How Apple sidestepped a 2013 crackdown on its Irish tax practices • Hacker News Board

Re: How Apple sidestepped a 2013 crackdown on its Irish tax practices

#271

Post by landryraccoon » Mon, Nov 06, 2017, 10:35 PM UTC

deong wrote: post #227

DigitalJack wrote: post #94

Earlier quoted context omitted.

In this case it's not a loophole in American laws. It's a problem with European and Carribean laws. This money was earned abroad. Blame the Irish, and now whatever this Jersey Island place is. The EU made a move to close the loophole, apple found another. I suppose there are loopholes with them selling IP assets to subsidiaries. But that's a different loophole than the one with them floating money around different co…

The US government doesn't, as a general rule, care if the money has ever been here. If you as a private US citizen choose to live and work abroad, you are required to file US income taxes and declare all foreign income. And depending on the precise details of the foreign government's treaty situation and tax rates, you may be required to pay the normal US tax rate on some or all of that income. I don't know that it c…

> If you as a private US citizen choose to live and work abroad, you are required to file US income taxes and declare all foreign income.

Do you support this practice though? Does any other country try to tax people for income earned entirely abroad? This puts US citizens at a disadvantage compared to citizens of say, the EU.

Re: How Apple sidestepped a 2013 crackdown on its Irish tax practices

#272

Post by hammock » Mon, Nov 06, 2017, 10:36 PM UTC

fredley wrote: post #264

hammock wrote: post #254

Earlier quoted context omitted.

Thanks for "taking me through that." Never thought about that before now. Let me take you through your scenario.. you give government increasing power to censure corporations it doesn't like, effectively making it kingmaker of the economy. You end up with something like China where every company is state-sanctioned, and there is widespread graft and corruption.

My point is not about increasing or decreasing the power of Government (in a democracy, Government power cannot really be 'increased' or 'decreased', but it can be concentrated or spread out though). The Chinese Government is not a democracy, so not really relevant to this discussion.

>in a democracy, Government power cannot really be 'increased' or 'decreased', but it can be concentrated or spread out though

What is the point of a constitution then?

Re: How Apple sidestepped a 2013 crackdown on its Irish tax practices

#273

Post by wildmusings » Mon, Nov 06, 2017, 10:40 PM UTC

jfoutz wrote: post #226

wildmusings wrote: post #216

Earlier quoted context omitted.

It seems that you're suggesting that we tax corporations on overseas income, even when reinvested overseas. That would put American companies at an extreme disadvantage compared to those from other countries, by forcing them to pay double taxes, US and foreign corporate taxes, on all income. The logical solution is to get rid of the corporate tax altogether. The only reason why it exists is to be a plank for politici…

That's fine, but all other things remaining equal, there's not as much revenue coming in. So, you need to raise capital gains tax and income tax in some proportion to retain the balance. Does that still seem easier? Alternatively, we could cut a bunch of spending, but that turns into its own dogfight.

The corporate tax is actually a small (but not negligible) portion of tax revenue. Part of the logic for capital gains tax being lower than income tax is to account for the double taxation of the corporate tax. So I would be in favor of raising the capital gains tax to make up for eliminating the corporate tax.

I also happen to think that taxes should be lower overall, but I think it’s best to divide the two issues: 1) how much we should be taxed, from 2) how we should be taxed.

Re: How Apple sidestepped a 2013 crackdown on its Irish tax practices

#274

Post by mattnewton » Mon, Nov 06, 2017, 10:44 PM UTC

crdoconnor wrote: post #251

landryraccoon wrote: post #211

Earlier quoted context omitted.

It's not corporation against nation state, it's nation state against nation state. I'm pretty sure China would be quite happy if the US punishes Apple. That means that their protectionist policy towards Huawei will be even more effective. It is difficult for me to imagine other nations either not rolling out the red carpet to bring Apple over, or giving virtually tax free giveaways to their own companies to gain smar…

>I'm pretty sure China would be quite happy if the US punishes Apple. That means that their protectionist policy towards Huawei will be even more effective. If the US put onerous taxes on the purchase of Apple phones that might be true. If the US instead just collects a larger share of Apple's profits then Apple is going to go on exactly as before and just not deliver quite as much cash to its shareholders.

Taxing the phone or the company’s margins should have the same effect, right? They’re both costs on apple’s revenue. Barring maybe some enforcement issue or something it makes no difference how you collect it, Apple will pass some of it off to their customers and eat another percentage based on whatever the new cost/demand curve looks like to them.

Re: How Apple sidestepped a 2013 crackdown on its Irish tax practices

#275

Post by pasbesoin » Mon, Nov 06, 2017, 10:58 PM UTC

rrggrr wrote: post #2

If passed, and for a brief period of time, Trump's dollar repatriation tax scheme brings home some of the +2 trillion dollars sequestered abroad - including some of the billions Apple has parked offshore. http://www.businessinsider.com/trump-gop-tax-reform-plan-bil... There's something to be said for Apple's efforts to level the playing field against the favorable tax & public policies under which Samsung and Huawei…

This was offered/done around 2004-2005, with the proviso that it would be a one-time deal.

Fool me once, shame on you. Fool me twice, shame on me.

Investigate. Confiscate. Incarcerate.

I'm done with the "business" line of rhetoric.

Re: How Apple sidestepped a 2013 crackdown on its Irish tax practices

#276

Post by mprev » Mon, Nov 06, 2017, 11:06 PM UTC

hex20 wrote: post #255

zeristor wrote: post #115

Maybe Britain should invade Jersey?

I don't think you can invade part of your own country. The UK can pass any laws it wants in Jersey.

Jersey isn’t part of the UK. The UK is responsible for the defence of jersey, so that’s something of a bargaining chip, perhaps.

Re: How Apple sidestepped a 2013 crackdown on its Irish tax practices

#277

Post by revelation » Mon, Nov 06, 2017, 11:07 PM UTC

c517402 wrote: post #240

nautilus12 wrote: post #38

Earlier quoted context omitted.

No, the spirit of the law is effectively being broken. Sidestepping the law does not constitute following it in my opinion. Laws are meant to be guidelines and legal precedent defines its true extent, you cannot make laws extensive enough to cover every scenario. If they make it illegal to offshore money then apple will simply find a way to establish a corporation on the moon. Its clearly demonstrable that they are g…

A product has its components fabricated in east Asia, is assembled in east Asia, sold in Europe, and the profits from the sale are held in Europe. Somehow you consider this “illegally offshoring money”. Somehow you think the US government deserves 34% of these profits. Apparently, the spirit of the law being violated is that the US government has the right to stick it’s nose in anyplace in the world it wants and extr…

I don't think the US government deserves 34% of these profits, but some country out there does. Make it point of sale, if you want.

But right now that money isn't taxed at all. That money is what the Irish subsidiary owes Apple US for the license to Apple IP. So the Irish subsidiary isn't paying taxes on it, and Apple isn't paying taxes on it in the US because they are refusing to "bring it home".

That is why Apple is lobbying so hard for some sort of "tax holiday". They want to pay 0, nada tax on those overseas profits.

You seem to be missing this little detail.

Re: How Apple sidestepped a 2013 crackdown on its Irish tax practices

#278

Post by loopbit » Mon, Nov 06, 2017, 11:15 PM UTC

enraged_camel wrote: post #197

namelost wrote: post #190

Earlier quoted context omitted.

For the US to start taxing Apple's foreign income abroad is not like taxing an American living in Ireland (and even that is crazy). It's like if the US started taxing an Irish person in Ireland[1]. However obvious it is that EU Apple is a sock puppet of US Apple, directly imposing taxes on foreign companies operating in foreign countries would be met with retaliation. It is not a smart nor a profitable trade policy.…

>>For the US to start taxing Apple's foreign income abroad is not like taxing an American living in Ireland (and even that is crazy). It's like if the US started taxing an Irish person in Ireland[1]. I'm not sure I follow. Apple is an American company.

No, Apple US is a shareholder of Apple EU. The US can tax Apple US for whatever income they get from Apple EU, but they can't tax Apple EU

Re: How Apple sidestepped a 2013 crackdown on its Irish tax practices

#279

Post by crdoconnor » Mon, Nov 06, 2017, 11:21 PM UTC

osteele wrote: post #269

crdoconnor wrote: post #249

Earlier quoted context omitted.

>As a government, raise corporate taxes too high, and corporations leave Only when there's almost no cost to leaving, which in itself is a tax loophole. If you declare that residency is about where you do the most business and has nothing to do with which letterbox has the word "headquarters" on it then their reaction would be limited to tantrums in Wall Street Journal op eds. >or overseas corporations outcompete the…

>>As a government, raise corporate taxes too high, and corporations leave >Only when there's almost no cost to leaving, which in itself is a tax loophole. If you declare that residency is about where you do the most business and has nothing to do with which letterbox has the word "headquarters" on it then their reaction would be limited to tantrums in Wall Street Journal op eds Or to the other two arms of the disjunc…

>It has to come from somewhere. It can come from owners, workers, or consumers.

Owners. It comes from owners.

>If it comes from owners, it increases the corporation's cost of capital

There is currently an almost absurd overabundance of capital relative to aggregate demand.

Re: How Apple sidestepped a 2013 crackdown on its Irish tax practices

#280

Post by idoh » Mon, Nov 06, 2017, 11:24 PM UTC

nautilus12 wrote: post #268

idoh wrote: post #236

Earlier quoted context omitted.

Replying to your points in order: - No, in order to sue you must have standing, which in a super short version means that the plaintiff has to be really close to the harm, not a bystander who witnesses something. - Obviously Apple did not not exist when Justice Hand said that, but I think he would be fine with it. Apple is complying with the letter of the law, and their responsibility on that issue goes no further. A…

Then really I guess we need to work harder to change the letter of the law. I was under the impression when I started the conversation that the tax havens were more of a loophole or ambiguity in the law and that you could prevent this behavior by showing intent to dodge taxes but apparently it is a long standing explicit component of the law. Id be happy to read up more on the existing laws if you would be willing to…

I do not have any links, the best I can say is that these pieces usually reward close reading and diagramming of the facts.

My understanding (as a person who has taken a couple tax law classes) is that it isn't an explicit law but a combination of things, all of which are reasonable, which yields what could be said to be a surprising result:

- companies pay taxes on profits

- profits = revenue - expenses

- It is OK to expense licensing of IP

- It is OK to sell IP to a subsidiary

So Apple creates a subsidiary in Jersey, transfers IP to that company, then charges the Irish subsidiary fees which are more or less equal to the revenue for selling the phones. In this way the Irish subsidiary makes no profit, so there is nothing to tax. All the profit goes to Jersey, which happens to have no tax.

It needs to be said that the money is stuck there, if Apple wants to get at the money then it would in fact be taxed depending on where it goes. So it is not even really dodging taxes, but more like delaying when they get paid (hoping for a better tax rate in the future, I suppose).

I am not even sure if US law is to blame here, it seems like the EU is the one that is upset at Apple, and Jersey is under EU law not US law.