How Apple Sidesteps Billions in Taxes • Hacker News Board

Re: How Apple Sidesteps Billions in Taxes

#111

Post by _delirium » Sat, Apr 28, 2012, 11:14 PM UTC

grellas wrote: post #66

The implied but never fully-articulated point of this article is that high-tax domiciles resent it when rational actors having a choice in the matter will routinely structure their business affairs to incur tax to the maximum extent possible in low-tax as opposed to high-tax domiciles. The issue becomes almost formulaic. Given (1) rational actors, (2) freedom to choose and to structure business affairs using a multip…

What's annoying to me is not that companies choose jurisdictions based on taxes, but that they get away with playing shell games to fake moving between jurisdictions entirely on paper, which also gives them an advantage over smaller companies and individuals that can't do that.

I lived in California for some years. If it were possible for me to open a P.O. box (or even rent a small office) in Reno, book all my non-California-sourced income (e.g. AdSense) to the Reno P.O. box, and avoid California taxes, maybe I would've. But that's not legal; my attempt to produce a fake domicile in Nevada for tax purposes when I clearly lived ~11 months of the year in California would be correctly judged a sham. If I wanted to claim I'd moved to Reno for tax purposes, I'd have to actually move to Reno in real life, too. Yet Apple can do effectively do that, opening a sham office where no work is done, solely to dodge taxes, because the rules for individuals when it comes to those kinds of fake domiciles are much stricter than the rules for corporations are.

If Apple actually moved its main operations and employees from Cupertino to Reno for tax reasons, that would be another matter entirely, and a more honest example of jurisdictional competition.

Re: How Apple Sidesteps Billions in Taxes

#112

Post by ImprovedSilence » Sat, Apr 28, 2012, 11:16 PM UTC

ashconnor wrote: post #109

robomartin wrote: post #82

Earlier quoted context omitted.

There's also the very real and reasonable question of where capital might be used more efficiently. Having seen first-hand how government agencies make spending decisions it is my opinion that a huge percentage of tax dollars is wasted. Private industry is almost always far more efficient in allocating resources out of necessity. I have seen cases where government agencies pay double --or more-- what a private entity…

It's a valid point. I think that there are a few reasons why this occurs. 1. Tax payers aren't as resilient as shareholders: 2. There's a psychological tendency to think that "this is not my money" leading to excessive spending. 3. The accountability isn't there. If a politician wastes taxpayer money then he's still a politician for the time being. But it's not always valid. Many government projects are carried out b…

In private industry, you promoted and seen a valuable if you make money for the company. In the government, you are promoted and seen as a power player if you spend more money. There are lots of super-competitive A-types in govt work who will spend a million dollars just to get another feather in their programs hat.

Re: How Apple Sidesteps Billions in Taxes

#113

Post by Drbble » Sat, Apr 28, 2012, 11:19 PM UTC

JamesLeonis wrote: post #92

ajkessler wrote: post #72

Earlier quoted context omitted.

Why not? (Honest question.) We have states that have no personal income tax. Not surprisingly, these states are doing fine because they raise revenue other ways.

Income tax only accounts for some of the taxes a state can take in. Property and sales tax are also forms states use to collect income, and they happen to be regressive in most cases. If you look at the CFED chart [2], those nine states [1] with no income tax make up the top 9 slots where the bottom 20% pay many times more in taxes than the top 1% (as a percentage of income), from 3.8 times (Tennessee) to a whopping…

Note that welfare benefits can cancel out a lot of taxes and restore the progressive effect.

Re: How Apple Sidesteps Billions in Taxes

#114

Post by Drbble » Sat, Apr 28, 2012, 11:22 PM UTC

hnwh wrote: post #93

Zak wrote: post #84

Earlier quoted context omitted.

I'm not sure it's that simple. I live in the US. The vast majority of the US Federal budget goes to the military, income redistribution (welfare) and insurance programs (social security, medicare). I do not believe most of those expenditures enable me to make money, and I think a significant segment is actively harmful. I also feel that I don't have a meaningful say in how that money is used because the political sys…

Exactly.. lets first talk about the morality and ethics behind the govt. spending MY hard-earned dollars to go bomb brown people in the middle of the desert for 20 STRAIGHT YEARS.

Your tax dollars don't pay for that. The government onflatess the currency via borrowing, so everyone's dollars pay for that.

Re: How Apple Sidesteps Billions in Taxes

#115

Post by jusben1369 » Sat, Apr 28, 2012, 11:23 PM UTC

jandrewrogers wrote: post #31

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 adj…

That's really not the reason short term and long term are taxed differently. It's based on a perceived notion that we want to reward long term investment as a preferable activity over shorter term speculation.

Re: How Apple Sidesteps Billions in Taxes

#116

Post by Drbble » Sat, Apr 28, 2012, 11:25 PM UTC

jandrewrogers wrote: post #31

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 adj…

That's silly. The government does lots of inflation adjustments andbracketing and phaseouts in financial programs already. And "long term" starts at two years, where inflation is just barely relevant.

Re: How Apple Sidesteps Billions in Taxes

#117

Post by temphn » Sat, Apr 28, 2012, 11:28 PM UTC

grellas wrote: post #66

The implied but never fully-articulated point of this article is that high-tax domiciles resent it when rational actors having a choice in the matter will routinely structure their business affairs to incur tax to the maximum extent possible in low-tax as opposed to high-tax domiciles. The issue becomes almost formulaic. Given (1) rational actors, (2) freedom to choose and to structure business affairs using a multip…

Exactly. And this extends down to the personal level. Elizabeth Warren, a millionaire Senatorial candidate who supports the Buffet Rule, nevertheless did not voluntary pay a higher tax rate:

http://www.realclearpolitics.com/articles/2012/04/20/warren_...

I think a number of people reading the article have the tacit impression that if the government taxed the money from Apple, that they would somehow benefit to a greater extent. But given that the US Government spends $11.5 billion more per day[1] than it receives in taxes, even seizing all of Apple's worldwide profits would just be a drop in the bucket.

A separate question is why the New York Times has declared war on Apple. It looks like with the departure of Steve Jobs, the Times has started to treat Apple with the hostility normally reserved for Exxon, what with this article and the iEconomy series of articles. It would be interesting for a large technology company to turn the lens on many of the Times' own abusive practices, or the Times journalists' entitlement complex. It would be particularly interesting to look at the tax status of the pensions[2] which rather well-paid reporters like Charles Duhigg and David Kocienewski wish to keep receiving.

[1] http://www.cbo.gov/sites/default/files/cbofiles/attachments/...

[2] http://www.huffingtonpost.com/2012/04/19/new-york-times-vide...

Re: How Apple Sidesteps Billions in Taxes

#118

Post by Drbble » Sat, Apr 28, 2012, 11:28 PM UTC

eps wrote: post #88

Similarly IKEA pays zero tax by channeling all it's profits through a very complicated setup to an Irish non-profit. GE not only pays zero tax, but also manages to extract tax refunds from the US government. The big question if an evasive tax setup makes sense at lower profit levels, or if the costs of setting up and maintaining it are prohibitive. Does anyone know?

If governments wanted to solve this problem, they could do so trivially by setting wealth taxes on the human owners of those corporations

Re: How Apple Sidesteps Billions in Taxes

#119

Post by Drbble » Sat, Apr 28, 2012, 11:32 PM UTC

guga31bb wrote: post #47

NHQ wrote: post #43

I'd like to see Apple or any company to do as they threaten and move their headquarters. Try asking all of your top talent to move from their nice property values and school districts to some tax haven.

Boeing moved from Seattle to Chicago in 2001 [0]. A major company moving headquarters is not unheard of. [0] http://www.nytimes.com/2001/03/22/us/boeing-jolting-seattle-...

Boeing moved less than 1 percent of their employees to Chicago.

Re: How Apple Sidesteps Billions in Taxes

#120

Post by Drbble » Sat, Apr 28, 2012, 11:33 PM UTC

Dove wrote: post #44

This seems like an appropriate place to mention that the FairTax proposal makes tax evasion very difficult. If you haven't read about it, you really should -- I think it's pretty well thought out.

Sure, if we stop trying to tax, we will stop failing. But that doesn't actually help.