How Apple Sidesteps Billions in Taxes • Hacker News Board

Re: How Apple Sidesteps Billions in Taxes

#21

Post by protomyth » Sat, Apr 28, 2012, 7:37 PM UTC

acslater00 wrote: post #19

There is a really important lesson from all of this, and it is not that Apple is wrong for rationally exploiting global tax laws to avoid paying US taxes. The fact that California has no tax jurisdiction in Nevada, and that the US has no tax jurisdiction in Ireland, is an unassailable fact of life. Tax laws are subject to regulatory competition like many other things, and ignoring that -- insisting that this is an is…

Uhm... the other problem increasing taxes on capital gains is that most Americans in the under 50 crowd are going to use those for retirement.

Re: How Apple Sidesteps Billions in Taxes

#22

Post by acslater00 » Sat, Apr 28, 2012, 7:41 PM UTC

protomyth wrote: post #21

acslater00 wrote: post #19

There is a really important lesson from all of this, and it is not that Apple is wrong for rationally exploiting global tax laws to avoid paying US taxes. The fact that California has no tax jurisdiction in Nevada, and that the US has no tax jurisdiction in Ireland, is an unassailable fact of life. Tax laws are subject to regulatory competition like many other things, and ignoring that -- insisting that this is an is…

Uhm... the other problem increasing taxes on capital gains is that most Americans in the under 50 crowd are going to use those for retirement.

The actual appreciation of their investments would be higher if you eliminated corporate income tax. And you would still get to defer payment until you sell the actual investment.

Properly designed, it all evens out.

Re: How Apple Sidesteps Billions in Taxes

#23

Post by jlarocco » Sat, Apr 28, 2012, 7:41 PM UTC

aakil wrote: post #18

There really should be some sort of movement to shame apple (and hopefully other California companies) for doing this. They've benefitted immensely from the infrastructure we've provided and are doing nothing to invest back into it now that they're on top. At the very least they should help with the rising tuition costs at public schools (UCs, Cal States, etc.)

Shaming them for what? They're simply taking advantage of the confusing and loophole filled tax laws you provided them.

Nobody pays more taxes than they absolutely have to. If you don't want people to abuse loopholes, fix the loopholes.

Re: How Apple Sidesteps Billions in Taxes

#24

Post by dageshi » Sat, Apr 28, 2012, 7:41 PM UTC

My personal feeling on this is that the moment the tax system becomes so complicated that you've got to employ lots of people to figure it out then you've turned taxes into a business expense which is as susceptible to optimisation as any other part of your business.

Re: How Apple Sidesteps Billions in Taxes

#25

Post by TheEzEzz » Sat, Apr 28, 2012, 7:42 PM UTC

acslater00 wrote: post #19

There is a really important lesson from all of this, and it is not that Apple is wrong for rationally exploiting global tax laws to avoid paying US taxes. The fact that California has no tax jurisdiction in Nevada, and that the US has no tax jurisdiction in Ireland, is an unassailable fact of life. Tax laws are subject to regulatory competition like many other things, and ignoring that -- insisting that this is an is…

> If the US had a globally competitive corporate tax rate (say 15%), it would make most of these tactics irrelevant.

Until Ireland further lowers its taxes. Your argument leads to a race to the bottom.

The problem with only taxing dividends is that corporations only pay out a small portion of their profits in dividends. I may theoretically be a billionaire in my holdings, but I only need a million in dividends per year to live my preferred lifestyle. Thus I only pay tax on the million dollars instead of on my billions. You can try and get at the money via capital gains, but what if the bulk of the money is being held by a foreign company, with only a small amounts to pay dividends to the owners filtering into the main company?

Re: How Apple Sidesteps Billions in Taxes

#26

Post by raganwald » Sat, Apr 28, 2012, 7:43 PM UTC

arvinjoar wrote: post #4

No matter the tax rate or how diligently one tries to fix loopholes, in a global world big corporations are going to dodge taxes (not always a bad thing). It's just that this is much harder for small companies who don't have armies of lawyers at their disposal, so it essentially creates an unfair advantage for bigger corporations (leverage) over startups and skews the economy towards the BigCo. This is why big corpor…

I’m reminded of an old poker saying: “The more wild cards and crazy rules, the better the expert’s advantage."

Re: How Apple Sidesteps Billions in Taxes

#27

Post by acslater00 » Sat, Apr 28, 2012, 7:46 PM UTC

TheEzEzz wrote: post #25

acslater00 wrote: post #19

There is a really important lesson from all of this, and it is not that Apple is wrong for rationally exploiting global tax laws to avoid paying US taxes. The fact that California has no tax jurisdiction in Nevada, and that the US has no tax jurisdiction in Ireland, is an unassailable fact of life. Tax laws are subject to regulatory competition like many other things, and ignoring that -- insisting that this is an is…

> If the US had a globally competitive corporate tax rate (say 15%), it would make most of these tactics irrelevant. Until Ireland further lowers its taxes. Your argument leads to a race to the bottom. The problem with only taxing dividends is that corporations only pay out a small portion of their profits in dividends. I may theoretically be a billionaire in my holdings, but I only need a million in dividends per ye…

That's great. If apple makes $1b, if the bulk of the money is held by a foreign SUBSIDIARY, my stock will go up, and I will pay capital gains. If they give it to me as a dividend, I will pay taxes on that. If they reinvest it in the company and the investment makes money, my stock will go up even more. And if they reinvest it in the company and squander it all, no taxes will be collected on the income, but they won't be able to write the loss off anything either.

The only thing that truly captures the vagaries of 'where money is held' is the stock price. Wall Street don't care if that money is in New York or Guatemala, if Apple has it it's making the stock go up.

Re: How Apple Sidesteps Billions in Taxes

#28

Post by jlarocco » Sat, Apr 28, 2012, 7:50 PM UTC

cooldeal wrote: post #11

tvon wrote: post #8

It's somewhat interesting (or just entertaining) that things large corporations have been doing for ages are gaining new attention because we can throw Apple's name into the mix.

It does change the scale of things materially because of Apple's high profits compared to other large organizations that you talk about.

Not really. Companies of every size have been taking advantage of stuff like this for decades. Stuff like Delaware's corporation laws [1] are pretty well known. It's common sense, really. Why would anybody pay more taxes than they had to?

https://en.wikipedia.org/wiki/Delaware_General_Corporation_L....

Re: How Apple Sidesteps Billions in Taxes

#29

Post by yummyfajitas » Sat, Apr 28, 2012, 7:51 PM UTC

TheEzEzz wrote: post #25

acslater00 wrote: post #19

There is a really important lesson from all of this, and it is not that Apple is wrong for rationally exploiting global tax laws to avoid paying US taxes. The fact that California has no tax jurisdiction in Nevada, and that the US has no tax jurisdiction in Ireland, is an unassailable fact of life. Tax laws are subject to regulatory competition like many other things, and ignoring that -- insisting that this is an is…

> If the US had a globally competitive corporate tax rate (say 15%), it would make most of these tactics irrelevant. Until Ireland further lowers its taxes. Your argument leads to a race to the bottom. The problem with only taxing dividends is that corporations only pay out a small portion of their profits in dividends. I may theoretically be a billionaire in my holdings, but I only need a million in dividends per ye…

Ireland can't lower it's taxes to the point of unprofitability, so it will lower it's taxes until revenues raised == cost of services + small margin. That's a good thing.

Don't complain that others provide the same service at lower cost, try to innovate and outcompete them.

Re: How Apple Sidesteps Billions in Taxes

#30

Post by jacquesm » Sat, Apr 28, 2012, 7:55 PM UTC

acslater00 wrote: post #19

There is a really important lesson from all of this, and it is not that Apple is wrong for rationally exploiting global tax laws to avoid paying US taxes. The fact that California has no tax jurisdiction in Nevada, and that the US has no tax jurisdiction in Ireland, is an unassailable fact of life. Tax laws are subject to regulatory competition like many other things, and ignoring that -- insisting that this is an is…

Of course it is an issue of morality. I could choose to avoid paying taxes in the society that I'm a part of. It would be in my economic interest to do so.

But it is morally wrong because it is that same society that enables me to make my money in the first place.

Simple, right?