Apple CEO Tim Cook calls US tax code outdated and 'awful for America'

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  • Reply 81 of 132
    cnocbuicnocbui Posts: 3,613member
    gatorguy said:

    shahhet2 said:
    The 40% refers to the combined U.S. federal(35%) and state tax rate(5%) Apple would likely owe.
    Still doesn't account for the taxes Apple already paid on those profits. Surely Apple paid something on it already and that would be deducted from what is stilled owed to the US, right? For example if they paid 12% to the Irish the remaining corporate taxes owed to the Feds would be 23% if they brought it home. If Cook's comment was close to accurate it would presume they've paid nothing to anyone. That's why 40% doesn't sound like it could possibly be right.  
    Perhaps it's a near admission that Cook's: "That is total political crap, There is no truth behind it. Apple pays every tax dollar we owe." actually means that those third party calculations that Apple has been effectively paying low single digit taxes overseas are indeed correct, otherwise they wouldn't be up for 40 % or anywhere near it - unless they had paid next to nothing overseas.

    Apple had AU$ 6 Billion in revenue in Australia in 2014 yet paid only 80.3 M in taxes there.  That's a tax rate of 1.3%.  Cook revealed the secret deal with Ireland was for a tax rate of 2%, so Apple is only paying 3.3% on it's Australian profits, unless the Irish tax is less taxes paid in Australia which would mean it's only paying 2% in total.  And before someone tries to claim Apple pay VAT - no they don't.  Consumers pay VAT, retailers just collect it and forward it to the government.

    What Cook actually wants is single digit tax rates on  profits repatriated to the US, which is unconscionable.  If Apple is only paying single digit tax overseas and is allowed to then repatriate funds at single digit tax rates  - I am presuming he is asking for the single digit tax rate to be in addition to those already paid overseas, though he probably want's those to be deducted first - that would mean Apple would be paying single digit tax rates on most of it's income.  That is immoral, considering personal tax rates.

    edited December 2015 IanMC2
  • Reply 82 of 132
    steven n.steven n. Posts: 1,225member
    Federal Tax Rates for US Companies are < 12%. Talk to GE about paying taxes. They received billions in a refund. Sorry, but the reason everyone is whining is they jumped all their accounting to overseas to hide as much of the wealth as possible, and now that they aren't getting a one time repatriation rate of 5% they cry wolf. It's a BS claim by Cook and he knows it. The company net profits since 2005.

    I'm sorry, but the idea that the President should give them a 5% one time repatriation makes me want to puke.

    You went off-shore to dodge taxes, not because they were abhorrently represessive, but because the tax code allowed it to be legally done and save you billions in the process. Eat it. Suck it up and pay back what you ethically absued.
    Much of what you wrote is based on a lie. Apple has not jumped all of their I counting overseas. Period. That is a straight out lie. 
  • Reply 83 of 132
    macarena said:
    I really don't think the real picture is being seen here by ANYONE. This should not be about where the money is kept, or where the money is earned.

    The simple point is this - Apple does almost all of its Research and Development in the US. They give a contract to Foxconn to build devices matching specs they have set. Foxconn loads the software for this on the phone, and charges Apple for the hardware, the assembling costs, etc. All of these are legitimate expenses to Apple.

    Now, irrespective of wherever in the world those phones are sold, the profit is belongs to, and is due to Apple in the US. If Apple has structured itself in such a way that there is an entity that is selling the products in a particular jurisdiction, then that entity should either be treated as a wholly owned subsidiary, with the profits rolling up to Apple in the US, or it should be treated as an arms length transaction, with the foreign entity paying Apple in the US a royalty for the rights to use its IP to sell devices somewhere.
    Apple, like many large companies wholly owns other corporations [e.g. Apple Computer Trading (Shanghai) Co Ltd] which are incorporated with a board of directors, etc. under the laws of the country it operates in.  Just like any investment in any other incorporated company the money does not come back to Apple Inc. until the other company pays a dividend.  

    If you were to turn around and change the rules of the IRS to "force" an imaginary dividend payment or gain/loss calculation at the end of the financial year to tax the corporation on world-wide income..... many large companies would have no real option other than to invert and move their headquarters over to somewhere like Canada that does not tax on world-wide income.    It is a case of shooting yourself in your foot.  If you reverted to a VAT/GST tax and reduced corporate taxes or eliminated them, and offset that with a tax-credit check to low income families to cover any potential increase in prices..... you would create a situation where you make it difficult to move where you earn services income or manufacturing income around.   Additionally since VAT/GST is typically levied only on internal consumption, you would create a more competitive landscape for manufactures since you have basically cut the cost of manufacturing in the US by up to 35%.   Often Income tax rises - which are offset for large companies by loopholes and other government handouts to lift the economy but all that ends up doing is giving a disproportionate advantage to connected large companies and handicapping new smaller companies that don't have the same clout.

    Additionally since the VAT/GST is a stable revenue stream vs Income it is a more reliable source of funds to cover necessary operational costs of the government.  What happens is that you have some really good years and the government is flush in new Income tax and goes wow -- great we can spend all this money on new programs and the voters will be happy..... then the economy goes into recession and income tax revenues all but disappear but the obligations the government have still exist and the government runs up a massive debt....  (sound familiar).  

    Tax should be about a necessary source of funding for funding essential services done by the government, not about being some sort of social engineering experiment....



    stompyIanMC2
  • Reply 84 of 132
    alandail said:

    pretty sure Rand Paul also did all of that

    Sanders is the only candidate that did those things. 
    Paul wasn't in his current position at the time of the vote.

    https://en.m.wikipedia.org/wiki/Political_positions_of_Rand_Paul#Foreign_policy
  • Reply 85 of 132
    davidw said:
    hmlongco said:

    American investor Warren Buffett, who publicly stated in early 2011 that he believed it was wrong that rich people, like himself, could pay less in federal taxes, as a portion of income, than the middle class, and voiced support for increased income taxes on the wealthy.

    The vast majority of WB income is in the form of long term capital gains. Which is taxes at 20%, no matter the income. So WB effective tax rate would naturally be less than most middle class that have little or no long term capital gains income. In fact, that is main reason for many of the wealthy tax payers have lower effective tax rate. I bet he wouldn't be too keen on increasing capital gains tax, as the, low long term capital gains tax, is one of the major benefit of investing in stocks like Berkshire Hathaway. And it's not the middle class that are buying BKR.A shares.

    And what is WB going to do with his $50B fortune. He's going to do what the richest man in the US did, to avoid taxes on $50B, he's going to donate it the Bill Gates Foundation. So on one hand, he's complaining about the rich not paying enough in taxes and on the other hand he's going to avoid paying taxes on most of his $50 fortune. 

    Yes, Buffet is a smart one. He plays nice with whomever is in charge to avoid being demonized for political purposes. He's a survivor of the Great Depression and has seen many presidents and long and short term social trends come and go. He's as self-interested as any of us, but knows how to avoid being cornered and eaten by wolves.
    edited December 2015
  • Reply 86 of 132
    kpluckkpluck Posts: 500member
    hmlongco said:
    American investor Warren Buffett, who publicly stated in early 2011 that he believed it was wrong that rich people, like himself, could pay less in federal taxes, as a portion of income, than the middle class, and voiced support for increased income taxes on the wealthy.

    Yes, Warren Buffet, the same super wealthy guy that pays people specifically to handle his taxes so he pays the least amount of tax legally required.

    Who gives a [email protected] okay, I will play.

    First, the obvious....corporate tax code is a different set of rules than personal income tax. Second, the even more obvious, Tim Cook is saying the code tax code is broken and outdated, it sounds like Warren Buffet is saying the exact same thing.

    Here is a tip for you..."It is better to remain silent and thought a fool then to speak and remove all doubt."

    -kpluck
  • Reply 87 of 132
    cook is right on the money! we should have the fairtax! google it!
    SpamSandwich
  • Reply 88 of 132
    mr omr o Posts: 1,046member
    MrSinatra said:
    cook is right on the money! we should have the fairtax! google it!
    I did, and it doesn't look too good:


  • Reply 89 of 132
    Even Steve Jobs supported irresponsible Democrat policies, while acting like a responsible businessman.
    Wtf is the 'Democrat' party?

    Gosh, I expected something slightly more intelligent from you. 
    https://en.wikipedia.org/wiki/Democrat_Party_(epithet)
  • Reply 90 of 132
    60 Minutes: "Mr. Cook, can you please explain Apple's tax practices?"

    Tim Cook: "There's an app for that." 

    *drops mic and walks off stage*
  • Reply 91 of 132
    flaneur said:
    Stop the presses!  "Famous Rich Guy Thinks Taxes are Bad!"  "Wealthiest Company in the History of Human Existence, Wants a Tax Break!"  

    Has there ever been a billionaire who didn't think the tax laws were bad or outdated?  
    Sorry, you're taking a very childish approach here. In case you haven't been paying attention — at all! — Tim Cook is not a typical rich guy, and Apple is not a typical corporation. 

    Deal with the facts. Thirty-five per cent is ridiculous, outdated, in the age of global economy.
    I'm not sure arguing over the current tax code helps much. Talking about what occurs because of it is so much more important. Just look at what companies are doing.

    They leave profits overseas
    Buy companies overseas with their offshore funds
    Expand their operations overseas with their offshore funds
    Sell Bonds in the US to pay Dividends to Shareholders
    Complain about the repatriation Taxes

    The key point missing from the list is "Bring profits from overseas back to US". If they won't bring it back, we need to fix the system so that they will. Why is the US against businesses bringing money to the US that they earned overseas? With an estimated 2 Trillion overseas doing nothing for the American economy, you would think we could get this fixed. Leaving the existing tax code in place which forces the money (and most importantly the investments that occur with this money) to stay outside the US is just wrong. 


    This same childish "it ain't fair", "it's outdated", "we will hold profits overseas until we turn blue" whine from industry leaders could happen all the way down to 0% corporate tax.

    Just change the code to force repatriation within 12 months of when it is earned.  Problem solved. 
  • Reply 92 of 132
    The last time corporations paid the same percentage of overall federal revenue as individual citizens did was back in the early to mid 1940's. Both were around 37 percent. During the last 70 years, the corporate percentage has dropped like a rock down to around 13.5% of total federal revenue today, while individual citizens now pay around 46% of the total. The idea that corporations are suffering under an "outdated" system or high tax level just isn't the case. If anything, the government has bent over backwards decade after decade to make it easier for them since the middle of the last century.
    edited December 2015 cnocbuiIanMC2
  • Reply 93 of 132
    asdasdasdasd Posts: 5,678member
    mr. h said:
    If I understand correctly the one who will ultimately be in trouble with the EU, if anyone, will be Ireland rather than Apple.

    Certainly many countries including the UK are working on trying to change their taxation systems to make it harder/impossible for companies to avoid tax in the manner they currently do.

    As for the US repatriation rule, it is really quite baffling that it hasn’t been changed. As pointed out, all it achieves is forcing companies to invest overseas, or even more oddly, borrow money in the U.S., secured by the money overseas, as that’s more cost effective than bringing the money home.
    Ireland might be fined but it will be owed back taxes. 

    I think 40% is too high but the admission by Cook that he owes 40% indicates he is paying 0% in Ireland. 
  • Reply 94 of 132
    asdasdasdasd Posts: 5,678member
    cnocbui said:
    gatorguy said:

    Still doesn't account for the taxes Apple already paid on those profits. Surely Apple paid something on it already and that would be deducted from what is stilled owed to the US, right? For example if they paid 12% to the Irish the remaining corporate taxes owed to the Feds would be 23% if they brought it home. If Cook's comment was close to accurate it would presume they've paid nothing to anyone. That's why 40% doesn't sound like it could possibly be right.  
    Perhaps it's a near admission that Cook's: "That is total political crap, There is no truth behind it. Apple pays every tax dollar we owe." actually means that those third party calculations that Apple has been effectively paying low single digit taxes overseas are indeed correct, otherwise they wouldn't be up for 40 % or anywhere near it - unless they had paid next to nothing overseas.

    Apple had AU$ 6 Billion in revenue in Australia in 2014 yet paid only 80.3 M in taxes there.  That's a tax rate of 1.3%.  Cook revealed the secret deal with Ireland was for a tax rate of 2%, so Apple is only paying 3.3% on it's Australian profits, unless the Irish tax is less taxes paid in Australia which would mean it's only paying 2% in total.  And before someone tries to claim Apple pay VAT - no they don't.  Consumers pay VAT, retailers just collect it and forward it to the government.

    What Cook actually wants is single digit tax rates on  profits repatriated to the US, which is unconscionable.  If Apple is only paying single digit tax overseas and is allowed to then repatriate funds at single digit tax rates  - I am presuming he is asking for the single digit tax rate to be in addition to those already paid overseas, though he probably want's those to be deducted first - that would mean Apple would be paying single digit tax rates on most of it's income.  That is immoral, considering personal tax rates.

    It bugs me that people think that corporation tax is paid where you sell. You are right that Apple is paying <2% in Ireland of its worldwide (non-US) profits. The Australians are owed anything except the VAT. Apple is not based in Australia. Also revenue? What's revenue in Apples retail and other stores in Oz got to do with the profits they realise in selling to retailers (including Apple retail) which is much lower than revenue. 

    The he only taxes apple owes in Oz is the Apple retail tax, that is the profit the retail arm of the business makes. 
    edited December 2015
  • Reply 95 of 132
    entropysentropys Posts: 3,193member
    Apple had AU$ 6 Billion in revenue in Australia in 2014 yet paid only 80.3 M in taxes there.  That's a tax rate of 1.3%.  Cook revealed the secret deal with Ireland was for a tax rate of 2%, so Apple is only paying 3.3% on it's Australian profits, unless the Irish tax is less taxes paid in Australia which would mean it's only paying 2% in total.  And before someone tries to claim Apple pay VAT - no they don't.  Consumers pay VAT, retailers just collect it and forward it to the government.

    One of the depressing aspects of the shallowness of the corporate tax debate in Australia is the deliberate (and deceitful) conflation of revenue, or turnover, with profit. You should avoid taking at face value anything a politician tells you, on any matter let alone tax matters. 

    Apple Australia builds nothing in Australia. Apple Australia is little more than a shopfront that imports its products at a price it pays to Apple in Ireland. Then there is the local operating expenses. The gross margin is pretty small. Tax is paid on that bit. 

    So why does the Irish Apple exist? Because it doesn't seek to ream the corporates, preferring the investment and wealth generated by having the corporates set up shop in Ireland.  Without that low tax structure, corporate investment and the jobs it creates in Ireland would probably be as lame as it is in Australia. Ireland ensures its tax arrangements are good to attract business.  

    As for the U.S. if did not insist on taxing foreign earnings like just about every other country, and had a competitive corporate tax rate this Irish problem would not exist. Why not beat Ireland's tax arrangements? At the moment the money isn't coming back anyway.  Instead of bitching about that, make it desirable to do so and see that wealth put to good use in your country. The only reason Not to do that I can see is that politicians believe they can determine what that good use is better than U.S. Apple shareholders.

    edited December 2015 bkkcanuck
  • Reply 96 of 132
    cnocbuicnocbui Posts: 3,613member
    asdasd said:
    cnocbui said:
    Perhaps it's a near admission that Cook's: "That is total political crap, There is no truth behind it. Apple pays every tax dollar we owe." actually means that those third party calculations that Apple has been effectively paying low single digit taxes overseas are indeed correct, otherwise they wouldn't be up for 40 % or anywhere near it - unless they had paid next to nothing overseas.

    Apple had AU$ 6 Billion in revenue in Australia in 2014 yet paid only 80.3 M in taxes there.  That's a tax rate of 1.3%.  Cook revealed the secret deal with Ireland was for a tax rate of 2%, so Apple is only paying 3.3% on it's Australian profits, unless the Irish tax is less taxes paid in Australia which would mean it's only paying 2% in total.  And before someone tries to claim Apple pay VAT - no they don't.  Consumers pay VAT, retailers just collect it and forward it to the government.

    What Cook actually wants is single digit tax rates on  profits repatriated to the US, which is unconscionable.  If Apple is only paying single digit tax overseas and is allowed to then repatriate funds at single digit tax rates  - I am presuming he is asking for the single digit tax rate to be in addition to those already paid overseas, though he probably want's those to be deducted first - that would mean Apple would be paying single digit tax rates on most of it's income.  That is immoral, considering personal tax rates.

    It bugs me that people think that corporation tax is paid where you sell. You are right that Apple is paying <2% in Ireland of its worldwide (non-US) profits. The Australians are owed anything except the VAT. Apple is not based in Australia. Also revenue? What's revenue in Apples retail and other stores in Oz got to do with the profits they realise in selling to retailers (including Apple retail) which is much lower than revenue. 

    The he only taxes apple owes in Oz is the Apple retail tax, that is the profit the retail arm of the business makes. 

    You are quite correct, Apple only owes the Australian government tax based on the profit they make in Australia and not corporation tax except for the operations of their subsidiaries which are actually incorporated in Australia.  For them to be paying only 1.3% of income means their operations in Australia must be unbelievably expensive to operate or the products and services they are selling must be amazingly expensive to obtain from their Irish operations.  There seems to be more than a slight disparity between what Apple reports it's margins and profitability in the US to be vs those they must be telling the Australian Taxation Office they are - I would have thought.

    The accusation/suggestion that has been made is that Apple's vast and extensive manufacturing operations in Ireland [cough] bullshit] [cough] somehow manage to infuse their products and services with magical fairy (little people) dust, which in the accounts is referred to as 'intellectual property', to prevent laughter and disbelief.  This fairy dust is incredibly expensive stuff - almost as expensive as unicorn manure - to the extent that poor Apple can barely manage any profit whatsoever when they come to sell their stuff in Oz.

    I do not understand your comment regarding VAT.
  • Reply 97 of 132
    flaneur said:
    Sorry, you're taking a very childish approach here. In case you haven't been paying attention — at all! — Tim Cook is not a typical rich guy, and Apple is not a typical corporation. 

    Deal with the facts. Thirty-five per cent is ridiculous, outdated, in the age of global economy.
    This same childish "it ain't fair", "it's outdated", "we will hold profits overseas until we turn blue" whine from industry leaders could happen all the way down to 0% corporate tax.

    Just change the code to force repatriation within 12 months of when it is earned.  Problem solved. 
    "Force repatriation"? LOL! That could never happen in the US, unless a dictator came to power.
  • Reply 98 of 132
    pmcdpmcd Posts: 396member
    "Tax should be about a necessary source of funding for funding essential services done by the government, not about being some sort of social engineering experiment...."

    Sales taxes are are one way the government tries to direct spending. This whole VAT, HST, GST and other forms of sales' taxes do provide steady streams of government income while reducing people's freedoms to do whatever they want with their money. VAT, HST and the like are like crack to governments whole feel it is their money and that they know best what you should do with it. Moreover, it is too easy for them to incrementally raise them. Heck why not just have a 100% sales' tax or even higher so that people end up with no money of their own and the government can buy goods for them. I realize many economists love the idea of VAT taxes. Nice and simple and somewhat progressive in the sense that it doesn't stop wealthy from buying their goodies.

    A sales' tax simply redlines the meaning of a currency. They should all be eliminated in my opinion.

    As for Apple operating in many countries and having to deal with so many different tax regimes, I feel for them. US citizens pay tax on their worldwide income, which is not the case with all countries. A company is not a citizen but it is true that their products originate in the US. If they were to simply regard other countries as markets used to suck back all profits then I suspect their sales would tank. It's pretty hard to deal with the unfortunate concept of sovereignty and the border less features of digital based companies.
  • Reply 99 of 132
    entropysentropys Posts: 3,193member
    Unfortunately I suspect far too many kiddies these days would be just fine with that, SpamSandwich. Can't have the little red hen eating it all by herself.
  • Reply 100 of 132
    cnocbuicnocbui Posts: 3,613member
    entropys said:
    Apple had AU$ 6 Billion in revenue in Australia in 2014 yet paid only 80.3 M in taxes there.  That's a tax rate of 1.3%.  Cook revealed the secret deal with Ireland was for a tax rate of 2%, so Apple is only paying 3.3% on it's Australian profits, unless the Irish tax is less taxes paid in Australia which would mean it's only paying 2% in total.  And before someone tries to claim Apple pay VAT - no they don't.  Consumers pay VAT, retailers just collect it and forward it to the government.

    One of the depressing aspects of the shallowness of the corporate tax debate in Australia is the deliberate (and deceitful) conflation of revenue, or turnover, with profit. You should avoid taking at face value anything a politician tells you, on any matter let alone tax matters. 

    Apple Australia builds nothing in Australia. Apple Australia is little more than a shopfront that imports its products at a price it pays to Apple in Ireland. Then there is the local operating expenses. The gross margin is pretty small. Tax is paid on that bit. 

    So why does the Irish Apple exist? Because it doesn't seek to ream the corporates, preferring the investment and wealth generated by having the corporates set up shop in Ireland.  Without that low tax structure, corporate investment and the jobs it creates in Ireland would probably be as lame as it is in Australia. Ireland ensures its tax arrangements are good to attract business.  

    As for the U.S. if did not insist on taxing foreign earnings like just about every other country, and had a competitive corporate tax rate this Irish problem would not exist. Why not beat Ireland's tax arrangements? At the moment the money isn't coming back anyway.  Instead of bitching about that, make it desirable to do so and see that wealth put to good use in your country. The only reason Not to do that I can see is that politicians believe they can determine what that good use is better than U.S. Apple shareholders.

    There is nothing shallow about the debate concerning heavily engineered tax minimisation schemes employed by large multi-national corporations.  The OECD recently did a report on it and concluded that individual tax payers were having to make up the shortfall.  Since I fall into that category, I find the topic personally relevant.

    Households forced to plug corporate tax gap, says OECD Report says increasing inability to tax corporate profits means governments are forcing workers and consumers to plug the revenue gap
    http://www.theguardian.com/business/2015/dec/03/civilians-shoulder-greater-tax-burden-companies-oecd

    Any deceit concerning Apple's revenues in Australia would be on Apple's part.

    Apple builds nothing in Australia - true  - and apart from a minuscule activity in Ireland I suspect is just for show - they build and create nothing here  either.  Governments do not engage in 'reaming' corporations:  That's what they they do to payers of income tax to make up for the shortfall in revenue that is largely due to corporate tax avoidance - sorry, I'm supposed to say 'minimisation'.

    I don't think you have been following the story.  There is indeed some prospect of both Ireland and Australia serving Apple with bills for back taxes, so actually the money might be coming back.

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