As Apple holds $138B overseas, US Senate considers one-time tax break for repatriating cash

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Comments

  • Reply 101 of 112
    frank777frank777 Posts: 5,839member
    Quote:

    Originally Posted by hmm View Post

     



    They don't necessarily care in the way you seem to be suggesting(?). As I mentioned there's a tax credit that ensures they don't pay anything over the tax rate of the US by allowing credits directly against what they would otherwise owe. I worded it that way to distinguish it from write offs such as operating expenses.


     

    I understood what you meant.

     

    Quote:

    Originally Posted by Crowley View Post

     

    Because that's how the tax system works? 


     

    Which is the problem with the tax system.

     

    We authorized income taxes out of desperation to pay for a world war, and it created a never-ending government monster that now believes it's entitled to a cut of every single transaction on the planet simply because.

     

    Forget about the fact that even if Apple brought this money back into the country where it wasn't earned, they'd be spending it domestically and paying taxes on those transactions. Or just holding it in the bank, where it would generate funds for thousands of bank loans to homeowners and businesses. Or worst case scenario, giving it back to the shareholders, who would then pay taxes on it and then pay sales taxes again when they spend it. Whatever way, the government stands to get its cut many times over.

     

    So why are they taxing success abroad? The same federal administration is going to spend millions of dollars on other initiatives to encourage Americans to do business abroad and increase the country's exports.

     

    Maybe China is winning because they're not conflicted about whether success abroad is a good thing.

  • Reply 102 of 112
    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?

    You don’t have the first clue what you’re talking about. Stop spewing FUD.

    And start chewing the cud. ????
  • Reply 103 of 112
    A TAX HOLIDAY WAS GIVEN IN 2004 TO AMERICAN CORPORATIONS, NOTHING CAME OF IT THEN AND NOTHING WILL THIS TIME AROUND EITHER JUST ONE MORE SHAM.

    Define "nothing".

    No thing.
  • Reply 104 of 112
    hmmhmm Posts: 3,405member
    Quote:
    Originally Posted by Frank777 View Post

     

     

    I understood what you meant.




    Ah okay.

     

    Quote:


     

    Which is the problem with the tax system.

     

    We authorized income taxes out of desperation to pay for a world war, and it created a never-ending government monster that now believes it's entitled to a cut of every single transaction on the planet simply because.





    Quite a bit of it continued to go to fund the military after that into the Cold War. You are probably old enough to remember the economic downturn in areas that indirectly relied on military funding after the defense budget was cut post Cold War. Even today consider how many bases we maintain worldwide.

     

    Quote:


    Forget about the fact that even if Apple brought this money back into the country where it wasn't earned, they'd be spending it domestically and paying taxes on those transactions. Or just holding it in the bank, where it would generate funds for thousands of bank loans to homeowners and businesses. Or worst case scenario, giving it back to the shareholders, who would then pay taxes on it and then pay sales taxes again when they spend it. Whatever way, the government stands to get its cut many times over.



    While it's different in many countries, that isn't assessed at the national level in the US. Sales tax can be assessed at the state and municipality levels. There is however a certain amount of redundancy.

     

    I'm not sure what to say here. There are liabilities that must be funded. The really unfortunate thing is the amount consumed by interest payments once a government finds itself in any kind of major debt. I'll add that as Marvin pointed out, a lot of it is invested within the US, even though it belongs to foreign subsidiaries.

    Quote:

    Maybe China is winning because they're not conflicted about whether success abroad is a good thing.


    That is a strange anecdote, and it ignores a lot of actual problems. It's not always a matter finances. Regulations vary immensely between states and there are sometimes conflicts between different levels of bureaucracy. It's not always about cost, but I still find the comparison kind of strange given the aspects of it that you would probably not want to see in the US.

  • Reply 105 of 112
    MarvinMarvin Posts: 15,309moderator
    frank777 wrote: »
    So why are they taxing success abroad?

    Local US businesses are expected to pay corporation tax at 35%. If a US company is equally profitable outside the US but manages to circumvent taxation, they do better than the local company, which is an incentive to operate more outside the US than inside and they get an advantage in profit growth. Taxation is often seen as big business vs government but the rates have to be level to make it fair for small businesses. If Amazon pays 5% tax on half their earnings outside the US and 25% on the other half inside, their effective tax rate would be 15%. A small, exclusively local US company selling books might pay 30-35%.

    It's only coming out of their profits so it's not going to affect their product markup but it makes it easier for big businesses to grow faster than small ones as they can invest more profit in growth and the rates compound over the years. If you get to keep 85% of your profits and your competitor only gets to keep 65%, you have 30% more (85/65 = 1.3) investible profit every year. That 30% might mean one business can afford a more prominent store with more foot traffic or open more stores, hire more staff, buy more inventory at a better discount.

    It's anti-competitive to have larger companies paying lower rates of taxation. The advantage should always be to the small businesses to allow them to grow because the economy thrives on competition. It is ironic how some of the same people who promote competition and free markets as the ideal also promote monopolization of business and low tax rates for the wealthiest people and companies and prefer measures that keep poor people poor. Upwards mobility is a key element of competition and it requires fast asset growth for people at the bottom with slow asset growth for people at the top.

    Having a credit system for repatriation means that if a small local US business pays 35% tax, an international company paying 5% outside has to pay 30% repatriation tax and it levels the taxation between the two businesses.
  • Reply 106 of 112
    larrya wrote: »
    Really?
    For the deaf and blind, then:

    Www.allgov.com/news/unusual-news/six-republicans-vote-against-deficit-bill-they-sponsored?news=840267

    "senate Republicans Hit an All Time Low Blocking Bill They Unanimously Supported"
    Www.politicususa.com/2014/05/17/senate-republicans-hit-time-blocking-bill-unanimously-supported.html

    Now, where's the example of the reverse?

    Humph, I guess you are right. Republicans are the only ones that are partisan.
  • Reply 107 of 112
    larryalarrya Posts: 606member
    Humph, I guess you are right. Republicans are the only ones that are partisan.

    I suggest you take a remedial reading class.
  • Reply 108 of 112
  • Reply 109 of 112
    frank777frank777 Posts: 5,839member

    Doesn't that just give the small business an incentive to stay small and not export products?

  • Reply 110 of 112
    crowleycrowley Posts: 10,453member
    frank777 wrote: »
    Doesn't that just give the small business an incentive to stay small and not export products?
    Not at all. Businesses are motivated by profit. 65% retained is still profit worth chasing.
  • Reply 111 of 112
    MarvinMarvin Posts: 15,309moderator
    frank777 wrote: »
    Doesn't that just give the small business an incentive to stay small and not export products?

    You mean equalizing the tax rate via a repatriation tax would encourage a business to simply avoid operating internationally because they'd pay the same tax rate? They'd still make more profit. Apple makes more than half their revenue outside the US so even paying 35% tax on it, they are more than doubling their profits by operating internationally.

    That particular rate can make them less competitive in the countries they operate in that have lower corporation tax rates for companies local to that country. Many EU countries have mid-20% corporation tax rates so making US companies pay 35% collectively isn't ideal. However, the low single digit percent they actually pay is too far the other way. Nobody is even expecting Apple to pay the full rates, they don't pay near the full US rate but under 5% is clearly too little.

    If the US lowered their corporation tax rate to 25% for everyone (the biggest companies aren't paying more than this anyway) and Apple managed 15-20% outside the US, they'd have a 5-10% repatriation fee.
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