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How Apple avoids paying taxes in CA

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Re: How Apple avoids paying taxes in CA

#71

Post by DaniFong »

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...

Why does selling shares to the public produce a duty to do anything possible to make a profit?

A share in something could be a share in any social contract. A share in a nation, for example, accords one vote and a host of other rights and duties. A share in Whole Foods implies a share in some of the profits going towards nonprofit activities. A share in Google implies only a 1/10th control over their direction -- they come along for the ride.

Re: How Apple avoids paying taxes in CA

#72

Post by Eliezer »

_delirium wrote: post #68
invisible wrote: post #63

Earlier quoted context omitted.

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 t…

How does having a legal duty put you outside the realm of ethics? If you have a legal duty to do something unethical, you're still doing something unethical.

Re: How Apple avoids paying taxes in CA

#73

Post by dooshydoo »

I think most rational people have a schizophrenic response to bits like this. It’s glib and cliché for the player to beg forgiveness because the game itself is corrupt. In a different time I naively thought that if the contest is crooked, don’t play. However, you get older and realize nobility is shortsighted, and that one of the trade-offs we willingly accept, to live amongst endless possibility, is the reservation of veto power for those prepared to pay for the protection of their self-interests.

So I remain realistically optimistic. After a hem and haw, I’ve settled on believing that business with a capital B-for-billion is a much different animal with greater responsibility. But only in that their duty is to succeed for their shareholders, for their employees, and for their customers; in that order.

Taxes suck, life is short, and none of us ever feel that our share is spent wisely. Seeing a company do their homework to pay less shouldn’t feel any more like salt in a wound than meeting an octogenarian. If you knew that was your future, you’d play a similar game.

Re: How Apple avoids paying taxes in CA

#74

Post by zamfi »

jbooth wrote: post #55
chrisbolt wrote: post #49

Earlier quoted context omitted.

Yeah, but they make more than 50% and more than 3/4 of the income, respectively. No, the linked Wikipedia page says: the top 5% with gross income of $137,056 or more pay 57.1% (earning 33.4%)

Well, the wikipedia cites the WSJ, which is behind a paywall. I suspect that they're either wrong or creatively fudging things. After 100k your FICA payments taper off to nothing. That's money off the top, right into your pocket. Additionally, the capital gains taxes are only 15% compared to much higher for income. This means that the wealthy have a hugely advantageous tax situation. Although, I thought that the bott…

If your income comes from capital gains or creative accounting, yes.

But if you're a salaried worker earning over 150-200k, the percentage of your income going to federal income tax is greater as your income increases - more of your income falls into a higher bracket. (Also, FICA doesn't drop to nothing, it drops to 1.45% from 7.65%, saving you 6.2%.) See e.g. http://en.wikipedia.org/wiki/File:US_income_tax_2008.svg

You are assuming that as income rises above 150-200k, it takes forms that are taxed at a lower rate, not just "potentially".

Re: How Apple avoids paying taxes in CA

#75

Post by zamfi »

jbooth wrote: post #50
dedward wrote: post #46

Earlier quoted context omitted.

You mean smaller businesses that create fewer jobs?

No, I mean the small businesses that have created almost all of the new jobs over the last 20 years. A few here and a few there. Some of them got really big. Go check out bls.gov.

Can you give a more specific link to the bureau of labor statistics?

Assuming you're using the typical "500 employees" definition of small business, US census data doesn't seem to bear you out. For the period 1988 to 2003, see table 2c here: http://www.census.gov/epcd/www/smallbus.html

The percentage of paid employees employed by organizations with 500+ employees increased in the period 1988 to 2004, to 49.1% - as the total number of employees has increased by 30%.

Are we looking at different things?

Re: How Apple avoids paying taxes in CA

#76

Post by hackinthebochs »

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…

Isn't it so easy to outsource your moral thinking to others. You can justify almost anything that way!

Re: How Apple avoids paying taxes in CA

#77

Post by jbooth »

zamfi wrote: post #74
jbooth wrote: post #55

Earlier quoted context omitted.

Well, the wikipedia cites the WSJ, which is behind a paywall. I suspect that they're either wrong or creatively fudging things. After 100k your FICA payments taper off to nothing. That's money off the top, right into your pocket. Additionally, the capital gains taxes are only 15% compared to much higher for income. This means that the wealthy have a hugely advantageous tax situation. Although, I thought that the bott…

If your income comes from capital gains or creative accounting, yes. But if you're a salaried worker earning over 150-200k, the percentage of your income going to federal income tax is greater as your income increases - more of your income falls into a higher bracket. (Also, FICA doesn't drop to nothing, it drops to 1.45% from 7.65%, saving you 6.2%.) See e.g. http://en.wikipedia.org/wiki/File:US_income_tax_2008.svg…

Hm, you actually may be right, assuming no accounting and no income from capital gains, high-paid salaried workers do pay more in taxes. And they're probably earning their pay. So I was wrong on that part of the math.

Meanwhile, people who are supremely highly paid (in the > 500k -> millions range) usually get a big chunk of it in options. That's fine as a payment plan, I even agree with it, but they should pay the going rate on their income. And that's not even getting into my real beef, which is the culture of "tax avoidance is honorable" that's pervasive in higher-end business - it diverts labor into parlor tricks and disadvantages actual innovation.

Re: How Apple avoids paying taxes in CA

#78

Post by _delirium »

Eliezer wrote: post #72
_delirium wrote: post #68

Earlier quoted context omitted.

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 t…

How does having a legal duty put you outside the realm of ethics? If you have a legal duty to do something unethical, you're still doing something unethical.

It means we're arguing different points. A duty to shareholders is one thing, which probably has a reasonably objective answer (though laws can be fuzzy). My argument is that there is no "duty to shareholders" to jurisdiction-shop in order to minimize taxes. (I might be wrong on that, but I don't think I am.)

The "right thing to do" is a much fuzzier question, which can include a lot of possible concerns. Perhaps there is an "ethical duty to shareholders to jurisdiction-shop", but certainly you'd have to analyze more than just obligations to shareholders, since there are potentially conflicting ethical obligations to all sorts of other people as well. In the other direction, there might be an ethical obligation not to jurisdiction-shop, depending on your ethical precepts.

Re: How Apple avoids paying taxes in CA

#79

Post by jbooth »

gyardley wrote: post #70
jbooth wrote: post #52

Earlier quoted context omitted.

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.

Yeah, and in an anarchic system, power and money flow upwards until it's unsustainable and it collapses.

We're not living in caves, definitions of fair should include upward mobility.

And who says they're not getting the same service? Wealthy corporations and individuals get a ton of services from the US gov't, from subsidies to infrastructure to direct benefit from the State Dept and military.

Re: How Apple avoids paying taxes in CA

#80

Post by nradov »

dot wrote: post #3
towndrunk wrote: post #2

Seems like a smart business move to me. Are we suppose to be upset about this?

well, the state is bankrupt. partly because companies that embody its dreams are not chipping in with the bills.

The state is "bankrupt" because it cranked up spending during the boom years, giving ridiculous pay and benefits to public employees instead of saving for a rainy day. Fighting the war on (some) drugs and passing out free services to illegal aliens hasn't helped much either.

Of course there is currently no legal way for the state government to file for bankruptcy. But I except that within the next 10 years it will default on its sovereign debt.

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