Apple's Provision for Taxes (i.e., the amount of taxes that it thinks it owes, but hasn't sent a check yet, since different countries have different payment dates) for the first nine months is ~$10.9B or over 25%. Actual Cash Taxes Paid is ~$8.1B, or about 20% (nowhere near the 14% nonsense you claim). There will be some convergence of the two numbers by the end of the FY.
You really need to take a step back and ask yourself why you continue to be so relentlessly negative and pessimistic about Apple, constantly shading facts and data to suit some weird agenda. Especially for a guy whose tagline claims to be 'the supplier of truth'....
So instead of questioning Sog's figures you're accepting them as accurate. And to support that agenda you use 9 months from a calendar year, quote what Apple is provisioning so far instead of what they actually paid and claim that the 14% worldwide effective rate is FUD.?? Mirror, mirror. .
You really want to know the truth?
Why not use some real year-end figures showing Apple's cash payments for taxes, and even better show how those off-shore profits, some with no taxes paid to any government, are figured into them for tax purposes.. I'll wait.
The reality is Ireland, or any other EU country, can (and will) then pass additional tax laws which will apply to every company which meets the qualifications. In construction, the only companies which will qualify will be Apple, Microsoft, Google, etc.
Thats the problem with tax law. Unless it is constructed with strong economic principles consistent across multiple tax jurisdictions, it can and will be gamed. Taxes on production are inherently economically inefficient. In the end, counties will be forced to rely more upon consumption taxes because of the difficulty in determing the appropriate transfer value when measuring in which state profits were economically generated. Was it China where assembly was completed? How about where the various chips was manufactured? What about the country in which the chip was initially researched and developed? What about the countries in which the all the various IP was developed? How about the location where the software was replicated?
Determining at which point in product development, manufacturing and then assembly created what profit is impossible. There will eventually be a race to the bottom on corporate tax rates because countries really want the economic benefit from the companies in terms of employment and the multiple effect this employment has on the local economy. The corporate tax is inefficiently passed on to the end user anyway in the form of higher costs. Consumption taxes avoids the layering between manufacturing steps and captures the necessary tax revenue at the point value is given to the ultimate end user.
Yes, I can hear the conversation in Apple's board rooms grow excited. "Oh my gosh! I just read this letter from the EU. Does this mean we've been saving $9 billion dollars a year in taxes? Amazing, I never realized that. I thought we were just doing this Irish thing because we like those "4,000 people we employ in Cork."
That's, of course, nonsense. Apple knew precisely what it was doing. At issue is whether it needed a bit of illegal assistance from the Irish government to do that. If this loophole has a nasty gotcha like that, Apple and the other giant tax-evaders may be in trouble.
Do you drive past cheaper gas stations to go to a more expensive one? Or do you drive past the more expensive ones to get to a cheaper station? Why?
Nations have a Right to set their own tax laws as part of their national sovereignty. Everyone else, including businesses, has a natural right to order their own affairs for their own benefit within those laws.
The EU is just sore because Ireland is outcompeting them for business (taxes), so they're trying to tell Ireland to raise their prices. That's exactly like telling gas stations they have to raise prices because one of the stations want to make more money. That is simply wrong.
It's not quite that simple, because the EU pays subsidies to Ireland, so it has a direct financial interest. In your gas station analogy, it would be more equivalent to the situation where one gas station sells gas too cheaply, loses money and then claims subsidies from the others to make up for it. It's fine for nations to own their own tax strategy as long as it doesn't result in other nations having to subsidize them for their generosity.
Well, thus the advantages and disadvantages associated with being a member of a 'union', a nation (person) is subject to the trails, tribulations and joys of being part of a group. When in the course of experiences and self-intest, it should become necessary for a nation to suffer more than it benefits from being a group member, then it becomes time to consider getting a 'divorce'. If Ireland left the EU, would it be so bad for Ireland? Probably not, it existed well before joining the EU and it can/will survive if it were to leave the EU. A political phenomena since the close of WWII for western Europe has been the unbridled institutionalism and promotion of 'federation' (ala NATO, EU, UN, etc) - to subvert nationalism for the benefit off Federalism/collectivism. Yet such a political and economic proposition has not proven any better than the stand-alone, stove-pipe nationalism to which it has sought to exercise and eliminate. When Federalism succeeds it does so to the benefit of all, however, as per recent witness of events, when it fails it takes down al those associated with it.
The report is written in British legalese. Beliefs and views are common terms when putting across an argument. It's up for the judge to decide on the facts.
Interesting - an innocent until proven guilty idea perhaps?
I was thinking it should be more along the lines of "here are the facts as we understand them" and leave it to the judge and jury to decide if those facts constitute a violation of the law.
Or at the very least it seems more like a fishing expedition if you are not sure in advance that the law was violated.
It should help you understand a bit better if you actually take the time to read it. As a financial professional I'm sure you have access to Wiley Online.
If you want to know how Apple specifically uses income shifting to avoid taxation (and how the 14% effective rate claim is arrived at in detail) there's a paper for that too. Again it shouldn't be hard for you to determine if his methodology is accurate should it? http://www.olin.wustl.edu/docs/Faculty/Dyreng Markle 18Sept2013.pdf
Even I with only 4 years business school (3.5 technically, dang calculus!) understood that 2nd paper with ease. Let me us know if that 14% effective rate claim seems accurate now that you had time to study it.
The big corps in the EU can easily move to South America or various Islands. Apple has already done this on a small scale. There are litterally DOZENS of countires that will fall over themself to house big corps to exchange for jobs and even a 1% tax rate would net them hundreds of millions.
They can do this for their US operations, why not do it there too? It's because as Tim Cook said, they are happy to pay taxes in the US.
And why should Corps get taxed such high rates in the first place?
Apples tax rate is about 25% over the entire company.
But then the earnings get distributed to employees. They get TAXED ANOTHER 25-50%!!! So the combined tax rate is 50-75%!!!! Isn't that enough!
Earnings don't get distributed to employees after corporation tax. Employees are paid throughout the year and what remains at the end of the year is taxed.
Investors also get taxed TWICE. Dividends get taxed from 15-25% and capital gains from 15-30%. Again the combined tax is over 50%!!!
How much fuking tax do you need! Apple is not the problem. Its the waste of government funds and the corruption. By raising taxes on Apple all you are doing is allowing politicans to have MORE money to bribe and give to their crownies.
Investors can get taxed twice but 50% is not an unusual tax rate. There's an actor here who is happy to pay 50% tax:
I think 50% is a bit high but that only applies above a certain income. If you make a couple of million and the government leaves you with one million, what's the big deal? The rates are set to cover the government spending, which is high but because they employ people who would otherwise be out of work and not buying Apple products. It's all cyclical. Government salaries ought to be much lower than they are though.
The money doesn't go on 'corruption', they give breakdowns of spending:
About 3/4 of it is for healthcare, old people's pensions and unemployed, defence and debt to China. Hardly any is on the administration itself. Thing is if you cut defence, it'll cut jobs so increase costs in social security. The only reason healthcare is so high is the prices the pharmaceutical companies (private companies) set, it's not the government setting those prices but it's also linked to people living longer. Killing old people sooner would cut both.
The size of government spending is not a cause, it is an effect. The solution is to get rid of the problems requiring the spending. It's not education either so the idea some people have of privatising schools is a complete non-issue.
If the Greedy EU decide to do away with these arrangements then the advantages of Apple/Google etc become no advantage at all so they will just relocate back to USA and the EU countries will get nothing.
Where they'll pay a far higher rate so that's not such a good idea.
The total tax rate is 75-85%
Isn't that FRIKEN ENOUGHT!!!!
What are you talking about?
Apple's accounts for 2013 were:
revenue: $171b
cost of sales: $107b
R&D: $4.4b
selling, general & admin: $10.8b
pre-tax income: $50.1b
provision for income tax: $13.1b
net income: $37b
Effective tax rate = $13.1/$50.1 = 26% (according to the senate hearing, they don't actually pay this amount to the government though, that's the provision they write in the SEC filing).
Employee income tax is deducted from their selling, general & admin cost so it's not taxed double.
Sog35 is correct. You cannot look at the actual tax payments made and compare it to GAAP reported pretax income to derive the rate. Beyond the lag in quarterly payments to taxable income, you have timing differences from deductions. You also have the issue of deducting for equity awards which has a massive timing difference between book and tax.
With that said, the provision for GAAP reported pretax income is accurate for what taxing authorities will ultimately receive. Very few publicly traded companies (like zero) inflate their tax provision for window-dressing. This would artificially reduce reported net income and would haver a negative effect on stock price.
When you think about the abuses by governments with the incomprehensible gross mismanagement of tax revenues, resulting in a continuing, insatiable appetite to take more and more for their own reasons of control, I cannot ever get upset at any company or individual who works to minimize the tax they have to pay.
If there were serious spending reforms at all levels, cleansing systems from ridiculous expenditures, redundancy, lack of fiscal oversight, financial cronyism, political payoffs and more, then you'd likely see governments are already collecting far too much from individuals and businesses, not that they need more.
YES YES AND YES great post
they beech to get more bribes we are fools to keep electing these dogs in government massive debt ruining our children's future
Scotland should have left become free the big UK and EU fear......when you are not dependent their reason for existence goes away
I believe the point here is in in 1991, when Apple made their first agreement with Ireland, Apple's revenues were fairly minor, so any savings were commensurately minor. However, Apple's revenues are now huge and the whole tax business is becoming an embarrassment. As they say "an embarrassment of riches". Clearly, back in 2007, Apple realised their revenues and by default their tax savings, were growing almost exponentially...hence the second agreement or understanding, where Apple made sure their legal standing was still intact. The problem I feel is that the EU can decide against Apple/Fiat/Starbucks et al, almost ignoring the legalities of the case, because this has become a "political" affair. This may well come back to bite the EU ass, if the TTIP is brought into law.
Sog is correct about cash vs accrual but I believe his claim that Apple pays a 25% corporate tax rate on it's worldwide earnings under whichever method he chooses to use is far from correct, which is the point of contention. You might read thru this paper too for any inconsistencies or errors leading to the 14% effective tax rate claim.
This footnote from Apple's 2011 10-K puts some numbers in perspective as to tax liabilities. i'm sure there's a more recent one if anyone is intersted in looking.
"The foreign provision for income taxes is based on foreign pretax earnings of $24.0 billion, $13.0 billion and $6.6 billion in 2011, 2010 and 2009, respectively. The Company’s consolidated financial statements provide for any related tax liability on amounts that may be repatriated, aside from undistributed earnings of certain of the Company’s foreign subsidiaries that are intended to be indefinitely reinvested in operations outside the U.S. As of September 24, 2011, U.S. income taxes have not been provided on a cumulative total of $23.4 billion of such earnings. The amount of unrecognized deferred tax liability related to these temporary differences is estimated to be approximately $8.0 billion.
As of September 24, 2011 and September 25, 2010, $54.3 billion and $30.8 billion, respectively, of the Company’s cash, cash equivalents and marketable securities were held by foreign subsidiaries and are generally based in U.S. dollar-denominated holdings. Amounts held by foreign subsidiaries are generally subject to U.S. income taxation on repatriation to the U.S."
I have read this report before and reviewed it just now. The paper validates my earlier posting on this topic:
"The reality is Ireland, or any other EU country, can (and will) then pass additional tax laws which will apply to every company which meets the qualifications. In construction, the only companies which will qualify will be Apple, Microsoft, Google, etc.
That is the problem with tax law. Unless it is constructed with strong economic principles consistent across multiple tax jurisdictions, it can and will be gamed. Taxes on production are inherently economically inefficient. In the end, counties will be forced to rely more upon consumption taxes because of the difficulty in determing the appropriate transfer value when measuring in which state profits were economically generated. Was it China where assembly was completed? How about where the various chips was manufactured? What about the country in which the chip was initially researched and developed? What about the countries in which the all the various IP was developed? How about the location where the software was replicated?
Determining at which point in product development, manufacturing and then assembly created what profit is impossible. There will eventually be a race to the bottom on corporate tax rates because countries really want the economic benefit from the companies in terms of employment and the multiple effect this employment has on the local economy. The corporate tax is inefficiently passed on to the end user anyway in the form of higher costs. Consumption taxes avoids the layering between manufacturing steps and captures the necessary tax revenue at the point value is given to the ultimate end user."
?The report you referenced then attempted to draw differences from companies under capital constraint who are forced to pay higher local taxes because they have inadequate access to capital in higher tax jurisdictions.
The essence of their study is to validate that income shifting does exist, it has a negative impact on higher taxing jurisdictions, and the ultimate measurement of this impact is based upon where actual end user products were purchased (see my comment quoted above).
However, this report does not have anything to do with the difference between tax provisions on reported GAAP income and the timing of actual tax payments. It just validates income shifting does exist and non cash constrained companies have greater ability to income shift.
G However, this report does not have anything to do with the difference between tax provisions on reported GAAP income and the timing of actual tax payments. It just validates income shifting does exist and non cash constrained companies have greater ability to income shift.
I had added an edit to the post that you may have missed.
This footnote from Apple's 2011 10-K puts some numbers in perspective as to tax liabilities. i'm sure there's a more recent one if anyone is intersted in looking.
"The foreign provision for income taxes is based on foreign pretax earnings of $24.0 billion, $13.0 billion and $6.6 billion in 2011, 2010 and 2009, respectively. The Company’s consolidated financial statements provide for any related tax liability on amounts that may be repatriated, aside from undistributed earnings of certain of the Company’s foreign subsidiaries that are intended to be indefinitely reinvested in operations outside the U.S. As of September 24, 2011, U.S. income taxes have not been provided on a cumulative total of $23.4 billion of such earnings. The amount of unrecognized deferred tax liability related to these temporary differences is estimated to be approximately $8.0 billion.
As of September 24, 2011 and September 25, 2010, $54.3 billion and $30.8 billion, respectively, of the Company’s cash, cash equivalents and marketable securities were held by foreign subsidiaries and are generally based in U.S. dollar-denominated holdings. Amounts held by foreign subsidiaries are generally subject to U.S. income taxation on repatriation to the U.S."
How does that figure into worldwide effective tax rates or does it at all?
And thanks for reading the links and offering comment!
It is the EU's OPINION that Apple is receiving AID. Lets see if that stands up in court (of course it won't). An expert on the situation said this could take 5-10 years to be resolved. But the EU basically has ZERO chance of winning because the arrangement was in place since 1990 (friken 24 years ago!) yet they do nothing till now? If what Apple/Ireland was truly illegal its the EU that should also be fined for not doing there job and taking almost 25 years to 'uncover' the illegal activity.
This is 100% POLITICAL. The EU commissioners are up for re-election and their terms are about to end. They just want to show that they were doing something with the tens of millions they have been paid.
The EU can suck on a Cock (rooster). They have no power and they know it. If they somehow magically win this case every single Corporation headquarter in the EU will pull out. It would totally tank the EU when that happens. They know this, everyone does. No corporation will want to be in the EU if they can magically force you to pay MORE TAXES than you were LEGALLY OBLIGATED to. And the EU has the right to go back 25 YEARS!!! No way. NO F'ing way.
They want a piece of Apple's pie and if governments want it, they will find a way to get it. They run the courts and it would be career suicide for a judge to go against their bosses.
What you are missing is Apple has accrued for repatriation taxes in the event then bring foreign earnings back to the USA.
Well isn't that what I indicated when I first questioned your 25% tax rate claim? I don't see any way that Apple's actual taxes paid resulted in a 25% effective rate on their worldwide profits and apparently you don't find it to be fact either after taking another look.
Comments
You really want to know the truth?
Why not use some real year-end figures showing Apple's cash payments for taxes, and even better show how those off-shore profits, some with no taxes paid to any government, are figured into them for tax purposes.. I'll wait.
The reality is Ireland, or any other EU country, can (and will) then pass additional tax laws which will apply to every company which meets the qualifications. In construction, the only companies which will qualify will be Apple, Microsoft, Google, etc.
Thats the problem with tax law. Unless it is constructed with strong economic principles consistent across multiple tax jurisdictions, it can and will be gamed. Taxes on production are inherently economically inefficient. In the end, counties will be forced to rely more upon consumption taxes because of the difficulty in determing the appropriate transfer value when measuring in which state profits were economically generated. Was it China where assembly was completed? How about where the various chips was manufactured? What about the country in which the chip was initially researched and developed? What about the countries in which the all the various IP was developed? How about the location where the software was replicated?
Determining at which point in product development, manufacturing and then assembly created what profit is impossible. There will eventually be a race to the bottom on corporate tax rates because countries really want the economic benefit from the companies in terms of employment and the multiple effect this employment has on the local economy. The corporate tax is inefficiently passed on to the end user anyway in the form of higher costs. Consumption taxes avoids the layering between manufacturing steps and captures the necessary tax revenue at the point value is given to the ultimate end user.
Yes, I can hear the conversation in Apple's board rooms grow excited. "Oh my gosh! I just read this letter from the EU. Does this mean we've been saving $9 billion dollars a year in taxes? Amazing, I never realized that. I thought we were just doing this Irish thing because we like those "4,000 people we employ in Cork."
That's, of course, nonsense. Apple knew precisely what it was doing. At issue is whether it needed a bit of illegal assistance from the Irish government to do that. If this loophole has a nasty gotcha like that, Apple and the other giant tax-evaders may be in trouble.
Do you drive past cheaper gas stations to go to a more expensive one? Or do you drive past the more expensive ones to get to a cheaper station? Why?
Nations have a Right to set their own tax laws as part of their national sovereignty. Everyone else, including businesses, has a natural right to order their own affairs for their own benefit within those laws.
The EU is just sore because Ireland is outcompeting them for business (taxes), so they're trying to tell Ireland to raise their prices. That's exactly like telling gas stations they have to raise prices because one of the stations want to make more money. That is simply wrong.
It's not quite that simple, because the EU pays subsidies to Ireland, so it has a direct financial interest. In your gas station analogy, it would be more equivalent to the situation where one gas station sells gas too cheaply, loses money and then claims subsidies from the others to make up for it. It's fine for nations to own their own tax strategy as long as it doesn't result in other nations having to subsidize them for their generosity.
Well, thus the advantages and disadvantages associated with being a member of a 'union', a nation (person) is subject to the trails, tribulations and joys of being part of a group. When in the course of experiences and self-intest, it should become necessary for a nation to suffer more than it benefits from being a group member, then it becomes time to consider getting a 'divorce'. If Ireland left the EU, would it be so bad for Ireland? Probably not, it existed well before joining the EU and it can/will survive if it were to leave the EU. A political phenomena since the close of WWII for western Europe has been the unbridled institutionalism and promotion of 'federation' (ala NATO, EU, UN, etc) - to subvert nationalism for the benefit off Federalism/collectivism. Yet such a political and economic proposition has not proven any better than the stand-alone, stove-pipe nationalism to which it has sought to exercise and eliminate. When Federalism succeeds it does so to the benefit of all, however, as per recent witness of events, when it fails it takes down al those associated with it.
The report is written in British legalese. Beliefs and views are common terms when putting across an argument. It's up for the judge to decide on the facts.
Interesting - an innocent until proven guilty idea perhaps?
I was thinking it should be more along the lines of "here are the facts as we understand them" and leave it to the judge and jury to decide if those facts constitute a violation of the law.
Or at the very least it seems more like a fishing expedition if you are not sure in advance that the law was violated.
As a CPA yourself you'll no doubt fully understand this research on determining the real effective tax rate paid by Apple and others.
http://onlinelibrary.wiley.com/doi/10.1111/j.1475-679X.2009.00346.x/abstract;jsessionid=847E7C3C681AB779E444DD8A98D33EF6.f03t01?deniedAccessCustomisedMessage=&userIsAuthenticated=false
It should help you understand a bit better if you actually take the time to read it. As a financial professional I'm sure you have access to Wiley Online.
If you want to know how Apple specifically uses income shifting to avoid taxation (and how the 14% effective rate claim is arrived at in detail) there's a paper for that too. Again it shouldn't be hard for you to determine if his methodology is accurate should it?
http://www.olin.wustl.edu/docs/Faculty/Dyreng Markle 18Sept2013.pdf
Even I with only 4 years business school (3.5 technically, dang calculus!) understood that 2nd paper with ease. Let me us know if that 14% effective rate claim seems accurate now that you had time to study it.
They can do this for their US operations, why not do it there too? It's because as Tim Cook said, they are happy to pay taxes in the US.
Earnings don't get distributed to employees after corporation tax. Employees are paid throughout the year and what remains at the end of the year is taxed.
Investors can get taxed twice but 50% is not an unusual tax rate. There's an actor here who is happy to pay 50% tax:
https://uk.news.yahoo.com/robson-hits-tax-dodge-stars-230208140.html
I think 50% is a bit high but that only applies above a certain income. If you make a couple of million and the government leaves you with one million, what's the big deal? The rates are set to cover the government spending, which is high but because they employ people who would otherwise be out of work and not buying Apple products. It's all cyclical. Government salaries ought to be much lower than they are though.
The money doesn't go on 'corruption', they give breakdowns of spending:
About 3/4 of it is for healthcare, old people's pensions and unemployed, defence and debt to China. Hardly any is on the administration itself. Thing is if you cut defence, it'll cut jobs so increase costs in social security. The only reason healthcare is so high is the prices the pharmaceutical companies (private companies) set, it's not the government setting those prices but it's also linked to people living longer. Killing old people sooner would cut both.
The size of government spending is not a cause, it is an effect. The solution is to get rid of the problems requiring the spending. It's not education either so the idea some people have of privatising schools is a complete non-issue.
Where they'll pay a far higher rate so that's not such a good idea.
What are you talking about?
Apple's accounts for 2013 were:
revenue: $171b
cost of sales: $107b
R&D: $4.4b
selling, general & admin: $10.8b
pre-tax income: $50.1b
provision for income tax: $13.1b
net income: $37b
Effective tax rate = $13.1/$50.1 = 26% (according to the senate hearing, they don't actually pay this amount to the government though, that's the provision they write in the SEC filing).
Employee income tax is deducted from their selling, general & admin cost so it's not taxed double.
Gaotorguy,
Sog35 is correct. You cannot look at the actual tax payments made and compare it to GAAP reported pretax income to derive the rate. Beyond the lag in quarterly payments to taxable income, you have timing differences from deductions. You also have the issue of deducting for equity awards which has a massive timing difference between book and tax.
With that said, the provision for GAAP reported pretax income is accurate for what taxing authorities will ultimately receive. Very few publicly traded companies (like zero) inflate their tax provision for window-dressing. This would artificially reduce reported net income and would haver a negative effect on stock price.
When you think about the abuses by governments with the incomprehensible gross mismanagement of tax revenues, resulting in a continuing, insatiable appetite to take more and more for their own reasons of control, I cannot ever get upset at any company or individual who works to minimize the tax they have to pay.
If there were serious spending reforms at all levels, cleansing systems from ridiculous expenditures, redundancy, lack of fiscal oversight, financial cronyism, political payoffs and more, then you'd likely see governments are already collecting far too much from individuals and businesses, not that they need more.
YES YES AND YES great post
they beech to get more bribes we are fools to keep electing these dogs in government massive debt ruining our children's future
Scotland should have left become free the big UK and EU fear......when you are not dependent their reason for existence goes away
Clearly, back in 2007, Apple realised their revenues and by default their tax savings, were growing almost exponentially...hence the second agreement or understanding, where Apple made sure their legal standing was still intact.
The problem I feel is that the EU can decide against Apple/Fiat/Starbucks et al, almost ignoring the legalities of the case, because this has become a "political" affair.
This may well come back to bite the EU ass, if the TTIP is brought into law.
Sog is correct about cash vs accrual but I believe his claim that Apple pays a 25% corporate tax rate on it's worldwide earnings under whichever method he chooses to use is far from correct, which is the point of contention. You might read thru this paper too for any inconsistencies or errors leading to the 14% effective tax rate claim.
http://www.olin.wustl.edu/docs/Faculty/Dyreng Markle 18Sept2013.pdf
This footnote from Apple's 2011 10-K puts some numbers in perspective as to tax liabilities. i'm sure there's a more recent one if anyone is intersted in looking.
"The foreign provision for income taxes is based on foreign pretax earnings of $24.0 billion, $13.0 billion and $6.6 billion in 2011, 2010 and 2009, respectively. The Company’s consolidated financial statements provide for any related tax liability on amounts that may be repatriated, aside from undistributed earnings of certain of the Company’s foreign subsidiaries that are intended to be indefinitely reinvested in operations outside the U.S. As of September 24, 2011, U.S. income taxes have not been provided on a cumulative total of $23.4 billion of such earnings. The amount of unrecognized deferred tax liability related to these temporary differences is estimated to be approximately $8.0 billion.
As of September 24, 2011 and September 25, 2010, $54.3 billion and $30.8 billion, respectively, of the Company’s cash, cash equivalents and marketable securities were held by foreign subsidiaries and are generally based in U.S. dollar-denominated holdings. Amounts held by foreign subsidiaries are generally subject to U.S. income taxation on repatriation to the U.S."
You still don't know the difference between CASH and ACCRUAL accounting.
Your brain is stuck on CASH accounting.
No SEC company does that.
As a CPA yourself ...... blah blah blah
Groan.
You're laughably relentless and obdurate.
Good for you. You don’t matter any more than any other individual.
1. What right do you have to think this?
2. Who are you to dictate this?
3. Who are you to have the ability to say how much tax anyone but you pays in any situation?
1. Who are you to know whether Apple knows what to spend its money on?
2. What does Apple’s cash have to do with the argument you are making?
3. To how much of Apple’s money are you entitled and why? I want a specific dollar amount. Put it in Euro if that’s your fancy.
There is no skirting. Prove otherwise or shut up.
There is no rigging. Prove otherwise or shut up.
GatorGuy,
I have read this report before and reviewed it just now. The paper validates my earlier posting on this topic:
"The reality is Ireland, or any other EU country, can (and will) then pass additional tax laws which will apply to every company which meets the qualifications. In construction, the only companies which will qualify will be Apple, Microsoft, Google, etc.
That is the problem with tax law. Unless it is constructed with strong economic principles consistent across multiple tax jurisdictions, it can and will be gamed. Taxes on production are inherently economically inefficient. In the end, counties will be forced to rely more upon consumption taxes because of the difficulty in determing the appropriate transfer value when measuring in which state profits were economically generated. Was it China where assembly was completed? How about where the various chips was manufactured? What about the country in which the chip was initially researched and developed? What about the countries in which the all the various IP was developed? How about the location where the software was replicated?
Determining at which point in product development, manufacturing and then assembly created what profit is impossible. There will eventually be a race to the bottom on corporate tax rates because countries really want the economic benefit from the companies in terms of employment and the multiple effect this employment has on the local economy. The corporate tax is inefficiently passed on to the end user anyway in the form of higher costs. Consumption taxes avoids the layering between manufacturing steps and captures the necessary tax revenue at the point value is given to the ultimate end user."
?The report you referenced then attempted to draw differences from companies under capital constraint who are forced to pay higher local taxes because they have inadequate access to capital in higher tax jurisdictions.
The essence of their study is to validate that income shifting does exist, it has a negative impact on higher taxing jurisdictions, and the ultimate measurement of this impact is based upon where actual end user products were purchased (see my comment quoted above).
However, this report does not have anything to do with the difference between tax provisions on reported GAAP income and the timing of actual tax payments. It just validates income shifting does exist and non cash constrained companies have greater ability to income shift.
This footnote from Apple's 2011 10-K puts some numbers in perspective as to tax liabilities. i'm sure there's a more recent one if anyone is intersted in looking.
"The foreign provision for income taxes is based on foreign pretax earnings of $24.0 billion, $13.0 billion and $6.6 billion in 2011, 2010 and 2009, respectively. The Company’s consolidated financial statements provide for any related tax liability on amounts that may be repatriated, aside from undistributed earnings of certain of the Company’s foreign subsidiaries that are intended to be indefinitely reinvested in operations outside the U.S. As of September 24, 2011, U.S. income taxes have not been provided on a cumulative total of $23.4 billion of such earnings. The amount of unrecognized deferred tax liability related to these temporary differences is estimated to be approximately $8.0 billion.
As of September 24, 2011 and September 25, 2010, $54.3 billion and $30.8 billion, respectively, of the Company’s cash, cash equivalents and marketable securities were held by foreign subsidiaries and are generally based in U.S. dollar-denominated holdings. Amounts held by foreign subsidiaries are generally subject to U.S. income taxation on repatriation to the U.S."
How does that figure into worldwide effective tax rates or does it at all?
And thanks for reading the links and offering comment!
They want a piece of Apple's pie and if governments want it, they will find a way to get it. They run the courts and it would be career suicide for a judge to go against their bosses.
Well isn't that what I indicated when I first questioned your 25% tax rate claim? I don't see any way that Apple's actual taxes paid resulted in a 25% effective rate on their worldwide profits and apparently you don't find it to be fact either after taking another look.
http://www.nytimes.com/interactive/2013/05/25/sunday-review/corporate-taxes.html?_r=0
http://www.bloomberg.com/news/2013-05-23/apple-tax-rate-ignores-profit-shifting-offshore.html
http://seekingalpha.com/news/1036491
http://seekingalpha.com/news/1047151