Apple details 'extraordinary amount' of taxes it pays in testimony to US Senate

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  • Reply 21 of 51
    hill60hill60 Posts: 6,992member

    Quote:

    Originally Posted by Marvin View Post



    When they talk about competition, what they mean is that if they stop avoiding taxes, other companies that still avoid them will be in a better position. Everybody has to follow the lowest common denominator - same reason why they move manufacturing to China. The only way to fix it is on a global level.

    They put up a page on their website about this:



    http://www.apple.com/about/job-creation/



    Commendable but not the issue.


     


    Sack people so money currently paid in wages can be paid to the government in tax, ignoring the fact that all those employees contribute income and other taxes and the money they spend supports other industries.


     


    Definitely part of the issue.

  • Reply 22 of 51
    richlrichl Posts: 2,213member


    Quote:

    Originally Posted by Marvin View Post



    image Keep going, there's more tax havens than that. They're going full diversionary on this one.


     


    Oh, like, say Luxembourg? image

  • Reply 23 of 51
    mstonemstone Posts: 11,510member

    Quote:

    Originally Posted by anantksundaram View Post




    Investors don't give a hoot about a company's pre-tax returns. All they care about, in valuing a business, is after-tax cash flows and after-tax returns.



    For not caring about anything but after-tax returns, Apple investors sure make a big stink about criticizing management for not making a larger iPhone, a cheaper iPhone, a TV, a dividend and just about every other trivial day to day management issue. If stock price had only to do with after-tax returns Apple would be through the roof.

  • Reply 24 of 51
    herbapouherbapou Posts: 2,227member


    The senate just accused them of being thieves.  It doesn't matter if true or not, this will stick in people minds and hurt sales in the only place in the world Apple still had a decent market share. I hope Tim Cook can repair this but I think Apple reputation just took a hell of a blow.


     


    This is going to be all over the news and average Joe is not going to understand anything else other then Apple is making tax gimmicks.

  • Reply 25 of 51
    e_veritase_veritas Posts: 248member

    Quote:

    Originally Posted by anantksundaram View Post


    Investors don't give a hoot about a company's pre-tax returns. All they care about, in valuing a business, is after-tax cash flows and after-tax returns.


     


    Therefore, from an investor standpoint, corporate income taxes are indeed like a cost of doing business.



     


    Maybe I should have phrased my comment a little better. My main contention was with the notion that increased taxes will raise prices of products and services at the cash register. 

  • Reply 26 of 51
    e_veritase_veritas Posts: 248member

    Quote:

    Originally Posted by SpamSandwich View Post


     


    Costs are most definitely factored into the ultimate price of goods and services. Taxes are a liability and they are part of the calculation.



     


    Corporate taxes have nothing to do with the prices of goods and services. They are a liability that take place 'after the fact' and much farther downstream from operating expenses.

  • Reply 27 of 51
    ktappektappe Posts: 808member

    Quote:

    Originally Posted by icoco3 View Post


     


    And just who do you think pays those corporate taxes in the end????  Individuals pay ALL the taxes in this country as the tax burden is considered a cost of doing business and is reflected at the cash register.



     


    Taking a step back, what exactly is wrong with this? It's not as if money paid in taxes just disappears. As sequestration recently proved, it goes to ensuring someone's in the control tower at your local airport, or someone is inspecting your meat for contamination, or someone is rebuilding your local crumbling bridge. The only people who don't want to pay taxes are those who want something for nothing.

  • Reply 28 of 51
    anonymouseanonymouse Posts: 6,675member

    Quote:

    Originally Posted by SpamSandwich View Post


     


    The income tax is a failure that is riddled with exceptions and favors for groups. Mind you, I'm against all taxes, but real reform could be made in the form of the FairTax.



     


    A progressive income tax is the only tax that is actually fair. Everything else is just a scam designed by someone trying to get out of paying their fair share.  

  • Reply 29 of 51
    anonymouseanonymouse Posts: 6,675member

    Quote:

    Originally Posted by anantksundaram View Post


    Investors don't give a hoot about a company's pre-tax returns. All they care about, in valuing a business, is after-tax cash flows and after-tax returns.


     


    Therefore, from an investor standpoint, corporate income taxes are indeed like a cost of doing business.



     


    Not one that can be passed along to the consumer in many, perhaps most, cases, though. Consider Amazon's profits. Now, consider passing your corporate income tax along to the consumer as a price increase. Now consider how fast you are out of business.

  • Reply 30 of 51
    mdriftmeyermdriftmeyer Posts: 7,503member
    The single greatest change in economic fortune in the US was post WWII when effective tax rates for corporations were in excess of 50%. Then again, CEO pay was 378% less and corportions came to Congress to raise tax rates and allow internal R&D increases and much more.

    The country grew the Middle Class and then came the precursor to the Reagan years. By the time Reaganomics took hold the raping of the nation's wealth was in full force. Bush 1.0/2.0 just amplified it.
  • Reply 31 of 51
    mdriftmeyermdriftmeyer Posts: 7,503member

    Quote:

    Originally Posted by Brian Jojade View Post


    Any taxes levied on corporations result in higher priced products, period.  They aren't simply going to reduce their profits by that much.  It comes into the calculation of what they need to charge to survive.  Over tax the local corporations, and out of country corporations suddenly have a huge advantage and can undercut the local businesses.


     


    I'm all for taxing anyone that generates income on an individual basis, including profits from capital gains, stocks, etc.  But to simply tax a corporation on its profits doesn't solve a thing.



     


    That's the biggest con of all. If that were the case, the massive effective tax rates on the auto industry during the Truman, Eisenhower, Kennedy and Johnson period would have seen all commodities, luxury items raised out of sight.


     


    Try something with real facts. What has changed is the effective tax rates these jokers pay and the incentives they have to off-shore their wealth. Cut those out and level the regulation playing field, to denying large consolidations in any industry and these ass clowns cash out and let other people take over the reigns.

  • Reply 32 of 51
    bugsnwbugsnw Posts: 717member


    If we are going to tax corporate income, we should head towards a much lower rate and broaden the base so everyone (with income) pays something. No industry should receive political favors as once that starts, we end up with the labyrinth code that we have now.


     


    Politicians don't like flat/simple tax solutions because it removes them from giving favors and getting elected. But we should do just that.


     


    Or we can move to a consumption tax and forget about taxing income altogether.


     


    A flat tax can be made more progressive with higher exemptions or even multiple rates (which is still flatter than how we tax now).


     


    Growth and fairness should be the goal.


     


    Apple would repatriate those earnings back if given a tax holiday. That means the tax code is creating an undesirable behavior. Complex/high taxes tend to do that. We see this destructive behavior with many of our clients. Behavior that would diminish or disappear if the code was simplified.

  • Reply 33 of 51
    tribalogicaltribalogical Posts: 1,182member

    Quote:

    Originally Posted by SpamSandwich View Post


     


    The income tax is a failure that is riddled with exceptions and favors for groups. Mind you, I'm against all taxes, but real reform could be made in the form of the FairTax.



     


    The "Fair Tax" is actually a VERY regressive tax that essentially rewards the wealthiest and hits the poor the hardest. I love these creative names for egregious things, like this "Fair Tax" (equal to a very unfair, across-the-board regressive flat tax), or the "Patriot Act" (which very unpatriotically impeded portions of our rights).


     


    I'm not against "all taxes", in fact, I'd like to revert to the original Constitutional tax structure, as envisioned by the founding fathers… no income tax, most revenue pulled from commerce (huh, corporations… what do you know), real property, import/export and excise taxes.


     


    Sales taxes are equally regressive, and hurt the poorest among us (e.g. when you NEED to spend all your income to survive, you end up paying a higher percent of your income in tax than someone who only needs to spend a small portion of their income. Get that?).


     


    Our GDP was something in the neighborhood of $14 Trillion last year? If corporations contributed most of that, then why aren't they paying more than 10% of the tax burden?

  • Reply 34 of 51
    e_veritase_veritas Posts: 248member

    Quote:

    Originally Posted by Brian Jojade View Post


    Any taxes levied on corporations result in higher priced products, period.  They aren't simply going to reduce their profits by that much.  It comes into the calculation of what they need to charge to survive. 



     


    Someone needs to put the Koch Kool-aid down. Let's say I have a lemonade stand that makes $100, and I am taxed at an effective rate of 20%; thereby paying $20 to Uncle Sam and keeping $80 for myself. Now let's take that same scenario, but increase the effective rate to 35%. According to you, for me to make my same $80, I would need to raise my prices in a manner that would have me make $123 in profit. But this is where you argument falls apart!


     


    If it was possible for my lemonade stand to simply raise prices to make $123 in profit, why wouldn't I have done so already? If I was a half-way decent lemonade stand owner, I would already have my product priced to be maximizing profits; regardless of my tax rate. You think corporations need the excuse of 'I need to compensate for my tax burden' to raise prices if it will yield higher profit? You seem to suggest that corporations are simply in business to make enough profit to meet a 'minimum floor', but that is not the case. I don't know of a single corporation whose sole objective isn't to MAXIMIZE profit.

  • Reply 35 of 51
    MarvinMarvin Posts: 14,737moderator
    While you are at it why not include the percentage of people who pay no taxes just to be fair?

    They have had a word with other tech companies already, this is just Apple's turn. They should be including GE though, they're doing it worse:

    http://www.huffingtonpost.com/2013/03/11/general-electric-taxes_n_2852094.html

    They say the same thing: " GE CEO Jeff Immelt has said that the U.S. tax system is "old, complex and uncompetitive" and has had a "hugely negative impact" on the economy."

    What rate do you have to bring it down to though in order for people to voluntarily pay more than they pay now? They're already not paying the rate so what difference does it make bringing it down?
    hill60 wrote:
    Sack people so money currently paid in wages can be paid to the government in tax, ignoring the fact that all those employees contribute income and other taxes and the money they spend supports other industries.

    Definitely part of the issue.

    Wages are parts of the costs of running the company though so if you fire an employee, you not only lose any revenue generated by their employment (employees are generally supposed to pay for themselves and more by the work they do - http://royal.pingdom.com/2011/05/17/apple-staff-profit-per-head/ ), you then have that salary amount as taxable profit.

    You would have to assume that employees are strictly an expense and that Apple could have generated $40b profit per year without them. Apple only has 50,000 main staff too. Getting rid of the store employees wouldn't even make a dent on their tax bill.

    There's an article here detailing some of the specific issues:

    http://www.ft.com/cms/s/0/9d3e8e8c-c177-11e2-b93b-00144feab7de.html#axzz2TsB2DoVQ

    “Apple sought the Holy Grail of tax avoidance,” said Carl Levin, the Democrat who chairs the panel and will lead the hearing. “It has created offshore entities holding tens of billions of dollars, while claiming to be tax resident nowhere.”

    The Senate report said Apple’s elaborate use of loopholes for international profits allowed it to save tax on $44bn in “otherwise taxable offshore income” in the past four years. But committee staff said there was no indication that Apple had done anything illegal in attempting to minimise its tax bill.

    The company denied that Apple Operations International, an Irish unit, was a “shell company”, arguing that the entity had been set up to manage its “global flow of funds” and that its activities did not reduce Apple’s US taxes.

    AOI generated profits of $30bn between 2009 and 2012 but did not file a tax return either in Ireland or the US in the past five years. Established in 1980, AOI holds board meetings in the US but has no physical presence or employees.

    Apple also defended its practice of shifting part of the costs of its research and development to Ireland, even though it conducts “virtually all” of the work in the US – a technique that was attacked as a tax-avoidance scheme by the committee. The arrangement was “authorised by US law and complies with all US regulations”, Apple said.

    Apple is the third big US technology group to face scrutiny from the Senate investigations panel after Microsoft and Hewlett-Packard."

    The fact that they keep suggesting it's all legal is just going to annoy them more. If most of your R&D happens in the US, it might be legal to declare it in Ireland but only if it happened in Ireland. There's not really any way to check up on it though, which is what the companies bank on. A great number of things like property depreciation is very difficult to check, especially with a company like Apple's. Imagine an audit process where they have to fly out to Ireland and Luxembourg and check out every post box hidden away in the middle of nowhere. Big companies know they won't do this but to keep suggesting it's all legal and essentially blaming the law makers for letting them get away with it isn't right. Laws rely on people being ethical because some things just aren't easy to check up on.
  • Reply 36 of 51
    adonissmuadonissmu Posts: 1,774member


    I think the Senate is grandstanding on this issue when there are much more important issues than how much taxes Apple is avoiding legally.

  • Reply 37 of 51
    jungmarkjungmark Posts: 6,918member
    herbapou wrote: »
    The senate just accused them of being thieves.  It doesn't matter if true or not, this will stick in people minds and hurt sales in the only place in the world Apple still had a decent market share. I hope Tim Cook can repair this but I think Apple reputation just took a hell of a blow.

    This is going to be all over the news and average Joe is not going to understand anything else other then Apple is making tax gimmicks.

    Congress has approval rates < 30% if I'm not mistaken. The average Joe couldn't name their representative.
    Nothing but grandstanding.
    The "Fair Tax" is actually a VERY regressive tax that essentially rewards the wealthiest and hits the poor the hardest. I love these creative names for egregious things, like this "Fair Tax" (equal to a very unfair, across-the-board regressive flat tax), or the "Patriot Act" (which very unpatriotically impeded portions of our rights).

    I'm not against "all taxes", in fact, I'd like to revert to the original Constitutional tax structure, as envisioned by the founding fathers… no income tax, most revenue pulled from commerce (huh, corporations… what do you know), real property, import/export and excise taxes.

    Sales taxes are equally regressive, and hurt the poorest among us (e.g. when you NEED to spend all your income to survive, you end up paying a higher percent of your income in tax than someone who only needs to spend a small portion of their income. Get that?).

    Our GDP was something in the neighborhood of $14 Trillion last year? If corporations contributed most of that, then why aren't they paying more than 10% of the tax burden?

    In many states, necessary items (unprepared food, clothes, paper goods, meds) are non-taxable. I think a flat-ish tax of some sort plus a consumption tax would be the way to go.
  • Reply 38 of 51
    All those claiming that corporations don't need to pay anymore, please tell me why Exxon-Mobil paid only 13% in taxes in 2011. Well it is because our government chooses to return nearly 60% of the initial 35% back out of its own coffers. The largest most profitable company pays nothing near the listed 35% for a company of their bracket. US tax rates are supposedly astronomical compared to other countries - not when they end up paying 13% through loopholes and subsides. Their fare share is explicit, but tax brakes make many companies pay even less or near zero. End corporate welfare. We need to end the subsidy. Period.
  • Reply 39 of 51
    davendaven Posts: 636member

    Quote:

    Originally Posted by Brian Jojade View Post


    Any taxes levied on corporations result in higher priced products, period.  They aren't simply going to reduce their profits by that much.  It comes into the calculation of what they need to charge to survive.  Over tax the local corporations, and out of country corporations suddenly have a huge advantage and can undercut the local businesses.


     


    I'm all for taxing anyone that generates income on an individual basis, including profits from capital gains, stocks, etc.  But to simply tax a corporation on its profits doesn't solve a thing.



     


    I disagree.  Corporations price their products at the maximum price consumers will pay.  Taxing a corporation will not increase the price of a product.  It is already the maximum the consumer will pay.


     


    Also, remember that one of the famous quotes from Mit Romney (for those outside the USA, he was the opposition Presidential candidate in the last election) was that "Corporations are people too my friend." So why should they get all the tax breaks?


     


    That said, I think the reality is that we will need to go to VAT system as the current system is broken.

  • Reply 40 of 51
    jessijessi Posts: 302member
    The idea that "Corporations" pay taxes separately from "individuals" is silly. Corporations are just groups of people.

    The problem is not that corporate taxes are "only" $250B, it's that income tax is an additional $2.2 Trillion.

    The federal government should be able to "live" off a budget of $250B a year. It should do everything it needs to do on that.

    This shows that %90 of the money they take (plus the deficits they spend on top of that) is simply wasted or stolen.

    Plus, what do Politicians pay in taxes? Most of their income is tax free, plus they get lots of perks, and get to spend OUR TAX MONEY to benefit themselves.... which is a total scam.

    Where's the investigation of the fact that politicians pass laws that they then exclude themselves from? For instance, congress and the administration are not forced to live under the burdens of "obamacare", which means they get to keep their "cadillac health plans" which they also don't ever pay for (or pay taxes on!)

    Of course they're going to go after Apple-- that's where the money is.

    They don't care that the US government has no moral right to money earned overseas for products made overseas and sold overseas.

    They're just greedy.

    People talk about corporations being greedy but they all make something that people want. And if people don't wnat it, they don't force you to buy it.

    The government makes things people don't want, and if you don't buy it, they send you to jail.

    No politician has any room to talk about people shirking their duties.... hypocrites!
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