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

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  • Reply 41 of 132
    sflocalsflocal Posts: 6,092member


    The reality is that Apple is under zero pressure.  What is congress going to do?  Force Apple to bring that money back into the country?  Not going to happen.  Is congress going to fine Apple for doing nothing illegal?



    Tim Cook has no pressure.  It's Congress doing their typical 15-minute fame show.  Nothing will come out of it.  Congress knows that they have to change the tax laws that will affect every company, not just Apple and Congress has to be very careful it doesn't alienate these companies.

  • Reply 42 of 132
    mj1970mj1970 Posts: 9,002member

    Quote:

    Originally Posted by mstone View Post


    In bookkeeping, the balance sheet has three columns, assets, liabilities and ownership equity. Which column does Margin go in?



     


    How "clever" of you. Not.


     


    Did you intentionally exclude the fact that there are other critical financial statements like...the income (or P&L) statement? In that case the "margin," which is synonymous with profit, goes into the profit lines which help to increase assets or owner equity.

  • Reply 43 of 132
    mstonemstone Posts: 11,510member

    Quote:

    Originally Posted by MJ1970 View Post




    Quote:

    Originally Posted by mstone View Post


    In bookkeeping, the balance sheet has three columns, assets, liabilities and ownership equity. Which column does Margin go in?





    Did you intentionally exclude the fact that there are other critical financial statements like...the income (or P&L) statement? In that case the "margin," which is synonymous with profit, goes into the profit lines which help to increase assets or owner equity.



    Sorry, you're losing me. I was trying to keep it simple so I could perhaps understand how the consumer allegedly pays the corporation's income taxes.

  • Reply 44 of 132
    mj1970mj1970 Posts: 9,002member

    Quote:

    Originally Posted by mstone View Post


    Sorry, you're losing me. I was trying to keep it simple so I could perhaps understand how the consumer allegedly pays the corporation's income taxes.



     


    1. You asked where "margin" goes on the balance sheet.


    2. The balance sheet is not the only financial statement for a business, there is also an income statement.


    3. Margin is profit.


    4. Profit goes (first) into the income statement and then makes it to the balance sheet as assets or owner equity.


     


    But all of this is really smoke and mirrors. The point is that companies will maximize profits. Where taxes reduce profits, the company will look for other ways to (effectively) maintain or hide profits or "reduce" profits. All of these actions are ultimately paid for directly or indirectly by the company's customers.


     


    But, more directly and clearly. All of the dollars the company gets come from the customers. The taxes come out of that money. The company is not paying the taxes, the customers (and investors also) are. So product prices are higher (or features are fewer and quality is lower) relative to what they would be without those taxes to be paid.


     


    This isn't some attempt at a Jedi mind trick of some kind. It's just a reality.

  • Reply 45 of 132
    ufwaufwa Posts: 64member

    Quote:

    Originally Posted by lkrupp View Post


     


    But since it's Apple that makes it an abomination worth dragging the CEO in front some corrupt politicians so they can rail against the company. 





    You realize that the same subcommittee already saw Microsoft and HP right? Those two sent company representatives. Apple could've done the same instead they or Cook decided he will go rather than send a representative.


     


    He wasn't dragged or subpoenaed to appear.

  • Reply 45 of 132
    jkichlinejkichline Posts: 1,369member


    I say Apple uses it's large, overseas cash hoard to create a floating headquarters in international waters. There, no one gets tax. Screw the politicians.

  • Reply 47 of 132
    chabigchabig Posts: 641member

    Quote:

    Originally Posted by mstone View Post


    Sorry, you're losing me. I was trying to keep it simple so I could perhaps understand how the consumer allegedly pays the corporation's income taxes.



    It's simple. You make a product for $1 and sell it for $1.50, netting $.50. Now government steps in and demands $.50 tax from each sale. Your profit is wiped out, so you raise the price to $2.00. Guess who pays? The consumer.

  • Reply 48 of 132
    solipsismxsolipsismx Posts: 19,566member
    jkichline wrote: »
    I say Apple uses it's large, overseas cash hoard to create a floating headquarters in international waters. There, no one gets tax. Screw the politicians.

    They can afford to buy a very large island to call home. How about New Zealand? I think it's mostly uninhabited¡
  • Reply 49 of 132
    mstonemstone Posts: 11,510member

    Quote:

    Originally Posted by MJ1970 View Post


    But, more directly and clearly. All of the dollars the company gets come from the customers. The taxes come out of that money. The company is not paying the taxes, the customers (and investors also) are. So product prices are higher (or features are fewer and quality is lower) relative to what they would be without those taxes to be paid.



    That is sort of a stretch "All of the dollars the company gets come from the customers." By that logic you could argue that all the money comes from the Federal Reserve. Simplified, all expenses come out of the gross revenue and what is left is the profit. The taxes are the last thing in the equation. Generally speaking, you can't deduct taxes as an expense except property taxes and the like.


     


    Now I fully understand that if the corporation was required to comply with some new regulation that cost them money, that is an expense and the company is likely to raise the price of the product to cover that expense thus maintaining their profits, but income taxes are a different situation because it is coming out of the profit at the very end of the calculation.

  • Reply 50 of 132
    mj1970mj1970 Posts: 9,002member

    Quote:

    Originally Posted by mstone View Post


    That is sort of a stretch "All of the dollars the company gets come from the customers." By that logic you could argue that all the money comes from the Federal Reserve.



     


    You could argue that, but that would merely show a fundamental misunderstanding of things.


     


     


    Quote:

    Originally Posted by mstone View Post


    Now I fully understand that if the corporation was required to comply with some new regulation that cost them money, that is an expense and the company is likely to raise the price of the product to cover that expense thus maintaining their profits, but taxes are a different situation because it is coming out of the profit at the very end of the calculation.



     


    Sorry I'm unable to explain it in a way that makes it clear to you.

  • Reply 51 of 132
    paxmanpaxman Posts: 4,729member

    Quote:

    Originally Posted by MJ1970 View Post


     


    Good for Apple (and its investors and its employees and its customers!)


     


    While you use terms like "loophole" and "tax dodging" in the pejorative sense, I am quite sure Apple is following the law. They are doing their best to keep as much of the money they have earned as possible. Good for them! Every business and individual should do the same thing. Sadly there are not as many "loopholes" available to individuals.



    Just because it is not illegal it doesn't make it just. I have no idea why people think it is OK for corporations and wealthy folks not to pay the taxes they owe. The thinking behind taxation is not to screw the rich, don't people understand that? 

  • Reply 52 of 132
    mstonemstone Posts: 11,510member

    Quote:

    Originally Posted by MJ1970 View Post




     


    Sorry I'm unable to explain it in a way that makes it clear to you.



    That is quite clear.

  • Reply 53 of 132
    paxmanpaxman Posts: 4,729member

    Quote:

    Originally Posted by SolipsismX View Post





    They can afford to buy a very large island to call home. How about New Zealand? I think it's mostly uninhabited¡


    And even if it isn't its so far away nobody could possibly care, could they? Ireland might be better. I hear its going cheap.

  • Reply 54 of 132
    charlitunacharlituna Posts: 7,217member
    eat@me wrote: »
    Apple is using every loophole and trick known to Wall Street and leveraging offshore accounts to "pay every dollar they owe" which is very little.  They used loopholes to pay dividends.
    Just like every other company

    And it's not really dodging when it's 100% legal. What's really sad is that the US could make a little money on funds coming in from out of country divisions if they would just change their rules. Money earned in the US would be taxed at X% regardless of if its held in US banks or not. Money earned out of country and presumably held out of country is currently also being taxed at X% just to be transferred into the country. So companies don't do it. If they would change it to a lower transfer tax, companies might. Heck Apple has all buy said the same thing when they brought up a tax holiday. And that's on top of the money they had to pay in the country the money came from
  • Reply 55 of 132
    anantksundaramanantksundaram Posts: 20,403member
    I don't believe Apple is under any kind of investigation, therefore neither Apple nor Cook have an obligation to testify in this hearing. I think Cook is rather foolish to sit in a congressional hearing, being asked questions, and looking like Apple is on trial when it isn't. Cook should have taken a pass and instead, invited a few Senators to discuss tax policy with him at his headquarters in Cupertino without any cameras present. That is how you do things. Now Cook is going to open his big fat mouth, look like a criminal in front of questioning senators, and Apple's stock will fall again.

    Thanks Tim!

    I agree with this assessment. I see no good coming out of this (and hope nothing bad does). Entirely unnecessary. He should simply have said -- even if Apple was subpoenaed -- that he is no expert on taxes (and I'll bet he's not), and that he'd be happy to send the CFO Oppenheimer or even better, the tax guy/gal that reports to the CFO.
  • Reply 56 of 132
    charlitunacharlituna Posts: 7,217member
    slurpy wrote: »

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

    The game isn't about the most but what is legally required of them

    And think about it, you don't not take deductions on your income tax do you, you don't not file because you would be getting a refund. So you're suggesting Apple pay every cent they can but you don't do that.
  • Reply 57 of 132
    anantksundaramanantksundaram Posts: 20,403member
    mstone wrote: »
    Sorry, you're losing me. I was trying to keep it simple so I could perhaps understand how the consumer allegedly pays the corporation's income taxes.

    The consumer pays because companies pass-through the effects through their product pricing. Why do they do that? Because what matters at the end of the day for a company's market value is is its **post-tax** (expected) returns. Of course, the ability to pass-through depends on a number of factors, including competitive conditions, the nature of the demand curve, and the company's cost structure. For a company like Apple, I am guessing that it is all pretty much passed-through.
  • Reply 58 of 132
    charlitunacharlituna Posts: 7,217member
    I don't believe Apple is under any kind of investigation, therefore neither Apple nor Cook have an obligation to testify in this hearing. I think Cook is rather foolish to sit in a congressional hearing, being asked questions, and looking like Apple is on trial when it isn't.

    So they refuse, the press finds out and spreads it around and rumors that Apple has something to hide start up
  • Reply 59 of 132
    mstonemstone Posts: 11,510member

    Quote:

    Originally Posted by anantksundaram View Post




    Quote:

    Originally Posted by mstone View Post



    Sorry, you're losing me. I was trying to keep it simple so I could perhaps understand how the consumer allegedly pays the corporation's income taxes.




    The consumer pays because companies pass-through the effects through their product pricing. Why do they do that? Because what matters at the end of the day for a company's market value is is its **post-tax** (expected) returns. Of course, the ability to pass-through depends on a number of factors, including competitive conditions, the nature of the demand curve, and the company's cost structure. For a company like Apple, I am guessing that it is all pretty much passed-through.


    So if I understand what you are saying, is that Apple picks a figure that they want to end up with at the end of the year as post-tax profit and then works backwards to arrive at a price for their product that also includes the income tax they would owe?


     


    Honestly this doesn't make sense to me because that additional cost to the consumer will show up as more profit.

  • Reply 60 of 132
    rcfarcfa Posts: 1,124member
    The issue is that the US tax code is both ridiculously expansive trying to extend US jurisdiction beyond US borders AND full of loopholes made for politically well connected interests both corporate and private.

    And that's an insane combination.

    To single out Apple in that context is nothing but a publicity stunt.
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