How Apple Sidesteps Billions in Taxes • Hacker News Board

Re: How Apple Sidesteps Billions in Taxes

#191

Post by greedo » Sun, Apr 29, 2012, 2:01 PM UTC

taligent wrote: post #136

protomyth wrote: post #64

Earlier quoted context omitted.

If they repealed all the Bush era tax cuts, the deficit would still be growing at a higher rate than before. Obama has run up the deficit at a faster pace (approaching double) than Bush and those tax cuts aren't even the major part of it. The biggest problem is the lack of a passed federal budget in over a 1,000 days. This is causing a lot of budget increasing in a time when we cannot afford it. What the media and po…

Sorry but what a load of rubbish. It has been clearly demonstrated time and time again that in periods of depression you DO NOT dramatically cut government spending. All it does is hamper growth which results in less tax income. I have no idea why the US debt is being touted about as being the number one priority when surely increasing growth rates and reducing unemployment are key.

Because the odds of the US growing its way out of a staggering burden of debt are roughly the same as winning the lottery.

Re: How Apple Sidesteps Billions in Taxes

#192

Post by greedo » Sun, Apr 29, 2012, 3:19 PM UTC

jarek wrote: post #153

mhartl wrote: post #151

Earlier quoted context omitted.

Such disasters could happen, and minimizing their frequency is an important engineering problem. But you have a long road to hoe if you want to argue that the average quality of private management isn't much better than the average quality of public governance.

It's not the disasters we should really be concerned about, it's the normal bigcorp experience. People are promoted based on office politics and taking credit for others' work. Big useless projects to raise a manager's profile happen all the time. Consultants are hired to produce reports that say exactly what the company, or part of the company, wants them to say to cover people's asses. Market leads and shareholder…

It's not the disasters we should really be concerned about, it's the normal government experience. People are promoted based on office politics and taking credit for others' work. Big useless projects to raise a manager's profile happen all the time. Consultants are hired to produce reports that say exactly what the department, or politician, wants them to say to cover people's asses. Taxpayer funds and freedoms are squandered by politicians unable to adjust to changing business or consumer climates.

Plenty of people on this site quit their government jobs because they couldn't stand the wastefulness and the politics. Every time HR is brought up, HN seethes hate at their uselessness. Middle management, that most corporate of jobs, is almost universally derided. Much better? I'd doubt it, but neither of us has data and personally I'm not sure how that would even be quantified.

See how that works?

Re: How Apple Sidesteps Billions in Taxes

#193

Post by byrneseyeview » Sun, Apr 29, 2012, 3:38 PM UTC

notJim wrote: post #141

byrneseyeview wrote: post #130

This indirectly brings up the point that it's hard to make the case for directly taxing corporations at all, aside from the fact that it's convenient. Ultimately, all corporations are owned by tax-paying people (or nonprofits). So why not tax their distributions as income? If I forgo working, and instead develop some skill that I could use to raise my income, nobody taxes me on the increase in notional wealth I have…

Another person suggested this idea and the thread, and this was the problem I had with it: > Ultimately, all corporations are owned by tax-paying people (or nonprofits). So why not tax their distributions as income? Many companies don't pay dividends and sit on their profits for a long period of time, so in practice, that money might never be taxed.

But if the money is never distributed, how does it benefit the shareholders? My thought experiment from earlier in the thread: what is the net present value of a billion dollars in cash, if I put it on a rocket and launch it into space? If you can't get the money, you can't spend the money, and you can't enjoy the money.

You could theoretically borrow against those assets, but only if your lender expected you to be paid. That's the beauty of the plan: it means that the only taxable event is the one that materially benefits you.

Re: How Apple Sidesteps Billions in Taxes

#194

Post by greedo » Sun, Apr 29, 2012, 3:58 PM UTC

redler wrote: post #131

temphn wrote: post #117

Earlier quoted context omitted.

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 grea…

In the press, it seems like Apple went from years of being unmentionable without the term "beleaguered" straight to being a manipulative, dominant monopolist. The company has certainly undergone a striking and highly unlikely reversal, and perhaps that's a reason for the tonally confused seas. "Beleaguered Apple Inc. now the most profitable company on Earth".

Monopolist. Let's look at Apple's product lines and see:

1. MP3 players. Yep, they own the largest portion of this shrinking market. But their monopoly share doesn't seem to have hurt the customer; and in fact, I still can find numerous non-Apple MP3 players without much trouble.

2. Smartphones. Nope, not even 50% of the US, much less the worldwide market for smartphones. The fact that they are much better than their competition at extracting profits is immaterial.

3. Tablet Computers. Clearly a yes, but in any market segment that explodes like this one, you'll have market shares that swing wildly. Currently Apple dominates this segment; but it's not clear that they will retain a monopoly position. And again, I still can find numerous non-Apple tablets without much trouble. And I don't see any damage to the consumer.

4. Personal Computers (i.e notebooks and desktops). Clearly not a monopolist in this segment.

5. Software. LOL

I do agree that Apple is going through a "striking and highly unlikely reversal" in terms of how it's portrayed in the media. Perhaps that's due to competitors not liking the fact that Apple is eating their lunch?

Re: How Apple Sidesteps Billions in Taxes

#195

Post by protomyth » Sun, Apr 29, 2012, 4:15 PM UTC

taligent wrote: post #136

protomyth wrote: post #64

Earlier quoted context omitted.

If they repealed all the Bush era tax cuts, the deficit would still be growing at a higher rate than before. Obama has run up the deficit at a faster pace (approaching double) than Bush and those tax cuts aren't even the major part of it. The biggest problem is the lack of a passed federal budget in over a 1,000 days. This is causing a lot of budget increasing in a time when we cannot afford it. What the media and po…

Sorry but what a load of rubbish. It has been clearly demonstrated time and time again that in periods of depression you DO NOT dramatically cut government spending. All it does is hamper growth which results in less tax income. I have no idea why the US debt is being touted about as being the number one priority when surely increasing growth rates and reducing unemployment are key.

"It has been clearly demonstrated time and time again that in periods of depression you DO NOT dramatically cut government spending."

That is the Keynesian point of view, but it has counter examples. The difference between three points in history 1920, 1929, and 1945-46 show a different story. Herbert Hoover was a Keynesian and made the increase spending decision in 1929 as opposed to the tactic that worked while he was Sec of Commerce under Harding. Harding didn't pull the spending panic despite Hoover's recommendation. 1945-47 is even more interesting in that Congress didn't let Truman continue the massive WWII spending into civilian government programs. Taxes and spending were cut drastically which finally led to a booming economy and an end to the shortages and rationing. So, I would say the case for the Keynesians is not as clear cut. The 19th century also has some good examples.

gains pretty much explained why debt is bad.

Re: How Apple Sidesteps Billions in Taxes

#196

Post by yummyfajitas » Sun, Apr 29, 2012, 4:22 PM UTC

FireBeyond wrote: post #174

yummyfajitas wrote: post #94

Earlier quoted context omitted.

Tech companies want repatriation amnesty so they can invest the money in the US. I have no idea why we want to prevent them from doing this.

So they can invest -some- of the money in the US. And pay salaries, bonuses and dividends with the rest - without paying the appropriate corporate income tax rate first. That's why.

The profits were earned in Ireland. Why is the "appropriate" corporate income tax owed to the US greater than zero?

Should Guinness also pay the US taxes for profits earned in Ireland?

Re: How Apple Sidesteps Billions in Taxes

#197

Post by protomyth » Sun, Apr 29, 2012, 4:26 PM UTC

yequalsx wrote: post #79

protomyth wrote: post #64

Earlier quoted context omitted.

If they repealed all the Bush era tax cuts, the deficit would still be growing at a higher rate than before. Obama has run up the deficit at a faster pace (approaching double) than Bush and those tax cuts aren't even the major part of it. The biggest problem is the lack of a passed federal budget in over a 1,000 days. This is causing a lot of budget increasing in a time when we cannot afford it. What the media and po…

The point I made in showing that yummyfajita's remarks to be wrong stand. I might be wrong on my belief that repealing the Bush tax cuts would greatly improve the fiscal outlook of the federal government but this does not in any way detract from my point. Your last two paragraphs are not germane to my point and they are wrong in any case. However, let's assume your last statement is correct. Right now taxes around 15…

I didn't say it was reasonable, I just said it was historical. My basic thesis is that government spending needs to be decreased by a lot. Taxes need to be simplified and dropped.

I have no idea how any of the links prove my point on not having an actual budget in 1000+ days isn't increasing the problem. Heck the debt ceiling raise had parts that immediately added quite a lot of debt. Given that [3] says the deficit amounts will be going down is off base. I assume it ignores the CBO estimates[1].

[1] http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/116x...

Re: How Apple Sidesteps Billions in Taxes

#198

Post by yequalsx » Sun, Apr 29, 2012, 4:29 PM UTC

yummyfajitas wrote: post #186

yequalsx wrote: post #173

Earlier quoted context omitted.

The first part of the article was about Apple avoiding California taxes by having a small office in Reno. You haven't shown that Apple pays its fair share of California's road system (don't ignore the federal road system), schools, sewers, police protection, or its use of American soft power for its purposes overseas. But supposing Apple does pay it's share of all these things. Given our current deficit and that a la…

Roads, sewers, police and fire are dirt cheap. Bringing them up is disingenuous. http://www.usgovernmentspending.com/year_spending_2010USbt_1... As for the federal road system, that's paid for by gas taxes - Apple (or fedex, or whoever delivers iPhones) pays for it whenever they fill up their gas tanks roughly in proportion to how much they use it. It's also hardly clear that businesses are not paying their share of…

The federal road system is not paid for by gas taxes. The soft power wielded by the U.S. is not paid for by gas taxes or by corporate taxes. The are a lot of very large companies that pay no tax despite reaping great rewards for using the services of the U.S. government and despite (at least in some areas) having regulatory capture.

Labor has very little power in the U.S. and in an environment of 8%+ unemployment (15% U2 rate) it's hard to believe that labor can raise prices.

Re: How Apple Sidesteps Billions in Taxes

#199

Post by nikcub » Sun, Apr 29, 2012, 4:46 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…

The more complex offshore structures take a lot of expert human effort and other capital costs to setup. To make them worthwhile requires a certain level of revenue, so it is usually only suited to medium-to-large sized businesses.

Apple and the other large companies can afford to keep the profit offshore. They are still paying full rates of tax on the revenue and profits they need to keep their businesses running.

When Apple pays a dividend, they will do it by paying full US tax rates on the dividend. Thus these tax structures are biased towards big companies only because they can afford to defer payments.

That said, all the knowledge that you need to setup a similar structure for a small business is available online and has become a lot cheaper. If you are accepting credit card payments you can setup in an offshore nation with a business registration, a bank account and a merchant account for a few thousand dollars.

Re: How Apple Sidesteps Billions in Taxes

#200

Post by nikcub » Sun, Apr 29, 2012, 4:51 PM UTC

These structures only defer taxes. They will eventually be paid somewhere. Surprised there was no mention of the recent large Apple dividend, which will require that cash to be repatriated to the USA.

What is unfair is that an international shareholder in Apple stock only gets their dividend after US taxes are paid and is then hit again with their local taxes.