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How Apple Sidesteps Billions in Taxes

nytimes.com

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Re: How Apple Sidesteps Billions in Taxes

#31

Post by jandrewrogers »

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…

Short-term capital gains are already taxed at income rates. Long-term capital gains are lower in part because they are not inflation protected, which can substantially discount the real returns. Having a lower tax rate is simpler than computing inflation-adjusted returns for every long-term transaction. For example, if you buy an asset for $500k and sell it for $600k ten years later, you actually lost money after adjusting for inflation but you still have to pay taxes on the $100k capital gain.

Another factor is that long-term capital gains taxes are much less efficient than income taxes in terms of adverse impact on the economy. If you need to raise additional revenue, it is better for economic growth to take it from income (or sales) than capital gains.

Re: How Apple Sidesteps Billions in Taxes

#32

Post by BCM43 »

yummyfajitas wrote: post #29
TheEzEzz wrote: post #25

Earlier quoted context omitted.

> 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.

But that won't work if some very small country lowers it's tax to 1%. The US can't compete with that.

Re: How Apple Sidesteps Billions in Taxes

#33

Post by yequalsx »

yummyfajitas wrote: post #29
TheEzEzz wrote: post #25

Earlier quoted context omitted.

> 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.

Well Bush II lowered taxes to the point of unprofitability (I assume you are speaking from a national governmental view). Governments engage in deficit spending and some foolishly lowers taxes at the behest of its monied interests.

You appear to assign to the government of Ireland some sort of rationality and ignore things like regulatory capture and corruption. Your belief that a government will only lower until "revenues raised == cost of services + small margin" is not rooted in fact.

Re: How Apple Sidesteps Billions in Taxes

#34

Post by forrestthewoods »

jacquesm wrote: post #30
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?

That doesn't make any sense at all. Tax avoidance is perfectly legal. Tax evasion is not. Playing within the rules created by society is not morally wrong. Every deduction you take on your personal income taxes falls under tax avoidance which you can't possibly be describing as morally wrong.

"The legal right of an individual to decrease the amount of what would otherwise be his taxes or altogether avoid them, by means which the law permits, cannot be doubted." - US Supreme Court

Re: How Apple Sidesteps Billions in Taxes

#35

Post by lunarscape »

Regarding how Ireland is mentioned in the article- Apple has had a significant presence in Ireland since the year 1980, has a workforce nearing 3000 and is expanding, announcing 500 jobs just this month [1]. Hardly "little more than a letterbox or an anonymous office " as could be misinterpreted rather easily from this article.

[1] http://www.reuters.com/article/2012/04/20/us-apple-ireland-i...

Re: How Apple Sidesteps Billions in Taxes

#36

Post by wdewind »

jacquesm wrote: post #30
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?

If you can draw clear lines at what a society is, sure.

Re: How Apple Sidesteps Billions in Taxes

#37

Post by noonespecial »

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…

I think part of the problem is that the loopholes are for sale. Their original existence may be accidental, but their continuing existence is not.

Re: How Apple Sidesteps Billions in Taxes

#38

Post by hej »

forrestthewoods wrote: post #34
jacquesm wrote: post #30

Earlier quoted context omitted.

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?

That doesn't make any sense at all. Tax avoidance is perfectly legal. Tax evasion is not. Playing within the rules created by society is not morally wrong. Every deduction you take on your personal income taxes falls under tax avoidance which you can't possibly be describing as morally wrong. "The legal right of an individual to decrease the amount of what would otherwise be his taxes or altogether avoid them, by mea…

> Playing within the rules created by society is not morally wrong.

There are people who honestly believe that? It’s not that simple, it really isn’t.

I, for example, think there are many immoral but legal things and I want it to stay that way. The law is not supposed to perfectly mirror our morality, that would be a clusterfuck, tyranny, and otherwise a really bad idea. (For example: I think not tipping in the restaurant is immoral. I, however, never ever want that to become a law. Just one example.)

In short: Just because it’s legal, doesn’t mean it’s right. Just because it’s not right, doesn’t mean it should be illegal.

Re: How Apple Sidesteps Billions in Taxes

#39

Post by raverbashing »

raganwald wrote: post #26
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."

This is very true

What the "regulation fans" don't realize is that the bigger the company the more lawyers/accountants it can hire and work the cracks in the system.

This is also valid in the case of Starbucks. Regulation is increased for a reason, and the only company that has the resources to comply with it is Starbucks.

Regulation has to be simple, and in the case of transnational corporations, were country borders are mere a detail, increasing regulation will mean essentially nothing to the company and a loss of revenue to the country.

Re: How Apple Sidesteps Billions in Taxes

#40

Post by aakil »

jlarocco wrote: post #23
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.

I guess I feel that there'll always be loopholes and ways to exploit the system if you try hard enough, so having that be something that can tarnish a company's public image is a much bigger deterrent than the law can be. Also, realistically, it's a lot easier to have a bunch of students refuse to buy the iPhone 5 until apple pays its fair share of taxes, than to have legislators change the tax code.
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