[QUOTE name="MJ1970" url="/t/157633/apple-publishes-execs-opening-statements-from-us-senate-testimony#post_2330969"] Sickening? On what objective basis have you arrived at this conclusion (and this rate)? [/QUOTE]
Why do I need an objective basis, is the fact that I feel a bit sick not good cause for me as a free-minded individual to label something as sickening? I find a corporation having a lower effective corporation tax rate below the lowest individual income tax rate in my country to be pretty sickening.
$900m total overseas corporation tax paid. 60% of profits generated overseas. $41b total profit in 2012
A quick and dirty calculation gives $25b total overseas profit, of which $900m is less than 4%. Not a professional estimate, but a ballpark figure for my purposes.
Why do I need an objective basis, is the fact that I feel a bit sick not good cause for me as a free-minded individual to label something as sickening? I find a corporation having a lower effective corporation tax rate below the lowest individual income tax rate in my country to be pretty sickening.
You don't have to. At that point then, it's merely your personal feeling and opinion. Mine is different. It's not sickening to me at all. So there...we volleyed two feelings back and forth.
"The main subsidiary, a holding company that includes Apple's retail stores throughout Europe, has not paid any corporate income tax in the last five years, the report said.
Apple's arrangement has allowed it to pay just 1.9 percent tax on its $37 billion (24 billion pounds) in overseas profits in 2012, despite the fact that the average tax rate in the countries of the Organisation for Economic Co-operation and Development (OECD), its main markets, was 24 percent in 2012."
The holding company (Apple Operations International) is not liable for income tax so it's not that important - Tim had to keep repeating that. Apple is paying US taxes on the interest AOI makes but the interest is listed in their 10K filing as $522m in 2012 so it's not that they're talking about with the $900m, that's taxes on the profits of non-US operations, which is pretty low. There's a regional breakdown in the 10K:
and they have 5 subsidiaries managing various income. There's a lot of interesting numbers in that document actually. They even split up unit numbers. 4.6m desktops (25%), 13.5m laptops (75%), 35.1m iPods, 125m iPhones, 58m iPads. Revenue-wise, the iPhone is $80.4b out of $156.5b and the iPad is $32b so over 70% revenue is iOS and as Tim said in the hearing, their gross margins are higher on iOS devices. The iPod makes less than their desktop line now too.
European Corporation tax rates are around 25%, margins should be similar everywhere. China is the same. Their effective Corporation Tax rate overseas should be at least 5x what it is. Tim said it would be significantly higher this year. As long as he means the rate and not just the amount.
In what way? Frankly, I think the whole country would have rallied behind Cook.
Possibly. It would have been a gamble. There's a fairly strong anti-corporate/anti-capitalist/anti-rich sentiment/streak running through the culture these days. But you may be right. We'll never know.
Quote:
Originally Posted by anantksundaram
Moreover, if a company with the power and presence of Apple cannot or will not put these fools in their place, what hope is there for the rest of us?
"If we've broken the law, tell us what we did wrong and we'll fix it and pay any taxes and penalties due. If we didn't break the law, then get off our backs. If you don't like the flipping tax code, fix it instead of going on witch hunts against law-abiding companies." Then "Any other questions before I go back to California and do my job?"
I so wish he could and would have. The problem is, these guys are a bunch of fucking mafia goons. They would have gone after him and Apple.
In what way? Frankly, I think the whole country would have rallied behind Cook.
Moreover, if a company with the power and presence of Apple cannot or will not put these fools in their place, what hope is there for the rest of us?
><span style="color:rgb(24,24,24);font-family:arial, helvetica, sans-serif;line-height:18.1875px;"> His expectations for tax reform include around 25% US Corporate Tax rate and single digit repatriation tax rate.</span>
<span style="color:rgb(24,24,24);font-family:arial, helvetica, sans-serif;line-height:18.1875px;">Apple is dead wrong about this. Greedy. (Remember, as much as we love the products that they are ruthless as a business.)</span>
If the subsidiaries exist solely to provide a channel to evade tax I'd say that's a pretty absurd state of affairs.
Nonsense.
First, the subsidiaries do not exist for that reason. If you read Cook's statement, he specifically points out that they're REQUIRED to have subsidiaries in some countries in order to do business there. Furthermore, there's a significant benefit to the consumers to be dealing with the local company.
But even if you were true, why is it absurd? Apple is a public company. That means that providing the best return they can for shareholders is a key objective. So why shouldn't they operate in a way that's consistent with all laws but still provides more money for shareholders? If the countries receiving nearly a billion dollars in taxes don't like it, they're free to raise their tax rates or eliminate loopholes.
Apple is operating within the law - and they don't even skirt the law like some companies do (for example, Google's transferring of IP out of the country and then licensing it back at inflated rates). Criticizing them for obeying the law is ridiculous.
Forgive my stupidity... but do senate subcommittees ever call members of congress before them to justify THEIR actions??? I suspect that Apple has dozens (if not hundreds) of lawyers who study every loophole in every law to determine exactly what is legal. The problem is not the corporations that take advantage of laws, but the fact that congress has passed these laws that are designed to benefit these large CORPORATIONS. It seems to me that the guilt lies with the legislators that have proposed and passed the laws!!!
If Apple and other companies didn't take advantage of tax laws that benefit them, their stockholders would crucify them. ... And rightfully so!
It might be more productive to learn that (perhaps) Exxon-Mobil or JP Morgan influenced politicians to propose and pass laws that benefit corporations that keep money off-shore!!... As opposed to their normal action of grandstanding by summoning (possibly) law-abiding Americans (including sports figures or other celebrities, or anyone who can focus the media on these politicians!!) to testify and make the 'summoned' look guilty of being deceptive and dishonest. Congress... Look in the mirror for starters. Once we have confidence in your ethics, then you can start to throw stones!
(Sorry to indiscriminately throwing Exxon-Mobil and JP Morgan 'under the bus'... but is seems that there are many other corporations with more motivation to influence lawmakers that Apple!! Note: I'm actually not the biggest Apple fan in the world, but I do respect what they have accomplished!)
Forgive my stupidity... but do senate subcommittees ever call members of congress before them to justify THEIR actions??? I suspect that Apple has dozens (if not hundreds) of lawyers who study every loophole in every law to determine exactly what is legal. The problem is not the corporations that take advantage of laws, but the fact that congress has passed these laws that are designed to benefit these large CORPORATIONS. It seems to me that the guilt lies with the legislators that have proposed and passed the laws!!!
If Apple and other companies didn't take advantage of tax laws that benefit them, their stockholders would crucify them. ... And rightfully so!
It might be more productive to learn that (perhaps) Exxon-Mobil or JP Morgan influenced politicians to propose and pass laws that benefit corporations that keep money off-shore!!... As opposed to their normal action of grandstanding by summoning (possibly) law-abiding Americans (including sports figures or other celebrities, or anyone who can focus the media on these politicians!!) to testify and make the 'summoned' look guilty of being deceptive and dishonest. Congress... Look in the mirror for starters. Once we have confidence in your ethics, then you can start to throw stones!
(Sorry to indiscriminately throwing Exxon-Mobil and JP Morgan 'under the bus'... but is seems that there are many other corporations with more motivation to influence lawmakers that Apple!! Note: I'm actually not the biggest Apple fan in the world, but I do respect what they have accomplished!)
It was a waste of time, obvious to me they have nothing but fluff to stand on... but I did Like to see Tim Cook his appearances are far and few between.......Levine probably needs money for some more $14,000 toilets...
First, the subsidiaries do not exist for that reason. If you read Cook's statement, he specifically points out that they're REQUIRED to have subsidiaries in some countries in order to do business there. Furthermore, there's a significant benefit to the consumers to be dealing with the local company.
AOI and ASI have had a net income of over $100b since 2009. They have no employees. The sole purpose of these subsidiaries is to act as a legal owner of owner of product and IP so that both can be cleansed of any tax obligations. Computers and devices are bought from China cheaply and sold on to Europe expensively, and the existence of AOI allows them to pay almost zero (<1%) on the profit from that markup. ASI does a similar thing with IP. Products never go anywhere near there, an AOI employee never handles a product, and ASI doesn't employee any IP lawyers. It's Apple China selling to Apple Ireland then selling on to Apple EuropeanCountry, and avoiding tax at each step of the way.
No consumers ever deal with these companies, and they are not necessary in order for the company to do business there, Apple have a separate retail presence in Ireland.
Nonsense? It's very good sense, a very clever arrangement.
Quote:
Originally Posted by jragosta
But even if you were true, why is it absurd? Apple is a public company. That means that providing the best return they can for shareholders is a key objective. So why shouldn't they operate in a way that's consistent with all laws but still provides more money for shareholders? If the countries receiving nearly a billion dollars in taxes don't like it, they're free to raise their tax rates or eliminate loopholes.
Apple is operating within the law - and they don't even skirt the law like some companies do (for example, Google's transferring of IP out of the country and then licensing it back at inflated rates). Criticizing them for obeying the law is ridiculous.
I'm not criticising Apple. There's the AI defensiveness again. I'm criticisizing the state of affairs that has allowed Apple to do this. That's what's absurd. Apple shouldn't have been able to be this clever and avoid so much tax.
AOI and ASI have had a net income of over $100b since 2009. They have no employees. The sole purpose of these subsidiaries is to act as a legal owner of owner of product and IP so that both can be cleansed of any tax obligations. Computers and devices are bought from China cheaply and sold on to Europe expensively, and the existence of AOI allows them to pay almost zero (<1%) on the profit from that markup. ASI does a similar thing with IP. Products never go anywhere near there, an AOI employee never handles a product, and ASI doesn't employee any IP lawyers. It's Apple China selling to Apple Ireland then selling on to Apple EuropeanCountry, and avoiding tax at each step of the way.
No consumers ever deal with these companies, and they are not necessary in order for the company to do business there, Apple have a separate retail presence in Ireland.
Nonsense? It's very good sense, a very clever arrangement.
I'm not criticising Apple. There's the AI defensiveness again. I'm criticisizing the state of affairs that has allowed Apple to do this. That's what's absurd. Apple shouldn't have been able to be this clever and avoid so much tax.
Your statement "Computers and devices are bought from China cheaply and sold on to Europe expensively, and the existence of AOI allows them to pay almost zero (<1%) on the profit from that markup."
It seems, like Levin and McCain you totally ignore the repeated testimony by Apple that the sales occur in the various countries in Europe where the appropriate taxes are paid on those profits. The net proceeds are then transferred to Ireland.
What part of 'the income has already been taxed' are you missing? Do you think countries like Britain would allow Apple UK to collect revenues from sales tax free? What our esteemed American Congress want is to be able to do what amounts to double taxation. Ironically, the UK and USA have a tax treaty that allows me as an ex pat to not be double taxed on my income from the UK now I am resident in Florida where I choose to pay my taxes. Which all goes to show the US tax system is an absurd mix of complex and convoluted variances. The solution IMHO is for the US to move to a territorial tax system and avoid double taxation arguments. Then again I am no tax expert and perhaps there are better solutions.
Here is a mind boggling, brief break down of worldwide tax systems. I'm not surprised there are loopholes! ~
It seems, like Levine and McCain you totally ignore the repeated testimony by Apple that the sales occur in the various countries in Europe where the appropriate taxes are paid on those profits. The net proceeds are then transferred to Ireland.
What part of 'the income has already been taxed' are you missing? Do you think countries like Britain would allow Apple UK to collect revenues from sales tax free?
You've misinterpreted what happens, I think Tim Cook was quite disingenuous about this.
Apple Operations International (Ireland) buys iPhones from Apple, or Foxconn in China at cost. Apple Operations International then sells those iPhones to Apple UK, Apple Germany, Apple France etc for close to the retail price. The local Apple Incs then sell the iphones to consumer or carriers. The local Apple Incs will pay sales tax, will have some staffing so will pay payroll taxes, but the amount of profit they book for selling iPhones will be absolutely minimal, and corporate tax for the local Apple Inc will also be minimal.
Apple Operations International meanwhile books Scrooge McDuck level of profit, since they sold the iPhones for so much more than they bought them, when it actually hasn't done anything in the real world. The iPhones were shipped from Foxconn to the local Apple Incs, AOI had no hand in anything except as a nebulous "owner" of the products for a short while. They have no staff, they have no overheads, and since through a curiosity of Irish Law they aren't "controlled" from within Ireland, they don't have to pay any corporation tax there.
Apple as a holistic entity has pretty much avoided paying any corporation tax in the EU. And it's entirely legal, which is why Tim cook is able to say that Apple pays all of its tax obligations with a straight face.
In answer to your question about whether Britain would allow this, Britain is basically king of the hill when it comes to allowing tax haven abuse. This country sold out to multinationals many years ago. Yes, we would allow this, we are allowing this, and under current policy directions it looks like it's only going to get worse.
*Obviously where I've said iPhones in the narrative above, you can take it to mean any Apple hardware product.
Comments
Sickening? On what objective basis have you arrived at this conclusion (and this rate)?
[/QUOTE]
Why do I need an objective basis, is the fact that I feel a bit sick not good cause for me as a free-minded individual to label something as sickening? I find a corporation having a lower effective corporation tax rate below the lowest individual income tax rate in my country to be pretty sickening.
$900m total overseas corporation tax paid.
60% of profits generated overseas.
$41b total profit in 2012
A quick and dirty calculation gives $25b total overseas profit, of which $900m is less than 4%. Not a professional estimate, but a ballpark figure for my purposes.
Quote:
Originally Posted by Crowley
Why do I need an objective basis, is the fact that I feel a bit sick not good cause for me as a free-minded individual to label something as sickening? I find a corporation having a lower effective corporation tax rate below the lowest individual income tax rate in my country to be pretty sickening.
You don't have to. At that point then, it's merely your personal feeling and opinion. Mine is different. It's not sickening to me at all. So there...we volleyed two feelings back and forth.
What an unproductive exchange. We should form a government.
Quote:
Originally Posted by Crowley
What an unproductive exchange. We should form a government.
Nah. I don't steal and kill.
It was even worked out at less than 2% tax earlier last year:
http://www.guardian.co.uk/technology/2012/nov/04/apple-paid-low-overseas-tax
It wasn't immediately obvious at the time if they were confusing taxes Apple wasn't due to pay but this hearing was clearer:
http://www.zdnet.com/apple-congress-face-off-over-taxes-cook-testifies-7000015663/
"Johnson asked Bullock about tax paid in foreign countries. "Apple paid over $900 million in income tax in fiscal 2012.""
Their profit was $41b in 2012 and they said 60% of profits are overseas so even $900m of $24.6b = 3.6% rate.
Reports keep confusing it though:
http://uk.reuters.com/article/2013/05/21/uk-usa-tax-apple-ireland-idUKBRE94K0BJ20130521
"The main subsidiary, a holding company that includes Apple's retail stores throughout Europe, has not paid any corporate income tax in the last five years, the report said.
Apple's arrangement has allowed it to pay just 1.9 percent tax on its $37 billion (24 billion pounds) in overseas profits in 2012, despite the fact that the average tax rate in the countries of the Organisation for Economic Co-operation and Development (OECD), its main markets, was 24 percent in 2012."
The holding company (Apple Operations International) is not liable for income tax so it's not that important - Tim had to keep repeating that. Apple is paying US taxes on the interest AOI makes but the interest is listed in their 10K filing as $522m in 2012 so it's not that they're talking about with the $900m, that's taxes on the profits of non-US operations, which is pretty low. There's a regional breakdown in the 10K:
http://investor.apple.com/secfiling.cfm?filingID=1193125-12-444068
and they have 5 subsidiaries managing various income. There's a lot of interesting numbers in that document actually. They even split up unit numbers. 4.6m desktops (25%), 13.5m laptops (75%), 35.1m iPods, 125m iPhones, 58m iPads. Revenue-wise, the iPhone is $80.4b out of $156.5b and the iPad is $32b so over 70% revenue is iOS and as Tim said in the hearing, their gross margins are higher on iOS devices. The iPod makes less than their desktop line now too.
European Corporation tax rates are around 25%, margins should be similar everywhere. China is the same. Their effective Corporation Tax rate overseas should be at least 5x what it is. Tim said it would be significantly higher this year. As long as he means the rate and not just the amount.
Quote:
Originally Posted by anantksundaram
In what way? Frankly, I think the whole country would have rallied behind Cook.
Possibly. It would have been a gamble. There's a fairly strong anti-corporate/anti-capitalist/anti-rich sentiment/streak running through the culture these days. But you may be right. We'll never know.
Quote:
Originally Posted by anantksundaram
Moreover, if a company with the power and presence of Apple cannot or will not put these fools in their place, what hope is there for the rest of us?
That's the scary part.
In what way? Frankly, I think the whole country would have rallied behind Cook.
Moreover, if a company with the power and presence of Apple cannot or will not put these fools in their place, what hope is there for the rest of us?
Uh... What?
Quote:
Originally Posted by Marvin
The girl sitting behind McCain is hot so even if you don't like listening to tax reform, the videos are worth a look.
Works for me ;-)
Nonsense.
First, the subsidiaries do not exist for that reason. If you read Cook's statement, he specifically points out that they're REQUIRED to have subsidiaries in some countries in order to do business there. Furthermore, there's a significant benefit to the consumers to be dealing with the local company.
But even if you were true, why is it absurd? Apple is a public company. That means that providing the best return they can for shareholders is a key objective. So why shouldn't they operate in a way that's consistent with all laws but still provides more money for shareholders? If the countries receiving nearly a billion dollars in taxes don't like it, they're free to raise their tax rates or eliminate loopholes.
Apple is operating within the law - and they don't even skirt the law like some companies do (for example, Google's transferring of IP out of the country and then licensing it back at inflated rates). Criticizing them for obeying the law is ridiculous.
Hear hear.
If Apple and other companies didn't take advantage of tax laws that benefit them, their stockholders would crucify them. ... And rightfully so!
It might be more productive to learn that (perhaps) Exxon-Mobil or JP Morgan influenced politicians to propose and pass laws that benefit corporations that keep money off-shore!!... As opposed to their normal action of grandstanding by summoning (possibly) law-abiding Americans (including sports figures or other celebrities, or anyone who can focus the media on these politicians!!) to testify and make the 'summoned' look guilty of being deceptive and dishonest. Congress... Look in the mirror for starters. Once we have confidence in your ethics, then you can start to throw stones!
(Sorry to indiscriminately throwing Exxon-Mobil and JP Morgan 'under the bus'... but is seems that there are many other corporations with more motivation to influence lawmakers that Apple!! Note: I'm actually not the biggest Apple fan in the world, but I do respect what they have accomplished!)
Quote:
Originally Posted by jragosta
Nonsense.
First, the subsidiaries do not exist for that reason. If you read Cook's statement, he specifically points out that they're REQUIRED to have subsidiaries in some countries in order to do business there. Furthermore, there's a significant benefit to the consumers to be dealing with the local company.
AOI and ASI have had a net income of over $100b since 2009. They have no employees. The sole purpose of these subsidiaries is to act as a legal owner of owner of product and IP so that both can be cleansed of any tax obligations. Computers and devices are bought from China cheaply and sold on to Europe expensively, and the existence of AOI allows them to pay almost zero (<1%) on the profit from that markup. ASI does a similar thing with IP. Products never go anywhere near there, an AOI employee never handles a product, and ASI doesn't employee any IP lawyers. It's Apple China selling to Apple Ireland then selling on to Apple EuropeanCountry, and avoiding tax at each step of the way.
No consumers ever deal with these companies, and they are not necessary in order for the company to do business there, Apple have a separate retail presence in Ireland.
Nonsense? It's very good sense, a very clever arrangement.
Quote:
Originally Posted by jragosta
But even if you were true, why is it absurd? Apple is a public company. That means that providing the best return they can for shareholders is a key objective. So why shouldn't they operate in a way that's consistent with all laws but still provides more money for shareholders? If the countries receiving nearly a billion dollars in taxes don't like it, they're free to raise their tax rates or eliminate loopholes.
Apple is operating within the law - and they don't even skirt the law like some companies do (for example, Google's transferring of IP out of the country and then licensing it back at inflated rates). Criticizing them for obeying the law is ridiculous.
I'm not criticising Apple. There's the AI defensiveness again. I'm criticisizing the state of affairs that has allowed Apple to do this. That's what's absurd. Apple shouldn't have been able to be this clever and avoid so much tax.
Your statement "Computers and devices are bought from China cheaply and sold on to Europe expensively, and the existence of AOI allows them to pay almost zero (<1%) on the profit from that markup."
It seems, like Levin and McCain you totally ignore the repeated testimony by Apple that the sales occur in the various countries in Europe where the appropriate taxes are paid on those profits. The net proceeds are then transferred to Ireland.
What part of 'the income has already been taxed' are you missing? Do you think countries like Britain would allow Apple UK to collect revenues from sales tax free? What our esteemed American Congress want is to be able to do what amounts to double taxation. Ironically, the UK and USA have a tax treaty that allows me as an ex pat to not be double taxed on my income from the UK now I am resident in Florida where I choose to pay my taxes. Which all goes to show the US tax system is an absurd mix of complex and convoluted variances. The solution IMHO is for the US to move to a territorial tax system and avoid double taxation arguments. Then again I am no tax expert and perhaps there are better solutions.
Here is a mind boggling, brief break down of worldwide tax systems. I'm not surprised there are loopholes! ~
http://en.wikipedia.org/wiki/International_taxation
Quote:
Originally Posted by digitalclips
It seems, like Levine and McCain you totally ignore the repeated testimony by Apple that the sales occur in the various countries in Europe where the appropriate taxes are paid on those profits. The net proceeds are then transferred to Ireland.
What part of 'the income has already been taxed' are you missing? Do you think countries like Britain would allow Apple UK to collect revenues from sales tax free?
You've misinterpreted what happens, I think Tim Cook was quite disingenuous about this.
Apple Operations International (Ireland) buys iPhones from Apple, or Foxconn in China at cost. Apple Operations International then sells those iPhones to Apple UK, Apple Germany, Apple France etc for close to the retail price. The local Apple Incs then sell the iphones to consumer or carriers. The local Apple Incs will pay sales tax, will have some staffing so will pay payroll taxes, but the amount of profit they book for selling iPhones will be absolutely minimal, and corporate tax for the local Apple Inc will also be minimal.
Apple Operations International meanwhile books Scrooge McDuck level of profit, since they sold the iPhones for so much more than they bought them, when it actually hasn't done anything in the real world. The iPhones were shipped from Foxconn to the local Apple Incs, AOI had no hand in anything except as a nebulous "owner" of the products for a short while. They have no staff, they have no overheads, and since through a curiosity of Irish Law they aren't "controlled" from within Ireland, they don't have to pay any corporation tax there.
Apple as a holistic entity has pretty much avoided paying any corporation tax in the EU. And it's entirely legal, which is why Tim cook is able to say that Apple pays all of its tax obligations with a straight face.
In answer to your question about whether Britain would allow this, Britain is basically king of the hill when it comes to allowing tax haven abuse. This country sold out to multinationals many years ago. Yes, we would allow this, we are allowing this, and under current policy directions it looks like it's only going to get worse.
*Obviously where I've said iPhones in the narrative above, you can take it to mean any Apple hardware product.