Study claims Apple avoided paying $65.08B in US taxes in 2015 through offshore arrangements

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Comments

  • Reply 21 of 65
    freerangefreerange Posts: 1,589member
    spice-boy said:
    The last "tax holiday" was granted by the US in 2004 for multinational companies. The rate was heavily reduced to a mere 5.25%. I as a small business owner pay about 35% on my profits. Corporations like Apple expect another Reparation tax holiday sooner or later so there is little incentive to bring this money back to the US until Congress caves in. How did this all happen? Well look at the people we citizen elect to political office, who funds their campaigns, who are they in debt to when the get into office? It is not the US citizen but these huge corporations. Laws are written to make these tax havens possible as a pay back for a cushy seat in Congress. Are corporations like Apple breaking the law? Not as the law is written. Is Apple morally wrong for taking advantage of these laws? Yes. Tax breaks and incentives were originally designed to help small to large businesses grow and have positive impact on a local or regional area. These incentives often have time limits unlike these tax haven laws. I am a big fan of Apple's products and services and have been for decades but don't let you love admiration of this company blind you to the fact they are positioned as many huge international corporations above the tax laws most citizens must follow. 
    First of all, the headline is a gross misreprentation of the facts. Apple's cash reserves have been built up over decades, not in 2015, so any US tax liability would have been spread out over time.

    But in terms of spice-boy's ridiculous rant, US companies paying high/full tax rates in the US for revenue generated and taxed overseas is absurd! From my own experience, living as an expat in China, i was still required to file and pay US taxes for income earned and taxed overseas. We are one of only a couple countries in the world that pulls this double taxation bullshit. Apple is totally in the right - these foreign revenues should be taxed at a far lower rate in the US, if at all. Further, Apple is already one of the largest tax payers in the US, by a significant amount.
    edited October 2016
  • Reply 22 of 65
    So what? Tax avoidance is legal. Tax evasion is illegal. Income tax is immoral, and corporate income tax raises retail prices. (Where do these corporate tax advocates think Apple gets the money to pay their taxes?)
    aderuttertallest skil
  • Reply 23 of 65
    It's a joke. This is a 99%ers troll. No company in the history of business ever paid near that amount of taxes. In fact a few years ago 1,100 major American companies  didn't paid any taxes and that list included GE. The tax code has been manipulated to benefit certain companies and specific industries. So there are a million exemptions that are out there for all... and it's legal. Change the laws!
  • Reply 24 of 65
    zoetmbzoetmb Posts: 2,490member
    Wait - Apple reported $53 billion and change profit, and this 'study' claims that they owe $65 billion in US taxes? That's whack.

    If a company pays taxes on earnings/sales made in a foreign country, (and also pays the taxes on domestic earnings/sales), why should they pay again for repatriating those already taxed earnings. 
    That's not what's happening.   It's not all about sales in a foreign country.   Personally, I think all sales should be taxed in the country where they're made.   I don't think American companies should have to pay anything (or perhaps a greatly reduced rate) on foreign sales if they're also paying taxes at similar rates on those sales in the country in which they're made (or maybe there's some compromise rate, etc.)

    What's largely happening is that companies are creating subsidiaries in foreign tax havens and shifting sales recognition and/or profits from one company division or subsidiary to another in order to avoid taxes.   It's similar to if one got a mailbox in the Bahamas, had your U.S. employer send your earnings there which you placed in a Bahaman bank and then claimed you didn't owe any U.S. taxes on those earnings.   Companies also create indecipherable business organizations so revenue can't be tracked by taxing authorities.    It's quite amazing how much Fortune 500 companies now operate like the mob.  

    Taxing foreign revenue is just one small part of the overall picture.   

    I think there needs to be changes in the tax laws so that sales made in a country are reported in that country and there's no way to shift those revenues/profits to another country AND you pay taxes on all sales in that country and you pay some compromise rate on sales made in other countries that at the very least, takes into account the taxes paid in that other country.   Companies have set up addresses in no-tax or low-tax countries that are nothing more than a mailbox or one-room office in order to avoid taxes.   Companies also report one number to Wall Street and another number to taxing authorities.   Those numbers should have to be the same.   

    The only other way to make it fair is to have a VAT on gross sales, but not charged to consumers at point of purchase, but by companies.    It would be relatively low rate because it would be based on sales and not profits.     

    Having said that, I would support a one-time "tax holiday" on repatriated money if (and only if), the money can only be used for reinvestment in that country or for hiring and not, for example, to further enrich executives or to buy back stock or to distribute the money to investors.    Obviously, that's "IMO".
    battiato1981
  • Reply 25 of 65
    gatorguygatorguy Posts: 21,236member
    cwingrav said:
    spice-boy said:
    The last "tax holiday" was granted by the US in 2004 for multinational companies. The rate was heavily reduced to a mere 5.25%. I as a small business owner pay about 35% on my profits.
    This 5.25% was assessed after all other international taxes. So, if they paid 20% in France, then they were taxed another 5.25% for 25.25% overall. If Apple brought that money back now, they would be hit for 20% taxes in France, and then another 35% to the US for a 55% tax rate overall. 

    Incorrect. Corporate taxes paid to other countries is credited towards any taxes paid to the US. It will never be another 35% on top of whatever was paid overseas. 
  • Reply 26 of 65
    zoetmbzoetmb Posts: 2,490member

    sog35 said:
    eightzero said:
    I'm a pretty left leaning, blue guy. But this headline needs to be fixed: "Report shows Apple complied with all requirements of law and paid taxes as required by Congress." Or maybe "Congress cheated the US Public by Writing a Tax Code that Encourages US Businesses to Offer Valuable Products and Services Outside the US."

    But then, analysis of political issues like this is generally beyond the comprehension of the public. 
    Or "US Tax laws make it almost impossible for US corporations to invest in the USA"

    The real issue is not Apple. The real issue is:

    1. The ridiculous 35% corp tax rate. Which is by far the highest in the world. Which hurts small businesses and large business alike
    2. The ridiculous UNIVERSAL tax that the US enforces. Even on profits earned in other countries.


    There may be a 35% corporate tax rate, but no one pays it.   Many Fortune 500 companies pay no Federal income taxes whatsoever.   If they did, we wouldn't have a deficit.  As corporations have become international conglomerates, they no longer feel any responsibility to the communities in which they reside and they do everything they can to avoid paying taxes.   

    The only way to fix this is to completely restructure the U.S. tax code so that it's both fair and impossible for companies to manipulate the law to their advantage and avoid paying taxes.   But that will never happen because it requires Congress and Congress is filled with incompetent and corrupt assholes who are only looking out for their own campaign contributors.   You'd think it would take $millions to buy off a politician, but it's amazing what just a few thousand dollars will do.   
  • Reply 27 of 65
    wigginwiggin Posts: 2,265member
    sog35 said:
    This is pure STUPIDITY.

    Lets say you have a local business selling Bikes in the USA. Call it Mike's Bikes USA.  So you make profits and pay your 35% tax to the IRS.

    But now you decide to incorporate in England. So you start a new corporation Mike's Bikes UK. It is a full UK corporation, with employees, stores, ect. You then pay full UK taxes at 15%. 

    Do you expect Mike's Bikes UK to pay and additional 20% taxes to the USA, just because? How does that make any sense?

    This is EXACTLY what is happenning to Apple.
    I agree that the US tax laws are crazy stupid, but your example is far too simplistic because you assume there is no relationship or agreements between Mike's US and Mike's UK and this is not exactly what is happening with Apple.

    To make it a bit more relevant, you have to have Mike's Bikes USA also doing all of the engineering and design work and testing of new bike models. These activities take place in the US, but they directly contribute to the revenue and profitability of Mike's Bike's UK. All of the cost of those activities is deducted as an expense which reduces the profit, and thus the taxes, in the high-tax US region. The profit and thus taxes in the UK will be higher because they didn't have an expense for the value of these activities, but if the tax rate is lower in the UK Mike has saved money by paying a lower tax rate on a portion of his overall profits.

    If half the revenue of bike sales is in the US and half is in the UK, but 90% of the expenses are deducted in the US, doesn't that seem a bit odd (but of course legal) to you?

    Now let's take it a step further. The bike design also constitutes intellectual property (which Mike can probably decide is worth whatever he wants to say it's worth). Mike opens Mike's International in Ireland and transfers the ownership of this intellectual property to that location which doesn't actually do any design work (I know how much everyone here likes non-practicing entities). Mike's Bike's USA then licenses the intellectual property and this licensing expense is deducted from US revenue to further reduce US profit and US taxes. Mike's International in Ireland has an increase in revenue from this licensing activity, but luckily for Mike Ireland has incredibly low tax rates for his type of company in Ireland. The downside is that all of this profit is now stuck overseas (and contributed to Ireland's unbelievable 26% increase increase in 2015 GDP over the previous year!).

    But I'll repeat, this is all perfectly legal (as far as the US is concerned, the EU obviously feels that at least part of this violates EU membership rules). The question is, should it be legal? And if not, how would you change the laws to fix it? Several people here have suggested the law should be to only tax revenue in the country it was earned in and repatriation should be 0%. Ok, I'm on board with that. But how do you determine the country it was earned in? You can't simply take the point of sale location because many countries may have contributed to "earning" the revenue through design work, intellectual property, manufacturing, etc. If Mike designs a bike in the US, manufactures it in China and sells it in the UK for $500, can you really say that all $500 was earned in the UK, or was some of it earned in the US and China?
    edited October 2016 roundaboutnowjvmbsingularity
  • Reply 28 of 65
    zoetmb said:
    That's not what's happening.   It's not all about sales in a foreign country.   Personally, I think all sales should be taxed in the country where they're made.   I don't think American companies should have to pay anything (or perhaps a greatly reduced rate) on foreign sales if they're also paying taxes at similar rates on those sales in the country in which they're made (or maybe there's some compromise rate, etc.)

    What's largely happening is that companies are creating subsidiaries in foreign tax havens and shifting sales recognition and/or profits from one company division or subsidiary to another in order to avoid taxes.   It's similar to if one got a mailbox in the Bahamas, had your U.S. employer send your earnings there which you placed in a Bahaman bank and then claimed you didn't owe any U.S. taxes on those earnings.   Companies also create indecipherable business organizations so revenue can't be tracked by taxing authorities.    It's quite amazing how much Fortune 500 companies now operate like the mob.  

    Taxing foreign revenue is just one small part of the overall picture.   

    I think there needs to be changes in the tax laws so that sales made in a country are reported in that country and there's no way to shift those revenues/profits to another country AND you pay taxes on all sales in that country and you pay some compromise rate on sales made in other countries that at the very least, takes into account the taxes paid in that other country.   Companies have set up addresses in no-tax or low-tax countries that are nothing more than a mailbox or one-room office in order to avoid taxes.   Companies also report one number to Wall Street and another number to taxing authorities.   Those numbers should have to be the same.   

    The only other way to make it fair is to have a VAT on gross sales, but not charged to consumers at point of purchase, but by companies.    It would be relatively low rate because it would be based on sales and not profits.     

    Having said that, I would support a one-time "tax holiday" on repatriated money if (and only if), the money can only be used for reinvestment in that country or for hiring and not, for example, to further enrich executives or to buy back stock or to distribute the money to investors.    Obviously, that's "IMO".
    I agree with a lot of what you say here but at least for me there is still a lot of confusion about what sales are currently being taxed and what are being sheltered off-shore. Apple paid $13+ billion last year, is that for US domestic sales only? And they are holding out for the tax holiday or reduced repatriation rate on foreign sales but some foreign countries are placing their claims of a large share of these sales also. 

    With regards to taxing sales based on the country in which the product is made, do you mean assembled, or more likely/fairly, parts and materials. Seems a complicated to track with a product whose parts are sourced worldwide but possible I suppose. Value added tax on gross sales, country by country, seems like a better way, but rates will vary by country leading to gray market in some places if the disparity is large enough. 

    I'm not attached to restrictions placed on repatriated money, except perhaps preventing execs from benefiting. If some goes to shareholders, it will be taxed as cap gains. If used for reinvestment, then if benefits the whole country and of course, that activity will be taxed whether it's funneled research or production. 

    Of course, Apple no doubt will want to keep a certain sizable amount of money outside of the country for various uses outside of the country. No need to repatriate all of it. 
  • Reply 29 of 65
    tallest skiltallest skil Posts: 43,399member
    Apple managed to avoid paying $65.08 billion in U.S. taxes last year
    Good for them. They should get an award. spice-boy said:
    Is Apple morally wrong for taking advantage of these laws? Yes.
    By stating this, you claim that the EXACT scope and EXACT percentage of ALL taxes in existence, right now, is “moral”. NO ONE SANE COULD SAY THIS.


    edited October 2016
  • Reply 30 of 65
    Isn't this the same question EU is mulling? The business entity Apple Ireland is the company that sells products in the EU. They pay taxes on sales and profits in the EU based on Ireland's tax laws. Presumably, the EU, like the USA, taxes based on the domicile of the business entity rather than requiring companies to pay taxes in every state in the union which would be a bookkeeping nightmare. If the EU has a problem with Ireland's tax laws, that is between the EU and the Irish state, not the companies that legally do business in the jurisdiction. Seems that the politicians see a deep pocket and go after these companies (Apple is not alone) because they can't win the argument using the lawmaking process. The only thing unfair about tax haven rules is that most small businesses find it hard to compete with the big guys because they lack the legal prowess to take advantage of the opportunity.
    No, I think this is a different thing al together. The UE wants that all countries enforce the tax rules they have installed, and not give certain companies a more favorite treatment. This is what happened with Apple. Ireland gave Apple a different treatment, less tax, and the EU sees this as unlawful. So, Ireland has to reverse this arraignment. Of course a lot more can be said about this, but this is the short version.
  • Reply 31 of 65
    wigginwiggin Posts: 2,265member
    sog35 said:
    eightzero said:
    I'm a pretty left leaning, blue guy. But this headline needs to be fixed: "Report shows Apple complied with all requirements of law and paid taxes as required by Congress." Or maybe "Congress cheated the US Public by Writing a Tax Code that Encourages US Businesses to Offer Valuable Products and Services Outside the US."

    But then, analysis of political issues like this is generally beyond the comprehension of the public. 
    Or "US Tax laws make it almost impossible for US corporations to invest in the USA"

    The real issue is not Apple. The real issue is:

    1. The ridiculous 35% corp tax rate. Which is by far the highest in the world. Which hurts small businesses and large business alike
    2. The ridiculous UNIVERSAL tax that the US enforces. Even on profits earned in other countries.


    For #1, what makes it even worse is that it disproportionately hurts domestic-only companies over international companies who have more options to use our stupid tax system to their advantage. Local small businesses, the ones who create most of our jobs, are pretty much screwed.

    For #2, as I mentioned earlier, you really need to define "earned in other countries". Earning is far more than just making the sale.
  • Reply 32 of 65
    spice-boy said:
    Is Apple morally wrong for taking advantage of these laws? Yes. 
    Do you take a standard deduction? Do you itemize? Do you take an earned income credit? How about a child tax credit? How about business write-offs? Track your mileage? Defer taxes by putting into an IRA? How about a Roth? I could go on, but you'd have to fall into one of the above if you file taxes.

    You MUST be morally wrong for following the law and paying only what you actually owe according to IRS!
  • Reply 33 of 65
    wigginwiggin Posts: 2,265member
    Isn't this the same question EU is mulling? The business entity Apple Ireland is the company that sells products in the EU. They pay taxes on sales and profits in the EU based on Ireland's tax laws. Presumably, the EU, like the USA, taxes based on the domicile of the business entity rather than requiring companies to pay taxes in every state in the union which would be a bookkeeping nightmare. If the EU has a problem with Ireland's tax laws, that is between the EU and the Irish state, not the companies that legally do business in the jurisdiction. Seems that the politicians see a deep pocket and go after these companies (Apple is not alone) because they can't win the argument using the lawmaking process. The only thing unfair about tax haven rules is that most small businesses find it hard to compete with the big guys because they lack the legal prowess to take advantage of the opportunity.
    No, I think this is a different thing al together. The UE wants that all countries enforce the tax rules they have installed, and not give certain companies a more favorite treatment. This is what happened with Apple. Ireland gave Apple a different treatment, less tax, and the EU sees this as unlawful. So, Ireland has to reverse this arraignment. Of course a lot more can be said about this, but this is the short version.
    The issue I have with the EU ruling is that this is an issue between the EU and Ireland. Apple is not a member of the EU and is not a party to the EU constitution (or whatever they call their governing documents). If Ireland violated the agreement, they can be penalized by the EU. Saying Apple retroactively owes taxes even though they complied with the laws of Ireland seems like an overreach by the EU.

    Apple does have a relationship with Ireland, so if Ireland wants to try to recoup some of their EU penalty from Apple perhaps they could try that, or they could just eat it themselves and not try to retroactively change their tax laws (which would make for a very unstable business environment). The EU should not be able to go after Apple directly. Penalize the entity that violated it's agreement.
    roundaboutnow
  • Reply 34 of 65
    spice-boyspice-boy Posts: 1,017member
    Why are all of you defending the richest company in the world? You will never see a penny of it unless you have Apple stock. If I didn't pay my taxes you would call me a tax cheat, unAmerican, morally wrong yet you let Apple slide. Corporations have abandoned  the USA for manufacturing because they can get people to work for less than our lowest minimum wage state. Cut labor cost by 75% and that money goes into yearly bonuses for the executives. As soon as China's develops a stronger middle class Apple and other corps will move to India, or the next pool of even cheaper labor. This is not just tech companies but fashion and household goods are the same. I suggest some of you read a newspaper now and then, a book on economics  and research what these tax laws really mean for our country, who wrote them and the ill affect it is happening on our shrinking middle class. 
  • Reply 35 of 65
    wigginwiggin Posts: 2,265member
    spice-boy said:
    Is Apple morally wrong for taking advantage of these laws? Yes. 
    Do you take a standard deduction? Do you itemize? Do you take an earned income credit? How about a child tax credit? How about business write-offs? Track your mileage? Defer taxes by putting into an IRA? How about a Roth? I could go on, but you'd have to fall into one of the above if you file taxes.

    You MUST be morally wrong for following the law and paying only what you actually owe according to IRS!
    The only thing that might, maybe, possibly be questionable is the valuation placed on the internal transfer and licensing of intellectual property. When you itemize deductions such as donations or for business write-offs, you have to give fair valuations to those things. You can't donate your 1982 Trans Am to KarsForKids and claim it was worth $50,000.

    I'm not at all saying Apple didn't give fair valuations to anything, and I've never seen anyone suggest that they haven't. Just saying that even if you follow all the rules there is room for a little fudging which may border on not moral when it comes to taxes.
  • Reply 36 of 65
    tallest skiltallest skil Posts: 43,399member
    spice-boy said:
    Why are all of you defending the richest company in the world?
    Why are you defending the idea that “rich = bad”?
    You will never see a penny of it unless you have Apple stock.
    We’ll see the products they create.
    If I didn't pay my taxes you would call me a tax cheat
    Yep. Guess what Apple ISN’T DOING.
    unAmerican
    lol no.
    yet you let Apple slide.
    Because they’re not cheating on their taxes.
    Corporations have abandoned the USA for manufacturing because they can get people to work for less than our lowest minimum wage state.
    So you’re voting for Trump, then, since he’ll end that.
    As soon as China's develops a stronger middle class
    So… NEVER.
    I suggest some of you read… …a book on economics… 
    Irony.
    what these tax laws really mean for our country, who wrote them and the ill affect it is happening on our shrinking middle class.
    Who wrote them?
    edited October 2016
  • Reply 37 of 65
    frankiefrankie Posts: 373member
    None of which is illegal, which these idiots conveniently forget. It's the same thing with Trump. 
    But it should be.  

    WhyTF anyone thinks multi-billion $ corps should pay less taxes than anyone else is beyond me.
  • Reply 38 of 65
    frankiefrankie Posts: 373member

    sog35 said:
    spice-boy said:
    The last "tax holiday" was granted by the US in 2004 for multinational companies. The rate was heavily reduced to a mere 5.25%. I as a small business owner pay about 35% on my profits. Corporations like Apple expect another Reparation tax holiday sooner or later so there is little incentive to bring this money back to the US until Congress caves in. How did this all happen? Well look at the people we citizen elect to political office, who funds their campaigns, who are they in debt to when the get into office? It is not the US citizen but these huge corporations. Laws are written to make these tax havens possible as a pay back for a cushy seat in Congress. Are corporations like Apple breaking the law? Not as the law is written. Is Apple morally wrong for taking advantage of these laws? Yes. Tax breaks and incentives were originally designed to help small to large businesses grow and have positive impact on a local or regional area. These incentives often have time limits unlike these tax haven laws. I am a big fan of Apple's products and services and have been for decades but don't let you love admiration of this company blind you to the fact they are positioned as many huge international corporations above the tax laws most citizens must follow. 
    Apple also pays 35% tax on ALL USA profits. You are in the same boat. You are barking up the wrong tree. The problem is the ridiculously high 35% tax rate in the USA. By far the highest tax rate in the world. 

    But Apple also has operations in other countries like China, Japan, and Europe. In those countries Apple pays all the taxes that are earned on profits in THOSE countries. In China they pay about a 15% corporate tax. So why should Apple pay the USA DOUBLE TAX on income EARNED in China? It makes ZERO sense.  There is no logical reason why Apple needs to pay the FULL TAX BURDEN of China profits and then pay tax again in the USA. Profits generated and EARNED in China have no business being taxed in the USA.

    When the tax holiday happenned those corporations were not paying a 5% tax on USA profits. They were paying a 5% tax IN ADDITION to the foreign taxes they ALREADY PAID.  So Apple would have paid 15% taxes on China generated profits and then an ADDITIONAL 5% tax to the US government for the right to bring the cash back into the USA.

    Basically you have a very shallow understanding of US and foreign tax laws.
    HAHA Sure they do!

     Anyone who thinks any of these multi-billion $ corps actually pays 35% in taxes is either lying on purpose or ignorant.
    boredumb
  • Reply 39 of 65
    frankiefrankie Posts: 373member

    Found elsewhere but informative

    .
  • Reply 40 of 65
    gatorguy said:
    cwingrav said:
    spice-boy said:
    The last "tax holiday" was granted by the US in 2004 for multinational companies. The rate was heavily reduced to a mere 5.25%. I as a small business owner pay about 35% on my profits.
    This 5.25% was assessed after all other international taxes. So, if they paid 20% in France, then they were taxed another 5.25% for 25.25% overall. If Apple brought that money back now, they would be hit for 20% taxes in France, and then another 35% to the US for a 55% tax rate overall. 

    Incorrect. Corporate taxes paid to other countries is credited towards any taxes paid to the US. It will never be another 35% on top of whatever was paid overseas. 
    Ah, you are correct. I thought I read it was a double tax but after reading the IRS site (i.e. the source), I see things correctly now. Cheers. 
    https://www.irs.gov/businesses/foreign-tax-credit-1 ;
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