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How Apple avoids paying taxes in CA

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Re: How Apple avoids paying taxes in CA

#61

Post by _delirium »

Scott_MacGregor wrote: post #39

It would be nice if California became the most business friendly state in the nation. One of the reasons we chose Austin over California for our startup is the high California taxes and loads of red tape to operate. Texas seemed a lot more business friendly to us, the only downside we can see is the humid climate.

For a company founded in the 70s like Apple, Texas has much higher property taxes. Prop 13 means that Apple's grandfathered in with extremely low property valuations in California, while Texas has both present-day valuations (no equivalent of Prop 13) and one of the highest property-tax rates in the nation.

Re: How Apple avoids paying taxes in CA

#62

Post by jbooth »

ryanwaggoner wrote: post #45
jbooth wrote: post #38

Earlier quoted context omitted.

Yeah, but they make more than 50% and more than 3/4 of the income, respectively. Richer people pay lower taxes as a percentage of their income than the middle class. Much lower. It'd be lower even if they did it all by the book and didn't hire expensive accountants and use offshore accounts, tax havens and all of that. Once you add that stuff in it's significantly lower. It's a bug, not a feature. Meanwhile, presumab…

First, how do you know that I'm cheering for anything? I stated a simple fact. It doesn't mean that I approve of it. And my post was in response to this claim: Yes, but in practice, this means that the middle classes pay most of the tax While "the rich" might pay a lower percentage of their income in taxes, it's just flat-out false that the middle class pay "most of the taxes." Whether this should or shouldn't be the…

Sorry for implying that, and you were correct on the semantics. The fuller explanation would have been more helpful, though.

Re: How Apple avoids paying taxes in CA

#63

Post by invisible »

_delirium wrote: post #59
hop wrote: post #32

Article title is misleading, they only minimize some capital gains tax on their cash and investments with the nevada entity. And they certainly have a duty to shareholders to do so. They pay hundreds of millions in income tax on their profit in California, plus everything else - property tax, payroll tax, sales tax on purchases in CA...

I don't think there is actually a "duty to shareholders" to reduce taxation by jurisdiction-shopping. At least, having done some research, I'm unable to come up with a single case where a shareholder lawsuit against a company that declined to do so succeeded.

I think the "right thing to do" for shareholders is probably a better way to describe the situation. Duty so much as to reduce their costs (with taxation being a cost).

Re: How Apple avoids paying taxes in CA

#64

Post by aero142 »

Scott_MacGregor wrote: post #39

It would be nice if California became the most business friendly state in the nation. One of the reasons we chose Austin over California for our startup is the high California taxes and loads of red tape to operate. Texas seemed a lot more business friendly to us, the only downside we can see is the humid climate.

It sounds like you are new to the area. It has been unusually wet recently, but give it time. It will be back to hot and dry soon enough.

Re: How Apple avoids paying taxes in CA

#65

Post by zmmmmm »

riferguson wrote: post #10

Judge Learned Hand: "Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for…

That's interesting. I know little of US tax laws but in my country if an arrangement has no legitimate purpose other than to minimize tax then it can be seen as tax evasion and the tax department can choose to tax under an alternative regime that they decide matches its "true" nature. Similar to how if you claim to be a contractor but you do all your work for one company they can decide to treat you as an employee. Of course, it is fairly easy to work around, so this does not have a lot of teeth, but it still weeds out the most egregious tax avoidance schemes.

Re: How Apple avoids paying taxes in CA

#66

Post by jbooth »

orangecat wrote: post #58
jbooth wrote: post #31

Earlier quoted context omitted.

Sure, but whenever anyone proposes that, 40% of the country, suckers that actually pay their taxes, stand up and beat their chests and wail about the inequities of making a corporation pay taxes. Last I heard, Exxon-Mobil, the most profitable corporation in the entire world, doesn't pay a dime in US taxes. Meanwhile, I pay every other week. This is BS.

Last I heard, Exxon-Mobil, the most profitable corporation in the entire world, doesn't pay a dime in US taxes. You heard wrong: http://blogs.forbes.com/energysource/2010/04/07/exxon-says-i...

Thanks.

So at least there's that. Meanwhile, google for "exxon subsidies us" brings up a 3 billion subsidy last year and who knows how much over the last 10. But at least we're probably not in the red. Although I'd say Exxon is getting a better-than-fair deal with all that the State Dept and US Military do for them.

Re: How Apple avoids paying taxes in CA

#67

Post by jbooth »

invisible wrote: post #63
_delirium wrote: post #59

Earlier quoted context omitted.

I don't think there is actually a "duty to shareholders" to reduce taxation by jurisdiction-shopping. At least, having done some research, I'm unable to come up with a single case where a shareholder lawsuit against a company that declined to do so succeeded.

I think the "right thing to do" for shareholders is probably a better way to describe the situation. Duty so much as to reduce their costs (with taxation being a cost).

Yeah, but that's a crappy thing to do. Lots of unethical practices are legal but we don't encourage companies to do them. Why this?

Re: How Apple avoids paying taxes in CA

#68

Post by _delirium »

invisible wrote: post #63
_delirium wrote: post #59

Earlier quoted context omitted.

I don't think there is actually a "duty to shareholders" to reduce taxation by jurisdiction-shopping. At least, having done some research, I'm unable to come up with a single case where a shareholder lawsuit against a company that declined to do so succeeded.

I think the "right thing to do" for shareholders is probably a better way to describe the situation. Duty so much as to reduce their costs (with taxation being a cost).

If there isn't actually a legal duty to the shareholders, though, then you're basically in a territory of normal ethics, with subjective tradeoffs and competing interests, aren't you? There might be some ethical concerns about being "fair" to your shareholders, even beyond what the law requires, but there's also concerns about paying a "fair" amount of taxes to the state you reside in, and all sorts of other things to balance.

Re: How Apple avoids paying taxes in CA

#69

Post by orangecat »

jbooth wrote: post #66
orangecat wrote: post #58

Earlier quoted context omitted.

Last I heard, Exxon-Mobil, the most profitable corporation in the entire world, doesn't pay a dime in US taxes. You heard wrong: http://blogs.forbes.com/energysource/2010/04/07/exxon-says-i...

Thanks. So at least there's that. Meanwhile, google for "exxon subsidies us" brings up a 3 billion subsidy last year and who knows how much over the last 10. But at least we're probably not in the red. Although I'd say Exxon is getting a better-than-fair deal with all that the State Dept and US Military do for them.

Although I'd say Exxon is getting a better-than-fair deal with all that the State Dept and US Military do for them.

No doubt. I'm always amused by claims that nuclear power or alternative energy is "too expensive", when they ignore the huge explicit and implicit subsidies that oil gets.

Re: How Apple avoids paying taxes in CA

#70

Post by gyardley »

jbooth wrote: post #52
ryanwaggoner wrote: post #47

Earlier quoted context omitted.

Are you donating all the extra money you have to the IRS? Are you skipping all deductions, even if you're eligible for them? Why not? Your argument is essentially that we have a duty to pay as much tax as possible. But this is predicated on the belief that paying taxes is the best way to benefit society with your resources. Obviously, this is a long-standing debate that we won't solve here, but I would argue that the…

I'm in the band of income that pays the absolute highest taxes as a % of income. I just want rich people to pay the same % as I do, or a tiny bit higher since they'll miss it less. I don't complain about paying my taxes, I see them as membership fees to live in a society with laws and running water and OSHA. It's not about "small govt" or "big govt", those are just buzzwords. The government's hugely in the red either…

While we might be able to justify one person paying orders of magnitude more taxes than another, based on the overall benefit to society as a whole, let's not pervert language by describing that system as 'fair'. In fair systems, people get the same service for the same price.
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