Apple's $348M Tax Settlement In Italy Bodes Ill For Google, Facebook, Microsoft • Hacker News Board

Re: Apple's $348M Tax Settlement In Italy Bodes Ill For Google, Facebook, Microsoft

#61

Post by guelo » Thu, Dec 31, 2015, 12:11 AM UTC

tn13 wrote: post #55

guelo wrote: post #50

Earlier quoted context omitted.

It's only complicated because the corporations hire hordes of top-notch lawyers to figure out the optimal structure for paying the least amount of taxes by exploiting all loopholes and coming as close as possible to skirting the laws. If the corporations optimized for simplicity the corporate structures would be much different.

Corporations are trying to keep their own money. Hiring top notch lawyers is economical because they actually help them save more than what the lawyers get paid. I dont see how fault lies with the corporations.

Sure. And that complication actually benefits the corporations that have the resources to figure it all out.

Re: Apple's $348M Tax Settlement In Italy Bodes Ill For Google, Facebook, Microsoft

#62

Post by meric » Thu, Dec 31, 2015, 12:13 AM UTC

gertef wrote: post #21

bpodgursky wrote: post #11

Earlier quoted context omitted.

No! No! No! What you legally owe in taxes, in a reasonable tax structure, has NOTHING to do with your moral compass. You should be able to plug numbers into a spreadsheet and get it. I'm not saying that taxes are bad. We need tax revenue. I get that. But there should NEVER, EVER, be two legally correct answers to how much you owe. The fact that you had to spend paragraphs making your case, makes mine -- when you reso…

Until we have a One World Order with no nations, what do you propose?

I think the world will become more fractured before we go towards something like a one world nation. Unity and Disunity waxes and wanes through out history[1], and now we're near a peak.

[1] For example, 50BC with the Roman Empire, Han Dynasty and this interesting map about Greeks in India, that I found just now. http://www.historyfiles.co.uk/FeaturesFarEast/CentralAsia_Ma...

Re: Apple's $348M Tax Settlement In Italy Bodes Ill For Google, Facebook, Microsoft

#63

Post by landryraccoon » Thu, Dec 31, 2015, 12:15 AM UTC

cosmie wrote: post #23

ryanwaggoner wrote: post #12

Earlier quoted context omitted.

The primary goal is to get Apple to pay U.S. taxes on U.S. sales. The linked Forbes article is a great introduction, but unless I'm reading it wrong, it covers how Apple avoids US taxes on foreign sales, not US taxes on US sales. How exactly are they avoiding US taxes on US sales? The US practice of taxing entities (corporations and people) on their global income based on citizenship instead of residency is just stup…

Due to the way they leverage their foreign subsidiaries, they're able to play accounting games that drastically lower the perceived (and taxable) profit of those US sales. Such as this mentioned at [1]: "ASI [an Irish Apple subsidiary] buys Apple products from a Chinese manufacturer, resells them at a “substantial” markup to other Apple affiliates and retains the profits, the report said." [1] http://www.macworld.com…

What you're claiming is that Apple is engaging in Transfer Pricing (https://en.wikipedia.org/wiki/Transfer_pricing) which is blatantly and totally illegal. If that is in fact the case, then no laws need to be changed and everyone at Apple who knew about this should be subject to criminal prosecution.

The article you posted however gives no evidence that Apple is actually engaging in such practices, or I assume they would already be under criminal investigation. The closest thing in the article you cited is grandstanding by members of congress. (Who aren't even being serious, Congress could easily fine or stop Apple if they actually wanted to do anything).

Re: Apple's $348M Tax Settlement In Italy Bodes Ill For Google, Facebook, Microsoft

#64

Post by forrestthewoods » Thu, Dec 31, 2015, 12:16 AM UTC

Oletros wrote: post #43

forrestthewoods wrote: post #35

Earlier quoted context omitted.

Windows 7 N exists because of the 2004 European Commission decision. That decision being a 497 million Euro fine. The fine was stupid when it was issued and it's ramifications were stupid when they forced Windows 7 N into existence. If you view the fine as a tax it all makes far more sense. The fine is merely a tax that is the cost of doing business in Europe. Microsoft is willing to pay it because they still net pro…

> The fine was stupid when it was issued and it's ramifications were stupid when they forced Windows 7 N into existence. This is just opinion > If you view the fine as a tax it all makes far more sense It is not a tax, so it doesn't make sense > The fine is merely a tax that is the cost of doing business in Europe Wrong, the fine is a consequence of breaking competition laws > And Europe certainly has no issue demand…

1) Windows 7 N is as objectively stupid as can be given that is an object with zero consumer interest created in the name of consumer protection. It's not a thing that anyone wants or wanted. It's a colossal waste of resources that provides zero value.

2/3) You're right. A fine isn't a tax. Now assume you are a nation state and some foreign entity is making a shit ton of money off your population. Now let's assume that you feel you aren't getting as large of a slice of pie as you deserve. What are some ways you can increase your slice size? Raising taxes is one way. Issuing fines is another way.

For example local police generate money off things such as parking fines. It's true that the parking fine is a consequence of breaking a local ordinance. However the rationale for issuing more fines can one of several reasons. It could be an increased focus on enforcing existing laws. It could also be because the police need more money and they looked at ways to generate more revenue and found that an increased focus on parking violations would be a cost efficient way to do so. This same line of reasoning can be applied to certain Euro fines.

4) That's fine. The commission can issue fines for many reasons.

5) Ask some lawyer friends for the opinion on Nintendo vs Galoob. They almost certainly discussed it in school. Opinions will vary. More than a few will likely agree that if Nintendo were an American company the outcome would have been different. That's the most famous case I know of.

Re: Apple's $348M Tax Settlement In Italy Bodes Ill For Google, Facebook, Microsoft

#65

Post by lumberjack » Thu, Dec 31, 2015, 12:25 AM UTC

bpodgursky wrote: post #8

It's great how we're living in a world where tax codes are so idiotic and complex that it takes long lawsuits to figure out what tax is actually due. It's not about following the letter of the law; it's about following the letter of the law, avoiding the court of public opinion, and coughing up whatever is necessary to stop the complaints when some politician wants to distract people from their incompetence and whip…

Why are you blaming the tax code? I think the problem originates in the loss of economic sovereignty of nations after signing countless FTAs. It is only because of that reason that Apple and Google can play nations against each other to dodge taxes. What has happened in the last 30 years is that laws has been passed that allow these multinationals to operate as such while at the same time everyone else is still limited by national borders. Why is it so easy for these corporations to open and close subsidiaries everywhere as they please? Oh right, something to do with the (misguided) liberal ideal that foreign and domestic investors should be treated equally, completely ignoring the fact that the foreign investor is not tied to the nation in the same way that the domestic investor is.

Re: Apple's $348M Tax Settlement In Italy Bodes Ill For Google, Facebook, Microsoft

#66

Post by cballard » Thu, Dec 31, 2015, 12:26 AM UTC

derefr wrote: post #39

junto wrote: post #24

Earlier quoted context omitted.

OK, I'll add another 'no' to you both. If a company is operating in a certain country offering goods and services to the population of that country then that country has the right to levy taxes upon the sales of those goods, and upon the operating profits of that company operating within that country. Global corporations fiddle this by moving money around so it appears that they don't make a corporate profit in that…

> A simple way to solve the problem is to levy an internet sales tax, which is the same percentage as the corporation tax that these companies should have paid if they were operating solely in that country in the first place. Ah, but how does something like Google work, then? They don't sell a product to people all over the world (where tax can be collected); people all over the world are the product, and they sell t…

People are not the product. Advertising is, and it's sold somewhere and served from somewhere.

Re: Apple's $348M Tax Settlement In Italy Bodes Ill For Google, Facebook, Microsoft

#67

Post by nodamage » Thu, Dec 31, 2015, 12:28 AM UTC

cosmie wrote: post #23

ryanwaggoner wrote: post #12

Earlier quoted context omitted.

The primary goal is to get Apple to pay U.S. taxes on U.S. sales. The linked Forbes article is a great introduction, but unless I'm reading it wrong, it covers how Apple avoids US taxes on foreign sales, not US taxes on US sales. How exactly are they avoiding US taxes on US sales? The US practice of taxing entities (corporations and people) on their global income based on citizenship instead of residency is just stup…

Due to the way they leverage their foreign subsidiaries, they're able to play accounting games that drastically lower the perceived (and taxable) profit of those US sales. Such as this mentioned at [1]: "ASI [an Irish Apple subsidiary] buys Apple products from a Chinese manufacturer, resells them at a “substantial” markup to other Apple affiliates and retains the profits, the report said." [1] http://www.macworld.com…

That article appears to be discussing Apple's avoidance of taxes on non-US sales:

"By running nearly all its non-U.S. sales through the Irish subsidiaries, Apple also avoids paying taxes on sales in other countries, including the U.K., Germany and France, the report said."

From what I can tell, this 'double Irish' arrangement does not apply to US sales.

Edit: Neither the Forbes article nor the Macworld article are discussing US sales, only worldwide sales.

Re: Apple's $348M Tax Settlement In Italy Bodes Ill For Google, Facebook, Microsoft

#68

Post by nodamage » Thu, Dec 31, 2015, 12:36 AM UTC

npizzolato wrote: post #30

zepto wrote: post #22

Earlier quoted context omitted.

Because the money is not made in the US

Is all that money actually made outside the US? Or is it made outside of the US in the same spirit as how Hollywood movies never make a profit?[1][2] [1] https://en.wikipedia.org/wiki/Hollywood_accounting [2] http://www.theatlantic.com/business/archive/2011/09/how-holl...

To my understanding, this is money that is actually made outside the US. If Apple (US) sells an iPhone to an American customer, they will pay US corporate income tax on the profits from that sale.

However, if Apple (Italy) sells an iPhone to an Italian customer, the 'double Irish' arrangement lets them avoid paying corporate income taxes on those profits.

There are two issues here:

1. Some might argue that because Apple is based in the US and the R&D for these products occurs in the US, that when Apple (Italy) sells an iPhone to an Italian customer, Apple (US) should pay taxes on those profits. This is somewhat questionable, I think.

2. When Apple (Italy) sells an iPhone to an Italian customer, they should pay Italian corporate income tax on those profits, instead of being able to wipe those profits out using licensing agreements with Apple (Ireland). This is more straightforward and is the loophole being addressed by this settlement.

Re: Apple's $348M Tax Settlement In Italy Bodes Ill For Google, Facebook, Microsoft

#69

Post by bedhead » Thu, Dec 31, 2015, 12:40 AM UTC

bpodgursky wrote: post #8

It's great how we're living in a world where tax codes are so idiotic and complex that it takes long lawsuits to figure out what tax is actually due. It's not about following the letter of the law; it's about following the letter of the law, avoiding the court of public opinion, and coughing up whatever is necessary to stop the complaints when some politician wants to distract people from their incompetence and whip…

It's one of the great misconceptions. You can't tax a corporation, you can only tax people.

Re: Apple's $348M Tax Settlement In Italy Bodes Ill For Google, Facebook, Microsoft

#70

Post by nodamage » Thu, Dec 31, 2015, 12:44 AM UTC

hyperbovine wrote: post #27

bpodgursky wrote: post #11

Earlier quoted context omitted.

No! No! No! What you legally owe in taxes, in a reasonable tax structure, has NOTHING to do with your moral compass. You should be able to plug numbers into a spreadsheet and get it. I'm not saying that taxes are bad. We need tax revenue. I get that. But there should NEVER, EVER, be two legally correct answers to how much you owe. The fact that you had to spend paragraphs making your case, makes mine -- when you reso…

> You should be able to plug numbers into a spreadsheet and get it. But we have that. Take profits and multiply by 0.35. Done.* The fact that Apple effectively pays less than %10 corporate tax rate in the US is, I think, what the parent poster was referring to.

> The fact that Apple effectively pays less than %10 corporate tax rate in the US is, I think, what the parent poster was referring to.

Can you source this claim, please?

The only sources I've seen that make this claim arrive at this number by treating Apple's worldwide sales as if they were entirely US sales, which is an absurd basis for this calculation.