Corps profits are transferred to shareholders. Those shareholder then pay taxes on dividends and capital gains. Basically the Corporations tax burden is paid by shareholders. So why the hell does the Corp need to pay ADDITIONAL TAXES?
Unless I've missed something your tax obligation on dividends and capital gains derived from Apple stock ownership have little to no connection to Apple's corporate profits. If the two were even substantially connected then by extension Amazon stockholders would owe basically nothing on their stock profits. Nice try tho.
Lowering corporate income taxes alone will not significantly change the offshore manufacturing trend. As long as there is such a huge difference in cost of labor, pensions, social security, real estate, environmental regulations and other taxes, there will still be sufficient incentive for corporations to keep the manufacturing abroad.
Yes, it is not a magic ticket to Willy Wonka's factory, but it would make the US more competitive.
The US govt should skip the BS and kill the corporate tax on overseas earnings, which is basically what this achieves anyways.
The reason Apple (and other companies) has been hoarding cash abroad for so many years is precisely because of the previous tax "break".
They hoard it overseas to not pay the taxes on bringing it back and not to just wait for a holiday. If the holiday never comes, they will keep spending this money outside of the US as all of these companies have been. There are many reasons why US companies are expanding outside of the US. One large part is because that is where their money is. They would all expand more in the US if they had enough money here to do so. The latest problem is that they all started borrowing money in the US to fund dividends and buy-backs. Which further cripples their ability to expand in the US due to these stateside bonds they must pay for. The tax policy is Anti-US expansion and it is getting absurd.
I believe they should set up a pretty simple formula that companies can look for long term.
First the 35% tax should be lowered by overseas income taxes. If the overseas rate is 20% then the US rate should be 15% for earnings in that overseas company. To make it simpler, allow companies to deduct overseas income taxes from the US taxes on those incomes - but not from the companies' tax on US generated income.
That will basically give companies a fast break - unless those companies pull all profits into a tax haven and pay no taxes on overseas income. Or US income shifted overseas.
If you're talking about personal taxes, you can have a simplified tax system but still have progressive rates. Those who propose a flat tax or two rates, as you have, usually have in mind having poorer people pay much higher taxes. That's inherently unfair as poorer people spend much more of their income (frequently 98% of their income) on the basic necessities of life: shelter, food, clothing, medical and transportation to school or work.
In ZoetWorld, you would have a one- or two-page tax form, eliminating all schedules. You take your gross income from all sources (including dividends, capital gains, interest, pensions, etc.). You eliminate all deductions except medical, education and pre-tax 401Ks. Social Security income would only be taxed when it exceeds what you put in. You still have five rates. (In fact, with proper electronic reporting from the income sources as well as medical and education expenses, you wouldn't even need to file. The IRS could collect this information, subtract how much you paid whether in payroll taxes or quarterlies, and either refund the overage or send you a bill.)
Small business taxes should be simplified as well, but since it could never be as simple as personal taxes, personal taxes should be tackled first.
But it will never happen. Everyone is too hung up on the deductions that they take, even if their new tax bill would be the same or lower than it is today (and at the very least you'd save either accountant or software fees). So homeowners would fight to keep the mortgage interest deduction. Families would keep to fight dependent deductions. Investors would fight to keep the lower rates on capital gains. The accountants lobby would fight to kill any simplification at all as they have a vested interest in a very complex tax system. Etc.
I'll buy a ticket to ZoetWorld....much better system than what we have now. BTW, simplified/flat/two-tier tax systems usually have a 'rebate.' The taxes don't kick in until some agreed upon amount that basically exempts the poor from paying in. I'm not as knee-jerk sensitive to killing any idea because it will kill off the poor amongst us. There will always be programs and healthy debate about what to do about any system that increases hardship on those on the lower spectrum.
Because our ideas basically remove political favors from the tax code, I think simplification faces an uphill climb.
Is this before or after the Republicans impeach President Obama over Benghazi and Berghdahl?
If the Republican party hadn't spent the last 6 years showing an unprecedented level of hostility toward our President, vehemently opposing him at every turn to appease their bloodthirsty base, bipartisan initiatives such as tax reform could've passed long ago. That the American people even consider handing these neanderthals more power in November is frightening.
You could technically say it the other way around.
You could technically say it the other way around.
Fantasy. There's just no evidence to support that, but there have been plenty of instances where Republicans in congress opposed the legislation that they themselves sponsored because Obama was for it
Fantasy. There's just no evidence to support that, but there have been plenty of instances where Republicans in congress opposed the legislation that they themselves sponsored because Obama was for it
Any efforts to stymie and prevent the president AND the Congress from doing anything would be beneficial. Politicians should be quarantined and prevented from further harming the country.
Politicians should be quarantined and prevented from further harming the country.
Politics has been an essential part of the human experience since the beginning of civilization. Society needs governance in order to function. It would certainly work much better if everyone supported the process of governance instead of trying to impede it.
I like Buffet's idea:
BUFFETT: I can end the deficit in five minutes.You just pass a law that says that anytime there’s a deficit of more than 3% of GDP, all sitting members of Congress are ineligible for re-election. Now you’ve got the incentives in the right place.
Basically Apple is telling the government that we have cheated you out of taxes and now want amnesty.Letting Apple bring home this 138B will not create a single job that they where not already planning on creating. Its great for Apple but whats in it for America?
Your cluelessness means I will stop at this point in wasting any effort to reply your post. Get schooled.
What about taxing each corporation as you would an investment at the capital gains rate, but swap the terms?
Repatriate in under a year and you get the (lower) long term rate...over a year and you get the (higher) short term rate.
The rate could vary based on the corporations tax bracket, but minimum should be 5 or 10% so nobody is able to take advantage of the 0% tax in the 10-15% bracket... http://www.moneychimp.com/features/capgain.htm
were that true, the republican-controlled congress would have passed it into law, wouldnt they? didnt happen.
theyre both the same, they both want green.
You obviously don't know how the American government works. The Republicans do not control congress, they have a majority in the House of Representatives. However they do not have a majority in the Senate. Thus they can not simply "pass it into law". Furthermore even if they did have a majority in both houses of Congress they still can not simply pass a bill into law. The bill would need to be signed by the executive before it becomes law.
Reading these posts makes my head hurt, and there are simply too many for me to multi-quote and respond to each one, So I won't. I will however give my viewpoint on our tax system and ideas on reform. As others have mentioned, companies such as Apple have already paid the taxes on the income in the country the income was earned. Any tax on moving those incomes into the US is a deterrent to companies to do so. One of the only things I could see that would spur a company to pay an additional tax on moving those incomes into the US would be if the tax liability would be lower than the interest liability of issuing debt for capital investments.
Others have also mentioned a flat tax, two tier tax, etc. While some of these do have merits they also have several challenges that would need to be addressed as well. People have also mentioned a VAT, and continued on with how complex they are. However I believe a pure flat VAT on either side of the equation, and eliminating any other tax would result in the easiest method of taxation. For example applying this on the income side would result in the following:
When apple buys the flash memory for the latest iPhone, they pay Samsung $100 for the component and as Apple has not yet added any value they would not pay any tax in the US. They would still end up paying whatever tax they owe in South Korea for that part. However they then buy the sapphire cover from GT Advanced for $100. Apple has still not added any value to that component and as such would not pay any tax on it. In this case though, GT Advanced would pay the tax on the value that was added by their production of the component. The materials and capital used to make the component cost GT Advanced $25 so they added $75 of value by producing the component. Using a flat 10% for simplicity, GT Advanced would then pay $7.50 in VAT on that component. We will move this along by saying the iPhone is made up of only those two components. So Apple has now spent $200 on producing the iPhone. Now they sell that iPhone directly to you for $650. Thus Apple has now added $450 of value by producing the iPhone that you bought. Just as Apple did not pay a tax on the sapphire component, you would not pay a tax on buying the iPhone. Apple however would then pay $45.00 in VAT. Your income, in this example would be just like the sapphire component, and you would pay the tax on the value you produced by working. You would be in this sense a raw resource.
The other side of this would be a VAT on expenses. Which is in the end the same thing, it is simply changing who is paying the tax. Using the previous example, when Apple bought the sapphire component from GT Advanced, Apple would pay the $7.50. When you bought the iPhone, You would pay the $45.00 in VAT, however when Apple pays you for your labor, Apple would pay the 10% on the expense rather than you paying it on your income (which is the same number). On the income side you are paying the tax on the value you create, on the expense side you are paying the tax on the value the entity you're buying something from created.
No way. Corps should not pay less than the middle class tax payer. 10-15% is more appropriate.
That makes no sense.
Corps profits are transferred to shareholders. Those shareholder then pay taxes on dividends and capital gains. Basically the Corporations tax burden is paid by shareholders. So why the hell does the Corp need to pay ADDITIONAL TAXES?
That's the most convoluted, twisted-up, BS I've ever heard. Ridiculous.
?You could ultimately twist that line of "logic" into "there should be no income tax at all".
Fantasy. There's just no evidence to support that, but there have been plenty of instances where Republicans in congress opposed the legislation that they themselves sponsored because Obama was for it
Wow, your facts are amazing. Also your source, LarryA, is the most vetted and reputable source I've ever seen. /s
Basically Apple is telling the government that we have cheated you out of taxes and now want amnesty.Letting Apple bring home this 138B will not create a single job that they where not already planning on creating. Its great for Apple but whats in it for America?
Shouldn't the question be what's right, and not how can we leech off a successful company? This attitude is disturbing.
To paraphrase George F. Will, corporations do not pay taxes. They collect taxes. They pass them on to consumers as a cost of doing business.
I mean think about it - in a business every expense, including taxes, is what it costs the company to conduct its operations. Their only source of revenue is from their customers. It doesn't take a degree in math, economics, or anything else to see that, as Will said, the correct corporate tax rate is 0%. Maybe if America would do this then businesses themselves would be an import rather than an export for the country.
Also, if you're running a business and you have various options for how to structure and locate yourself and you choose anything other than the option that results in the lowest tax burden you are not cheating the government (unless you are breaking the law), you are cheating your stakeholders (and running your business from a mindset that will likely produce a crop of other decisions that will soon put you out of business).
Can you provide a reference to a specific part of the tax code which Apple violates?
Keep in mind, this percentage is on top of the taxes that were already paid in the jurisdiction in which the profit was earned.
Apple still pays the 35% rate on all income generated within the U.S. and whatever local taxes are required in other countries.
A 0% or other low rate is appropriate for money which has already been taxed elsewhere. Why should the U.S. collect any taxes on a sale of a product made in Europe?
We don't tax European companies that make sales in Europe, so it's a "technicality" on where the corporate headquarters are physically located that determines if they owe U.S. taxes.
Keep in mind, this percentage is on top of the taxes that were already paid in the jurisdiction in which the profit was earned.
Well that is a nice fantasy. See, there are many convoluted details to the accounting process. I'll only mention one for now.
For example, Apple USA transfers patents to their European corporation in Ireland, then Apple's Italian based sales division licenses these patents at a huge expense. So when it comes time to pay Italy their tax, the sales division claims that they made no profit in Italy because the license fees were so high. In this case, the income never gets taxed at all. Perfectly legal but not at all ethical in my opinion.
Comments
Unless I've missed something your tax obligation on dividends and capital gains derived from Apple stock ownership have little to no connection to Apple's corporate profits. If the two were even substantially connected then by extension Amazon stockholders would owe basically nothing on their stock profits. Nice try tho.
Yes, it is not a magic ticket to Willy Wonka's factory, but it would make the US more competitive.
Lol. The tax "break" is nothing but a sham.
The US govt should skip the BS and kill the corporate tax on overseas earnings, which is basically what this achieves anyways.
The reason Apple (and other companies) has been hoarding cash abroad for so many years is precisely because of the previous tax "break".
They hoard it overseas to not pay the taxes on bringing it back and not to just wait for a holiday. If the holiday never comes, they will keep spending this money outside of the US as all of these companies have been. There are many reasons why US companies are expanding outside of the US. One large part is because that is where their money is. They would all expand more in the US if they had enough money here to do so. The latest problem is that they all started borrowing money in the US to fund dividends and buy-backs. Which further cripples their ability to expand in the US due to these stateside bonds they must pay for. The tax policy is Anti-US expansion and it is getting absurd.
Quit the political nonsense. It's largely the Democrats that are against the repatriation tax holiday.
were that true, the republican-controlled congress would have passed it into law, wouldnt they? didnt happen.
theyre both the same, they both want green.
First the 35% tax should be lowered by overseas income taxes. If the overseas rate is 20% then the US rate should be 15% for earnings in that overseas company. To make it simpler, allow companies to deduct overseas income taxes from the US taxes on those incomes - but not from the companies' tax on US generated income.
That will basically give companies a fast break - unless those companies pull all profits into a tax haven and pay no taxes on overseas income. Or US income shifted overseas.
If you're talking about personal taxes, you can have a simplified tax system but still have progressive rates. Those who propose a flat tax or two rates, as you have, usually have in mind having poorer people pay much higher taxes. That's inherently unfair as poorer people spend much more of their income (frequently 98% of their income) on the basic necessities of life: shelter, food, clothing, medical and transportation to school or work.
In ZoetWorld, you would have a one- or two-page tax form, eliminating all schedules. You take your gross income from all sources (including dividends, capital gains, interest, pensions, etc.). You eliminate all deductions except medical, education and pre-tax 401Ks. Social Security income would only be taxed when it exceeds what you put in. You still have five rates. (In fact, with proper electronic reporting from the income sources as well as medical and education expenses, you wouldn't even need to file. The IRS could collect this information, subtract how much you paid whether in payroll taxes or quarterlies, and either refund the overage or send you a bill.)
Small business taxes should be simplified as well, but since it could never be as simple as personal taxes, personal taxes should be tackled first.
But it will never happen. Everyone is too hung up on the deductions that they take, even if their new tax bill would be the same or lower than it is today (and at the very least you'd save either accountant or software fees). So homeowners would fight to keep the mortgage interest deduction. Families would keep to fight dependent deductions. Investors would fight to keep the lower rates on capital gains. The accountants lobby would fight to kill any simplification at all as they have a vested interest in a very complex tax system. Etc.
I'll buy a ticket to ZoetWorld....much better system than what we have now. BTW, simplified/flat/two-tier tax systems usually have a 'rebate.' The taxes don't kick in until some agreed upon amount that basically exempts the poor from paying in. I'm not as knee-jerk sensitive to killing any idea because it will kill off the poor amongst us. There will always be programs and healthy debate about what to do about any system that increases hardship on those on the lower spectrum.
Because our ideas basically remove political favors from the tax code, I think simplification faces an uphill climb.
You could technically say it the other way around.
Good on Rand Paul for spearheading this, which is not mentioned in this story.
This should be permanent and the tax rate should be 5%.
I'm all for it as long as citizens get the same tax rate.
Fantasy. There's just no evidence to support that, but there have been plenty of instances where Republicans in congress opposed the legislation that they themselves sponsored because Obama was for it
Any efforts to stymie and prevent the president AND the Congress from doing anything would be beneficial. Politicians should be quarantined and prevented from further harming the country.
Politics has been an essential part of the human experience since the beginning of civilization. Society needs governance in order to function. It would certainly work much better if everyone supported the process of governance instead of trying to impede it.
I like Buffet's idea:
BUFFETT: I can end the deficit in five minutes.You just pass a law that says that anytime there’s a deficit of more than 3% of GDP, all sitting members of Congress are ineligible for re-election. Now you’ve got the incentives in the right place.
Basically Apple is telling the government that we have cheated you out of taxes and now want amnesty.Letting Apple bring home this 138B will not create a single job that they where not already planning on creating. Its great for Apple but whats in it for America?
Your cluelessness means I will stop at this point in wasting any effort to reply your post. Get schooled.
Repatriate in under a year and you get the (lower) long term rate...over a year and you get the (higher) short term rate.
The rate could vary based on the corporations tax bracket, but minimum should be 5 or 10% so nobody is able to take advantage of the 0% tax in the 10-15% bracket...
http://www.moneychimp.com/features/capgain.htm
were that true, the republican-controlled congress would have passed it into law, wouldnt they? didnt happen.
theyre both the same, they both want green.
You obviously don't know how the American government works. The Republicans do not control congress, they have a majority in the House of Representatives. However they do not have a majority in the Senate. Thus they can not simply "pass it into law". Furthermore even if they did have a majority in both houses of Congress they still can not simply pass a bill into law. The bill would need to be signed by the executive before it becomes law.
Reading these posts makes my head hurt, and there are simply too many for me to multi-quote and respond to each one, So I won't. I will however give my viewpoint on our tax system and ideas on reform. As others have mentioned, companies such as Apple have already paid the taxes on the income in the country the income was earned. Any tax on moving those incomes into the US is a deterrent to companies to do so. One of the only things I could see that would spur a company to pay an additional tax on moving those incomes into the US would be if the tax liability would be lower than the interest liability of issuing debt for capital investments.
Others have also mentioned a flat tax, two tier tax, etc. While some of these do have merits they also have several challenges that would need to be addressed as well. People have also mentioned a VAT, and continued on with how complex they are. However I believe a pure flat VAT on either side of the equation, and eliminating any other tax would result in the easiest method of taxation. For example applying this on the income side would result in the following:
When apple buys the flash memory for the latest iPhone, they pay Samsung $100 for the component and as Apple has not yet added any value they would not pay any tax in the US. They would still end up paying whatever tax they owe in South Korea for that part. However they then buy the sapphire cover from GT Advanced for $100. Apple has still not added any value to that component and as such would not pay any tax on it. In this case though, GT Advanced would pay the tax on the value that was added by their production of the component. The materials and capital used to make the component cost GT Advanced $25 so they added $75 of value by producing the component. Using a flat 10% for simplicity, GT Advanced would then pay $7.50 in VAT on that component. We will move this along by saying the iPhone is made up of only those two components. So Apple has now spent $200 on producing the iPhone. Now they sell that iPhone directly to you for $650. Thus Apple has now added $450 of value by producing the iPhone that you bought. Just as Apple did not pay a tax on the sapphire component, you would not pay a tax on buying the iPhone. Apple however would then pay $45.00 in VAT. Your income, in this example would be just like the sapphire component, and you would pay the tax on the value you produced by working. You would be in this sense a raw resource.
The other side of this would be a VAT on expenses. Which is in the end the same thing, it is simply changing who is paying the tax. Using the previous example, when Apple bought the sapphire component from GT Advanced, Apple would pay the $7.50. When you bought the iPhone, You would pay the $45.00 in VAT, however when Apple pays you for your labor, Apple would pay the 10% on the expense rather than you paying it on your income (which is the same number). On the income side you are paying the tax on the value you create, on the expense side you are paying the tax on the value the entity you're buying something from created.
-PopinFRESH
No way. Corps should not pay less than the middle class tax payer. 10-15% is more appropriate.
That makes no sense.
Corps profits are transferred to shareholders. Those shareholder then pay taxes on dividends and capital gains. Basically the Corporations tax burden is paid by shareholders. So why the hell does the Corp need to pay ADDITIONAL TAXES?
That's the most convoluted, twisted-up, BS I've ever heard. Ridiculous.
?You could ultimately twist that line of "logic" into "there should be no income tax at all".
Fantasy. There's just no evidence to support that, but there have been plenty of instances where Republicans in congress opposed the legislation that they themselves sponsored because Obama was for it
Wow, your facts are amazing. Also your source, LarryA, is the most vetted and reputable source I've ever seen. /s
Basically Apple is telling the government that we have cheated you out of taxes and now want amnesty.Letting Apple bring home this 138B will not create a single job that they where not already planning on creating. Its great for Apple but whats in it for America?
Shouldn't the question be what's right, and not how can we leech off a successful company? This attitude is disturbing.
To paraphrase George F. Will, corporations do not pay taxes. They collect taxes. They pass them on to consumers as a cost of doing business.
I mean think about it - in a business every expense, including taxes, is what it costs the company to conduct its operations. Their only source of revenue is from their customers. It doesn't take a degree in math, economics, or anything else to see that, as Will said, the correct corporate tax rate is 0%. Maybe if America would do this then businesses themselves would be an import rather than an export for the country.
Also, if you're running a business and you have various options for how to structure and locate yourself and you choose anything other than the option that results in the lowest tax burden you are not cheating the government (unless you are breaking the law), you are cheating your stakeholders (and running your business from a mindset that will likely produce a crop of other decisions that will soon put you out of business).
Can you provide a reference to a specific part of the tax code which Apple violates?
Apple still pays the 35% rate on all income generated within the U.S. and whatever local taxes are required in other countries.
A 0% or other low rate is appropriate for money which has already been taxed elsewhere. Why should the U.S. collect any taxes on a sale of a product made in Europe?
We don't tax European companies that make sales in Europe, so it's a "technicality" on where the corporate headquarters are physically located that determines if they owe U.S. taxes.
Keep in mind, this percentage is on top of the taxes that were already paid in the jurisdiction in which the profit was earned.
Well that is a nice fantasy. See, there are many convoluted details to the accounting process. I'll only mention one for now.
For example, Apple USA transfers patents to their European corporation in Ireland, then Apple's Italian based sales division licenses these patents at a huge expense. So when it comes time to pay Italy their tax, the sales division claims that they made no profit in Italy because the license fees were so high. In this case, the income never gets taxed at all. Perfectly legal but not at all ethical in my opinion.