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How Apple avoids paying taxes in CA

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Re: How Apple avoids paying taxes in CA

#91

Post by kd0amg »

eru wrote: post #90
jbooth wrote: post #67

Earlier quoted context omitted.

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?

We don't encourage them to do this. The shareholders elected the board that is currently minimizing the taxes. If you don't like that, you can become an activist shareholder (or just an activist) and campaign for changing this company policy. This is no question of company ethics. It might be a question of the ethics of shareholding.

Having been elected to a position does not absolve you of moral responsibility for the actions you take while holding that position.

Re: How Apple avoids paying taxes in CA

#92

Post by nitrogen »

zach wrote: post #81
eston wrote: post #5

It's a wonder that Apple is still a primarily American corporation at all. Really big companies like Accenture are multinational corporations, generally incorporated in a tax haven with decent legal standing and running its HQ in the US as a domestic subsidiary.

Apple isn't even a Delaware corporation, as maybe 99% of publicly-traded companies are, but is still a California corporation after all these years.

Maybe the "California corporation" ethos is a part of their brand image. Some people may associate the "Deleware corporation" designation with scheming and untrustworthy businesses.

Re: How Apple avoids paying taxes in CA

#93

Post by _delirium »

ju2tin wrote: post #86
_delirium wrote: post #60

Earlier quoted context omitted.

I don't know about other people, but I don't go out of my way to avoid taxes. I certainly don't create new companies or change how I do business in order to avoid taxes. If there's an actual deduction box on a form that I'm eligible for, sure, I'll check it. But I don't really spend days thinking up ways to hide my income. Any time I would've spent on that could be much more productively spent by just making more inc…

"Any time I would've spent on that could be much more productively spent by just making more income." Which is actually a good reason to make taxes lower and less burdensome, so the most productive members of our society (as measured by income) will spend their time producing, instead of defending the fruits of their labor from the tax man.

In my experience, the kinds of people who spend the most time on minimizing taxes are precisely the opposite of productive members of society: heirs and heiresses with large assets and passive incomes, but not much real capacity for earning income through their own labors. You generally see complex tax-avoidance trust structures in these "old-money" families much more than you see them in new-money families. For them, it's a rational decision, because the opportunity cost of spending a bunch of time/effort on tax avoidance is low: they aren't wasting time that they would otherwise have put to more productive uses.

Re: How Apple avoids paying taxes in CA

#94

Post by stretchwithme »

Apple is well with in its rights to do this and I do think there is a duty to shareholders to not overpay for things, including government. That said, Apple pays a lot more taxes than most corporations, simply because they are successful and they should be commended for producing so high a return on capital.

Some will be ripping their hair out over such a comment. Apple is successful and therefore worthy of punishment, they will tell you. I respectfully disagree.

Re: How Apple avoids paying taxes in CA

#95

Post by eru »

kd0amg wrote: post #91
eru wrote: post #90

Earlier quoted context omitted.

We don't encourage them to do this. The shareholders elected the board that is currently minimizing the taxes. If you don't like that, you can become an activist shareholder (or just an activist) and campaign for changing this company policy. This is no question of company ethics. It might be a question of the ethics of shareholding.

Having been elected to a position does not absolve you of moral responsibility for the actions you take while holding that position.

Indeed. But the shareholders will find somebody to do their bidding.

Also you could argue that doing what you were elected to do, within the legal limits, is fine.

I'd say tax minimization is a patriotic duty.

Re: How Apple avoids paying taxes in CA

#96

Post by hop »

_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.

The board of directors and officers have a fiduciary duty to do what is in the best interest of the company and shareholders. If the choice is to invest our extra cash thru a CA based corp, pay more tax, have a lower return and ultimately less $ to reinvest in the company, or, to set up in the neighboring state so don't lose money, and its perfectly legal, the choice is easy.

I think a better question is why have CA voters voted in so much spending and extra taxes, putting them at disadvantage to other states. Nevada actively encourages companies and individuals to come set up shop there.

Capital gains tax by state - http://www.thereibrain.com/realestate-blog/2007/10/capital-g...

Re: How Apple avoids paying taxes in CA

#97

Post by mturmon »

mturmon wrote: post #28
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…

http://en.wikipedia.org/wiki/Race_to_the_bottom

Why the downvotes? The linked page points to the judicial concept of the "Race to the Bottom" in which countries/states/counties competitively weaken their laws to attract investment.

Re: How Apple avoids paying taxes in CA

#98

Post by Ryan-R »

JabavuAdams wrote: post #26
btmorex wrote: post #17

Earlier quoted context omitted.

That may be true, but the simple fact is that it's a lot easier for a large corporation to minimize its taxes than it is for a small business or individual. For example, a company like apple can afford to pay 10 people full time to move around money and assets in order to minimize taxes. Those people will save Apple far more than it costs to employ them. A 5 person company not only can't match that effort, but if the…

Your example is just an economy of scale. The same could be said of engineering support infrastructure.

I think the point he is trying to make is that the current tax laws favor big businesses because, let's face it, the government is run by those businesses.

Re: How Apple avoids paying taxes in CA

#99

Post by _delirium »

hop wrote: post #96
_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.

The board of directors and officers have a fiduciary duty to do what is in the best interest of the company and shareholders. If the choice is to invest our extra cash thru a CA based corp, pay more tax, have a lower return and ultimately less $ to reinvest in the company, or, to set up in the neighboring state so don't lose money, and its perfectly legal, the choice is easy. I think a better question is why have CA…

You assert the opposite of my claim, but do you have any evidence? "Fiduciary duty" is an actual legal term; there are some actions or non-actions which violate a corporate officer's fiduciary duty, and some which don't. Failure to set up a tax shelter, even when it would be possible to do so and it would save the company money, is not a breach of fiduciary duty. I'd welcome any evidence otherwise, but I suspect you'll have trouble finding any, because I did research this at one point, and as far as I know, no corporate officer in U.S. history has ever been found to be in breach of fiduciary duty for not setting up tax-sheltering subsidiaries.

I can imagine a scenario where something like that might happen, but I think it would have to be fairly egregious, probably more something like deliberately setting up a new tax structure to increase a company's taxes (maybe because you know the mayor and want to help him out with his budget or something).

Re: How Apple avoids paying taxes in CA

#100

Post by barrkel »

ryanwaggoner wrote: post #35
barrkel wrote: post #33

Earlier quoted context omitted.

Yes, but in practice, this means that the middle classes pay most of the tax, since the poor don't earn enough, while the rich are able to afford different wealth structures that e.g. fall under capital appreciation, or are structured around shares of ownership and operated in a different state or country for tax reasons, etc. In other words, the burden of funding of the state - the security, infrastructure and socia…

Not true, the top 5% of earners in the US pay more than 50% of the taxes, and the top 10% pay almost 3/4ths of the taxes. http://en.wikipedia.org/wiki/Taxation_in_the_United_States#T...

I'm aware of this, and is actually the reason I included "proportionately" in my post, but I didn't have time to explain what I meant.

I would consider the vast majority of the top 10% to be middle class, however.

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