tax corporate foreign profits at all. They want corporations to spend and invest their money in their country. There's a reason why countries offer big tax incentives for corporations to build plants in their countries. There's a reason why the US tax capital gains (on corporate investment held for over a year), at a lower rate than regular income. Corporations fuels the economy.
For he US, it is pure greed for them to want to tax profits made overseas. Those profits should be invested back in the foreign countries from which they were made. That would be better for the World economy. That's why most countries won't tax corporations at all if they want to invest their profits, in their countries. None of this 40% tax crap if you want to spend the money you made elsewhere, here.
There is a history on why the US tax foreign profits. Back in the old days, around the 50's and 60's, there were not many US international corporations. Maybe GM and GE were the largest. What the US didn't want these international corporations to do was to use the profits made overseas in the US, to unfairly compete with companies that were US based only. So the US taxed those overseas profits, like if they were made in the US, if they were spent in the US to compete with their competition. This leveled the competition between international corporations and companies that were mainly US only.
But that was the old days when doing international business was not easy to do for most companies. Now of days, nearly all businesses can easily become an international business. All it takes is the internet and a website. Plus most of the foreign corporations, that US international corporations must compete with, aren't as taxed burdened as the US ones. So the US wanting to tax overseas profits is no longer about preventing unfair competition, it's just greed on the US part.
With 93% being held overseas, guess who gets to make up the multi- billion (trillion?) $$ difference that Apple and other corporations are taking from the tax fund?
That's right: you, me, and the rest of the middle and working class. Open up your wallets, suckers!
USA!
That's like saying, guess who gets to make up the difference that all those with a 401(k) are taking from the tax fund? You do realize it's substantially the same, right? You do understand that corporations holding their revenues earned overseas offshore is a tax deferral situation, not a tax avoidance situation. In THAT ASPECT the effect is EXACTLY the same as a worker stashing part of his pre-tax income in a 401(k) account, to defer paying taxes until a later date. Are you implying Americans with 401(k) accounts need to open up our wallets in opposition to the laws that allow us to defer taxes on our income, and in defiance of common sense and astute financial planning? Because if you are, then you are showcasing the real problem; that such people as yourself aren't savvy about finances. I would hope the vast majority of people understand personal finances better than that. Please tell us you do.
You're not completely accurate in this case. There is a significant portion of Apple's "cash stash" that is NOT subject to deferred taxes, considered permanently invested overseas. That amounted to approx $100 Billion US as of two years ago, and that's according to direct Apple statements and not some 3rd party.
So yes there's a chunk for which Apple has no plans to ever pay US taxes on whether tax reform happens or not.
But if that chunk of money is NOT subject to deferred taxes because the US don't tax it, how does that make the OP any less accurate? What difference does it make that there's legally no taxes due on that chunk on money, thus there is no tax deferral or avoidance on Apple part.
Or do you think that when there's legally no taxes due and therefore Apple made no plan to ever pay any taxes on it, that Apple is avoiding paying taxes? And thus the rest of the taxpayers are still on the hook for those taxes, regardless. You can't avoid something that isn't there to begin with. It's like saying that when I withdraw money from my Roth IRA, I avoided paying taxes on the profits from it. There was no tax on the profits to begin with, I didn't avoid anything. And no other taxpayers have to make up for the taxes I didn't have to pay on the profits made in a Roth IRA.
With 93% being held overseas, guess who gets to make up the multi- billion (trillion?) $$ difference that Apple and other corporations are taking from the tax fund?
That's right: you, me, and the rest of the middle and working class. Open up your wallets, suckers!
USA!
That's like saying, guess who gets to make up the difference that all those with a 401(k) are taking from the tax fund? You do realize it's substantially the same, right? You do understand that corporations holding their revenues earned overseas offshore is a tax deferral situation, not a tax avoidance situation. In THAT ASPECT the effect is EXACTLY the same as a worker stashing part of his pre-tax income in a 401(k) account, to defer paying taxes until a later date. Are you implying Americans with 401(k) accounts need to open up our wallets in opposition to the laws that allow us to defer taxes on our income, and in defiance of common sense and astute financial planning? Because if you are, then you are showcasing the real problem; that such people as yourself aren't savvy about finances. I would hope the vast majority of people understand personal finances better than that. Please tell us you do.
You're not completely accurate in this case. There is a significant portion of Apple's "cash stash" that is NOT subject to deferred taxes, considered permanently invested overseas. That amounted to approx $100 Billion US as of two years ago, and that's according to direct Apple statements and not some 3rd party.
So yes there's a chunk for which Apple has no plans to ever pay US taxes on whether tax reform happens or not.
But if that chunk of money is NOT subject to deferred taxes because the US don't tax it, how does that make the OP any less accurate? What difference does it make that there's legally no taxes due on that chunk on money, thus there is no tax deferral or avoidance on Apple part.
Of course there's tax avoidance. What do you think Apple's very creatively-designed and unique foreign corporate structure was intended to accomplish? Avoid corporate taxes both in the US and overseas on the majority of their foreign profits thru "stateless" entities and Apple IP transfers out of the US to foreign subsidiaries. While it would surely seem to be legal it certainly does not follow "the spirit of the tax laws". I'm sure you would agree with that if you take your team jacket off for a moment.
As for your IMHO not-well-thought-out Roth IRA comparison, a Roth is funded with AFTER-TAX "profits" (income) isn't it? Apple does pay corporate tax on the "profits" (interest) realized from investing their money thru Braeburn but not on the original investment for the most part, quite the opposite of your Roth. And yes most of that "foreign cash" is actually right here in the grand ol' USA, in US banks and safely invested in 1-3 year maturity US corporate bonds, some US Treasuries, etc.. Heck if interest rates would rise a bit more Apple could even end up involved in the mortgage market which is a bit more liquid and where they might realize a little more than the 1.x% return they reportedly have.
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And no Apple has not paid $31B in cash for US Corporate taxes on their profits from the past three years. That would be obvious by doing the math. Apple itself only claims a 26% effective tax rate give or take, and factually it comes out to 19% or less on a purely cash basis, and certainly not the 50% you would claim they have.
EDIT: I see our bone of contention. I see that I did not originally write my thoughts as clearly as I should have.
But that's a chunk that they therefore owe no US tax on in the first plsce, as at least one other commenter has well outlined.
That passage describes exactly what I was explaining, except with numbers from the end of the previous fiscal year. I gave the numbers Apple reported for the end of FY 2016, the numbers above are from the end of FY 2015.
At that time, Apple had $91.5 billion in undistributed foreign earnings which it intended to indefinitely reinvest outside of the United States. Substantially all of those undistributed earnings were generated by Irish subsidiaries - i.e., they relate to sales which Apple accounts for through those Irish subsidiaries. Apple had not provided for deferred U.S. income taxes on those undistributed earnings. Apple estimated that unrecognized deferred U.S. income tax liability to be $30 billion. That would come from applying the U.S corporate tax rate of 35% to that $91.5 billion, subtracting whatever foreign taxes had already been paid on those earnings (a small amount), and perhaps adding state income taxes which would also be owed.
At that time Apple's foreign subsidiaries held another $95 billion or so on which deferred U.S. income tax liability had been provided.
That reported 26% effective rate is based on Apple's global profits. If you add all of Apple's reported taxes (U.S., state, and foreign; and including deferred taxes accounted for) for the last 3 years it comes to $48.8 billion. Apple's total pre-tax profit for those three years was $187.4 billion. That's where an aggregate effective tax rate of 26% comes from. That isn't an effective tax rate for U.S. taxes only, and it isn't based on only profits from U.S. sales. That's not how Apple would compute such a reported effective tax rate - it wouldn't be consistent with applicable accounting standards.
1% and $2.5B seems like a "small chunk". In fact it's a lot smaller than a "small chunk", it's more like an itsy bitsy teeny weenie chunk.
Apple has donated to many worthy causes but in the tune of 10's of millions not billions. And a lot of the money donated are from Apple employees donating thru a special program where Apple may matches the donation. Apple have donated a percentage of the proceeds from sales of Apple products to worthy causes. But the total amount is no where near what would be considered a "small chunk" of its fortune. It would probably require shareholder approval if Apple wanted to donate a "small chunk" of their fortune to chartable causes.
https://macrumors.zendesk.com/hc/en-us/articles/202084918-Apple-Support-for-Charity
Plus since most of Apple fortune is overseas, they must donate those profits to overseas causes, as bringing in those profits into the US would still most likely incur a 40% tax liability, even if they donate it. Think about it. If Apple brought back $5B into the US and donated half of it, would than mean that Apple wouldn't have to pay any taxes on the other half because they can use the tax deduction from the donated half, to offset any taxes owed on the other half. I don't think the IRS would like that. And neither would any of Apple US competitors. As Apple donating a "small chunk" of their fortune to charitable and worthy causes in the US would cast a very favorable light on Apple and it's products. Thus Apple would receive a huge benefit from donating overseas profits in the US and not having to pay US taxes on that money.
the only reason the money isn't coming back to the us is because it will be taxed. They're "deferring" tax. Just like your 401K investors defer tax. I mean, that was your point, right?
the difference I point out is that the retiree is using the existing tax framework, whilst Apple and other companies (I'm not singling them out) are waiting for some wrinkle in the tax continuum to repatriate their money. There are no existing provisions for them to bring that money home at a lower rate, now or into the future. So these companies have to sell the idea to government that a lower rate would encourage them to bring the money home.
Im putting aside a perhaps valid point that the taxes themselves should not be levied in the first place. What is in place is in place and none of it jumped out from behind a bush to surprise anyone. So I don't get the sour grapes.
as a side note, the collective ability to lobby is there I guess, in your vote. But you don't have the scale or the influence through fair means or foul that corporations do.
But there would be no consumer side without the other side. What would consumers be consuming? What would State collect sales tax on? How would consumers collect a pay check from which to pay income taxes on? How many consumers are employed by big businesses and corporations? How would many of the rich, who happens to pay about 80% of the income taxes collected on the consumer side, become rich without being able to invest in stocks, bonds and property on the corporation side? How many consumers are counting on their corporate investment, with the money in their IRA, to help finance them through retirement? How many retirees depends on corporate dividend stocks to help finance their retirement? How many State workers pension funds are counting on their corporate investments to help fund it? How much of the taxable income of the rich is due to capital gains and dividends on investment? Payroll tax is the next largest source of tax revenue for the Feds and the employers pays half of it for their employees.
http://www.taxpolicycenter.org/briefing-book/what-are-sources-revenue-federal-government
How much you think the cost of consumers goods would go up by if corporations were taxed more they are now? FYI- corporations do not pay taxes, they merely collect it from the consumers that buys their products and turn it over to the government.
https://www.atr.org/corporations-dont-pay-taxes-brpeople-a3203
Consumers may be the driver of the economic bus, but corporations are supplying the fuel. Otherwise that bus is a trailer. There's a reason why most other developed countries in the World have a very low corporate tax rate and don't tax corporate foreign profits at all. They want corporations to spend and invest their money in their country. There's a reason why countries offer big tax incentives for corporations to build plants in their countries. There's a reason why the US tax capital gains (on corporate investment held for over a year), at a lower rate than regular income. Corporations fuels the economy.
For he US, it is pure greed for them to want to tax profits made overseas. Those profits should be invested back in the foreign countries from which they were made. That would be better for the World economy. That's why most countries won't tax corporations at all if they want to invest their profits, in their countries. None of this 40% tax crap if you want to spend the money you made elsewhere, here.
There is a history on why the US tax foreign profits. Back in the old days, around the 50's and 60's, there were not many US international corporations. Maybe GM and GE were the largest. What the US didn't want these international corporations to do was to use the profits made overseas in the US, to unfairly compete with companies that were US based only. So the US taxed those overseas profits, like if they were made in the US, if they were spent in the US to compete with their competition. This leveled the competition between international corporations and companies that were mainly US only.
But that was the old days when doing international business was not easy to do for most companies. Now of days, nearly all businesses can easily become an international business. All it takes is the internet and a website. Plus most of the foreign corporations, that US international corporations must compete with, aren't as taxed burdened as the US ones. So the US wanting to tax overseas profits is no longer about preventing unfair competition, it's just greed on the US part.
Or do you think that when there's legally no taxes due and therefore Apple made no plan to ever pay any taxes on it, that Apple is avoiding paying taxes? And thus the rest of the taxpayers are still on the hook for those taxes, regardless. You can't avoid something that isn't there to begin with. It's like saying that when I withdraw money from my Roth IRA, I avoided paying taxes on the profits from it. There was no tax on the profits to begin with, I didn't avoid anything. And no other taxpayers have to make up for the taxes I didn't have to pay on the profits made in a Roth IRA.
As for your IMHO not-well-thought-out Roth IRA comparison, a Roth is funded with AFTER-TAX "profits" (income) isn't it? Apple does pay corporate tax on the "profits" (interest) realized from investing their money thru Braeburn but not on the original investment for the most part, quite the opposite of your Roth. And yes most of that "foreign cash" is actually right here in the grand ol' USA, in US banks and safely invested in 1-3 year maturity US corporate bonds, some US Treasuries, etc.. Heck if interest rates would rise a bit more Apple could even end up involved in the mortgage market which is a bit more liquid and where they might realize a little more than the 1.x% return they reportedly have.