Apple to raise $3.5 billion from euro debt at some of the lowest interest rates in history

124»

Comments

  • Reply 61 of 74
    plovellplovell Posts: 819member
    Quote:

    Originally Posted by Entropys View Post





    I'd call that being taxed twice.



    Look at it another way. When you bring the money back to the U.S. you get your original payment back (not in reality, but as a credit) and then pay just the U.S. tax. 

     

    So you're not paying full-rate tax twice, which is most people understand by the term "double taxation". Note that this DOES occur in some situations but not in this one. Here you pay no more, but no less, than if the money had come directly.

  • Reply 62 of 74
    gatorguygatorguy Posts: 23,509member
    plovell wrote: »
    Sort of. It was "subject to tax" but in a place where the tax rate was zero. So there has not been a tax payment on it, but it has been "taxed" because it was subject to tax.

    A subtle point but one much loved by corporate tax advisers.
    Actually no isn't it since some (most?) funds are controlled by Apple subsidiaries with no employees that answer to no taxing authority whatsoever?
  • Reply 63 of 74
    Originally Posted by anantksundaram View Post

    He simply means taxation of worldwide -- as opposed to territorial -- income. Given that the US tax rate is 35%, what he's saying is, it's first taxed (at say, 20%) abroad, and then it's taxed for a second time (an extra 15%) when it gets to the US. I.e., it's "taxed twice."



    Originally Posted by Gatorguy View Post

    Well I'm not certain that's what he meant which is why I replied.

     

    Correct; sorry for the confusion. My main point was in calling out the “thought” (it’s too stupid to be called that, really) that Apple is in any capacity ‘in the wrong’ for not repatriating the money.

  • Reply 64 of 74
    gatorguygatorguy Posts: 23,509member
    Correct; sorry for the confusion. My main point was in calling out the “thought” (it’s too stupid to be called that, really) that Apple is in any capacity ‘in the wrong’ for not repatriating the money.
    IMHO Apple is not in the wrong at all for leaving much of their cash overseas.
  • Reply 65 of 74
    gatorguy wrote: »
    He simply means taxation of worldwide -- as opposed to territorial -- income. Given that the US tax rate is 35%, what he's saying is, it's first taxed (at say, 20%) abroad, and then it's taxed for a second time (an extra 15%) when it gets to the US. I.e., it's "taxed twice."e."

    Well I'm not certain that's what he meant which is why I replied. In addition more than a few folks are confused by this and assume when they see "taxed twice" it would be another 35% in taxes on top of the foreign taxes already paid, That actually would be double-taxation if it happened. Which it doesn't.

    1) Who here said its 35% on top of what was paid abroad? It's possible I missed it.

    2) Did someone use the term 'double taxation'? They may have, I am asking a factual question.
  • Reply 66 of 74
    gatorguy wrote: »
    plovell wrote: »
    Sort of. It was "subject to tax" but in a place where the tax rate was zero. So there has not been a tax payment on it, but it has been "taxed" because it was subject to tax.

    A subtle point but one much loved by corporate tax advisers.
    Actually no isn't it since some (most?) funds are controlled by Apple subsidiaries with no employees that answer to no taxing authority whatsoever?

    The cash might be lying around in zero-tax jurisdictions like Singapore, but it is after-tax cash. Most places where Apple sells its products have tax rates in the 15%-25% range (although the effective rate is lower).
  • Reply 67 of 74
    Much as I love Apple and admire its ability to grow a huge cash pile, "repatriating it to buy back shares or issue dividends would cost the company a considerable sum in U.S. taxes" is a slap in the face to all those Apple customers who do not have such a choice about whether they pay their taxes or not; well, they can choose not to pay them but that way they end up in prison.

    @mazecookie You are getting confused between BORROWING (which Apple is doing with the bond issue) and lending (which is what banks do when they give us a mortgage or car loan).
  • Reply 68 of 74
    jony0jony0 Posts: 368member


     


    Quote:

    Originally Posted by anantksundaram View Post

     

    1) What would be the motive of such a purchase? To avoid paying taxes to the IRS and yet do a US share repurchase? If so, the short answer is, it's not possible.

     

    2) If something is bought by Apple's subsidiary abroad, it will not count as 'Apple Inc's' purchase if the purpose is to return money to shareholders via a dividend, repurchase, etc.

     

    Bottom line is, there's no simple way around this. The only options are: (i) Buy non-US assets; (ii) Leave it there forever; (iii) Bring it back and pay the differential in tax; (iv) Negotiate a lower rate with the US government.


     

    1) The motive would be twofold.


    • On the one hand, their huge cash reserves are gathering dust in the form of a paltry 1% or so interest, so it could be used for something more profitable, albeit riskier, like buying stocks. AAPL would be an attractive and relatively low risk choice and potentially more profitable.

    • On the other hand, they are paying interest for borrowing a small fraction of the money they already have which is doing relatively nothing. Even though it is low interest, it is still costing them more money to use other people's cash rather than making more money with their own free cash. It just seems like a win-win to me, there's still something I don't get.

        So the short answer is yes, to avoid paying taxes to the IRS and yet do a US share repurchase and even make more money.

     

    2) I didn't think that it would count as 'Apple Inc's' purchase if the purpose is to return money to shareholders via a dividend, repurchase, etc. Which means that they wouldn't pay the differential tax does it not ?

     

    I appreciate the time you're taking to answer my question but I'm still puzzled. Please bear with me as I am unfamiliar with international accounting and tax laws. You wrote that it's not possible to avoid taxes in 1) but then in 2) you say that it will not count as 'Apple Inc's' purchase which I understand as meaning that it would be avoiding taxes. What am I missing ?

  • Reply 69 of 74
    gatorguygatorguy Posts: 23,509member
    The cash might be lying around in zero-tax jurisdictions like Singapore, but it is after-tax cash. Most places where Apple sells its products have tax rates in the 15%-25% range (although the effective rate is lower).

    Oh, not nearly that far away. According to official records most of it, $100B+, is sitting safely in New York banks, the accounts controlled by overseas Apple subsidiaries with no tax residency anywhere on the planet. That never-taxed money is off-shore only as regards tax accounting.

    Lots of companies do much the same thing to avoid taxes, all perfectly legal as far as the IRS is concerned.
  • Reply 70 of 74
    dysamoriadysamoria Posts: 3,430member

    You should do the same by immediately pulling all the money out of your 401(k) and paying the taxes on that money.  How dare you defer taxes, which is all Apple is doing by holding that money offshore, along with hundreds of other U.S. companies using the same tax deferral strategy.

    What 401(k)? I lost that in my descent to poverty after my last employer screwed me and the housing market collapsed just after buying a house.
  • Reply 71 of 74
    dysamoriadysamoria Posts: 3,430member
    I’m sitting here wondering how someone could be so willfully stupid so many times, and then it hit me: you’re just trolling. Inexcusably, irrefutably trolling.

    Apple doesn’t have to do anything with THEIR money. It’s THEIR money. The US is the only country that taxes twice.

    You're inexcusably, irrefutably obnoxious. The second someone challenges the libertarian party line, you proclaim "TROLL!" Grow up. I am not the only person bothered by this activity. It's called respecting my nation and expecting the participants of the economies to put back into it, rather than constantly taking out of it and hoarding the fair share that is supposed to go into the damned system for running a business in this country. "Taxes are terrible oh my oh my!!!!" Taxes are what allow a society to function. Who cares about that?? Lets just keep worshipping these corporations for their share prices, let them keep dodging taxes indefinitely, marvel at their cash horde and clever tax evasion, "because it's perfectly legal!!" and watch the system continue to fall apart, putting the blame on immigrants and "wasted" social services.

    This isn't about you and your share prices. Sorry, didn't mean to get all scary socialist on you and suggest that an American company pays its freaking taxes so that the country gets its fair share, which is agreed upon by running a business here and being citizens here. Don't want to pay taxes? LEAVE!!
  • Reply 72 of 74
    dysamoriadysamoria Posts: 3,430member
    The Mac worship doesn't bother me so much. The incessant Mac vs PC holy wars don't bother me much (i chose Apple myself). The incessant Apple vs Samsung playground name calling and manhood measuring doesn't even get up my nostrils TOO badly.

    It's the money worship and arrogant antipathy shown by the minority of loudmouthed bullies in the forum, drooling over share prices, stock options, tax evasion, and frothing at the mouth about how "stupid" any dissenting views must be. Those are the ones that irritate the living CRAP out of me on an Apple forum. It has nothing at all to do with Apple and everything to do with people that think aggressiveness and verbal assaults are the key to winning an argument.

    If I was a troll, I wouldn't come by again to continue engaging. Sorry if I'm not available ALL DAY to sit and watch how people froth at the mouth over my occasional commentary. I'm not an elite forum regular bull dog waiting around all day to bark furiously at anyone that differs from my world view. How certain fist pounding, stomping, name calling children haven't been banned I have no idea. I'm tired of seeing you go off on other people too. Maybe you're just entertaining to moderators.
  • Reply 73 of 74
    Originally Posted by dysamoria View Post

    The second someone challenges the libertarian party line, you proclaim "TROLL!"

     

    Do you know... anything about what you’re saying? Why not just answer the question?

     

    I am not the only person bothered by this activity.


     

    Good for you. No laws are being broken, no morality is being violated, and Apple is doing the best for their money and shareholders.

     

    ...hoarding the fair share...


     

    Ah, geez, there goes any chance you had at a real argument.

     

    “Taxes are terrible...


     

    Strawmen are great, though.

     

    ...putting the blame on immigrants and “wasted” social services.


     

    Given that that’s exactly where much of the blame does lie, please don’t pretend otherwise.

     

    ...suggest that an American company pays its freaking taxes...


     

    Apple has paid their taxes. Do not suggest they have not without proof.

     

    ...the country gets its fair share...


     

    What “share” does the United States deserve that is fair of business done OUTSIDE the United States, exactly?

     

    ...which is agreed upon...


     

    Nowhere near universally.

     

    Don't want to pay taxes? LEAVE!!


     

    1. The argument regards in no way not paying taxes at all.

    2. Many ARE leaving. Because of the system you laud here. If you cared at all about ‘respecting the nation’ or ‘giving back’, you’d be against that for which you stand so that companies wouldn’t leave.

     

    Originally Posted by dysamoria View Post

    If I was a troll, I wouldn't come by again to continue engaging.

     

    No, that’s exactly what a troll would do.

  • Reply 74 of 74
    swiftswift Posts: 436member

    I think this is inevitable, once you've put your effective interest rates at zero. It's Europe's problem, and ours, that we're relying on budget cutting and austerity. That's appropriate for inflation, not something right on the brink of deflation. Want another round of that? Hi, 2008! Welcome back!

Sign In or Register to comment.