Apple's $348M Tax Settlement In Italy Bodes Ill For Google, Facebook, Microsoft • Hacker News Board

Re: Apple's $348M Tax Settlement In Italy Bodes Ill For Google, Facebook, Microsoft

#151

Post by IanCal » Thu, Dec 31, 2015, 1:46 PM UTC

funkyy wrote: post #148

IanCal wrote: post #141

Earlier quoted context omitted.

I didn't downvote, but you seem to have put basically no thought into this or have at least not shown any in your comment. Why 1%? How would that work? What are the downsides, etc? Why is VAT in the EU not the right way?

1% would mean there would be increase in revenue to the government. For example Adam Smith Foundation in Poland have calculated that introducing revenue tax of 1% would increase revenue to the country budget, remove black market and allow country to tax international corporations easily. Also savings from tax collection process would be huge and there would be no place to manipulate with tax credits. At the moment in…

> 1% would mean there would be increase in revenue to the government.

For all governments? UK corporation tax receipts were £40B in 2013-2014, to be matched there would have to be over 4 trillion pounds in revenue to tax. GDP seems to be less than half of that. While you're providing a source, does this extend to other countries? What other impacts are there? Does everyone need to switch over to this approach at the same time?

Are small businesses selling in a chain hurt because there are multiple sales, therefore promoting huge single companies where there's only one sale?

> The VAT is OK as long as it is fixed and low (10-12% without discounts etc.)

Well, that's not what happens now (UK is between 0 and 20%), so again you're glibly making huge changes to large tax setups without looking at the consequences. Increases to basic staples would hit the poorest harder, for example.

Re: Apple's $348M Tax Settlement In Italy Bodes Ill For Google, Facebook, Microsoft

#152

Post by funkyy » Thu, Dec 31, 2015, 2:52 PM UTC

IanCal wrote: post #151

funkyy wrote: post #148

Earlier quoted context omitted.

1% would mean there would be increase in revenue to the government. For example Adam Smith Foundation in Poland have calculated that introducing revenue tax of 1% would increase revenue to the country budget, remove black market and allow country to tax international corporations easily. Also savings from tax collection process would be huge and there would be no place to manipulate with tax credits. At the moment in…

> 1% would mean there would be increase in revenue to the government. For all governments? UK corporation tax receipts were £40B in 2013-2014, to be matched there would have to be over 4 trillion pounds in revenue to tax. GDP seems to be less than half of that. While you're providing a source, does this extend to other countries? What other impacts are there? Does everyone need to switch over to this approach at the…

> GDP seems to be less than half of that

GDP is total INCOME not revenue. GDP is total value of FINAL product, so all steps in the shipping chain are not calculated, just the last one.

>Are small businesses selling in a chain hurt because there are multiple sales, therefore promoting huge single companies where there's only one sale?

SMBs are actually the ones that will profit from this the most. Since the tax is on all revenues and there is no tax credit, the tax amount on final product between large shopping chain and small shop is rather small. Large chains undercut small shops now by using advanced accounting, something that small shops cannot afford to do. This way of taxation was used before in communism to some extent to help to ease tax burden. It was quite successful - and now would be even better with country-wide usage of banking to handle revenues rather than cash.

The amount of sales does not matter - only thing that matters is the amount of middle man in the shipping chain. Small shops would be encouraged to get products from local producers and directly from warehouses that avoid middle man in order to save on taxes. This would encourage direct transactions between farmers and vegetable shop owners for example boosting local markets and distributing employment more evenly. Large companies would need to fight the market with higher quality products, better marketing and unique products - driving technology up.

>Increases to basic staples would hit the poorest harder, for example.

With overall products being cheaper and local markets being boosted, the distribution of wealth would be easier. Also government instead of reducing VAT on certain products which creates a lot of creative accounting by corporations, could for example provide "food stamps" for certain products to the poorest. Additional £25 a week in food stamps for groceries from government to poorest families would have way better affect than decreasing tax equivalent to £25.

Re: Apple's $348M Tax Settlement In Italy Bodes Ill For Google, Facebook, Microsoft

#153

Post by AnthonyMouse » Thu, Dec 31, 2015, 3:01 PM UTC

jph wrote: post #10

bpodgursky wrote: post #8

It's great how we're living in a world where tax codes are so idiotic and complex that it takes long lawsuits to figure out what tax is actually due. It's not about following the letter of the law; it's about following the letter of the law, avoiding the court of public opinion, and coughing up whatever is necessary to stop the complaints when some politician wants to distract people from their incompetence and whip…

What Apple owes is clear to me: pay the standard U.S. corporate tax on the standard U.S. profits. Do the same for all countries. The Apple problem is that its lawyers are deliberately avoiding using current tax codes, and instead essentially claiming that Apple is based in Ireland, then playing shell games with what counts as U.S. sales, U.S. profits, and also U.S. property. Apple ends up paying ~10% U.S. tax, rather…

> What Apple owes is clear to me: pay the standard U.S. corporate tax on the standard U.S. profits. Do the same for all countries.

The whole problem is, what are "U.S." profits?

Google pays a bunch of engineer salaries to design Google Docs. Most of the engineers are in the U.S. If they declare that huge expense in the U.S. then it will cancel all the U.S. revenue for Google Docs, which they're happy to do because the U.S. has a high corporate tax rate.

Meanwhile the parent company in Ireland now owns a bunch of valuable new code that can be used world-wide and be licensed to Google UK and Google France etc., creating lots of profits for Google Ireland where taxes are low.

No part of this is doing anything "wrong" -- whichever corporate entity is the one that owns the rights to the code is the one that will make all the profits, because the code generates more revenue than it costs to create. And there is nothing that ties that entity to a particular country, especially when the expenses aren't actually all in the same place. The product is created by huge teams spread all over the world. Which corporate entity in which country "owns" the profits is completely arbitrary. So they choose the one in the country with the lowest taxes. What would you expect?

Re: Apple's $348M Tax Settlement In Italy Bodes Ill For Google, Facebook, Microsoft

#154

Post by ksec » Thu, Dec 31, 2015, 3:24 PM UTC

1stop wrote: post #137

ksec wrote: post #104

Earlier quoted context omitted.

But you need to take into account how much some countries are charging for cooperate tax. A stupid insanely huge amount! You have sales tax, then this company invest into the country and hire people, paying rental for stores, advertising and spending. Once you take away all that, the country has to take 35% of your profits? The case for Apple isn't as convincing as they are the most profitable company in the world. W…

No it doesn't need to be fair or reasonable, if you want access to the market - pay the tax. Simple. If you don't think it's fair or reasonable, don't enter the market. Kind of like saying "I'll only play monopoly if I don't have to pay anyone elses rent, but you pay mine".

What you are saying is perfectly correct until no one on the market is actually paying their part. Why should other company follow to give themselves an disadvantage?

Re: Apple's $348M Tax Settlement In Italy Bodes Ill For Google, Facebook, Microsoft

#155

Post by AnthonyMouse » Thu, Dec 31, 2015, 3:36 PM UTC

dangrossman wrote: post #80

harryh wrote: post #78

Earlier quoted context omitted.

When Apple designs a phone in CA, buys supplies from companies located in a dozen different countries, assembles it in China and sells it in Australia what tax should be paid and to whom? These aren't "tax loopholes." They're legitimate rules to answer this fairly complicated question.

When the income ends up on the books and taxed only in Ireland, after expensing most of it as licensing fees to a shell company in Bermuda, despite none of those things (design, sourcing, manufacturing, assembly, sales) occurring in either country, it starts looking more like a loophole than legitimate rules around taxing an international business.

> When the income ends up on the books and taxed only in Ireland, after expensing most of it as licensing fees to a shell company in Bermuda, despite none of those things (design, sourcing, manufacturing, assembly, sales) occurring in either country, it starts looking more like a loophole than legitimate rules around taxing an international business.

That's because it's a tax on profit, not a tax on design, sourcing, manufacturing, assembly, or sales.

Suppose I have an idea for a piece of hardware. So I hire one of these body shops in India to design the hardware. They make hardly any profit. Then I pay a Chinese company to manufacture it. They make hardly any profit. Then I sell the hardware through some retailer in Germany. They make hardly any profit.

But the enterprise is very successful for me and I'm sitting at home in my mansion driving my Ferrari because I've made all this profit. And you don't have any idea what country I live in because it doesn't matter -- if I move to a different country because it has lower taxes then the profits are still mine. Which is what international corporations do.

Stop trying to tax profits. They have no physical presence which means they just disappear into whichever jurisdiction has the lowest taxes. Tax something that physically exists in your jurisdiction and be done with it.

Re: Apple's $348M Tax Settlement In Italy Bodes Ill For Google, Facebook, Microsoft

#156

Post by ryanwaggoner » Thu, Dec 31, 2015, 4:08 PM UTC

Marazan wrote: post #142

ryanwaggoner wrote: post #96

Earlier quoted context omitted.

On the latter, isn't that how the EU is supposed to work? I can base my company in an EU country of my choice and not have to pay income taxes for sales in the other EU countries? Similar to basing a company in a US state without corporate income tax, and not owing income tax on sales made in other states. Though the difference is that Federal taxes in the US are much larger than state taxes, while there isn't a broa…

No, the point is not that European sales are taxed in Ireland, it is that they are not taxed at all.This is special treatment Apple got by cutting a deal with the Irish authorities

Actually, I don't get the feeling that a single person in this discussion is upset on behalf of Ireland's tax revenues. Why shouldn't a sovereign nation get to decide that they'd rather have Apple HQ there for other reasons and forego some or all of the tax revenue? Tax incentives to lure businesses are common and reasonable.

Re: Apple's $348M Tax Settlement In Italy Bodes Ill For Google, Facebook, Microsoft

#157

Post by gorhill » Thu, Dec 31, 2015, 4:51 PM UTC

bryanlarsen wrote: post #26

AlwaysRock wrote: post #20

Earlier quoted context omitted.

I'm on uBlock Origin 1.5.2 and cannot access Forbes as well.

I'm on uBlock Origin and got a page telling me to turn off my adblocker to access the content. I did so, and it worked.

I did get the message, clicked "Continue", did get the message again, clicked "Continue" again then it worked -- without having to disable uBO.

Edit: ok I also get the issue after I clear all the cookies for forbes.com. I added a new filter to fix this.

Re: Apple's $348M Tax Settlement In Italy Bodes Ill For Google, Facebook, Microsoft

#158

Post by Marazan » Thu, Dec 31, 2015, 5:55 PM UTC

ryanwaggoner wrote: post #156

Marazan wrote: post #142

Earlier quoted context omitted.

No, the point is not that European sales are taxed in Ireland, it is that they are not taxed at all.This is special treatment Apple got by cutting a deal with the Irish authorities

Actually, I don't get the feeling that a single person in this discussion is upset on behalf of Ireland's tax revenues. Why shouldn't a sovereign nation get to decide that they'd rather have Apple HQ there for other reasons and forego some or all of the tax revenue? Tax incentives to lure businesses are common and reasonable.

Because their actions are neither fair to other businesses ( Apple's tax emeption was an individually negotiated deal) nor other EU countries as the income is not taxed at all.

Re: Apple's $348M Tax Settlement In Italy Bodes Ill For Google, Facebook, Microsoft

#159

Post by npizzolato » Thu, Dec 31, 2015, 6:32 PM UTC

nodamage wrote: post #68

npizzolato wrote: post #30

Earlier quoted context omitted.

Is all that money actually made outside the US? Or is it made outside of the US in the same spirit as how Hollywood movies never make a profit?[1][2] [1] https://en.wikipedia.org/wiki/Hollywood_accounting [2] http://www.theatlantic.com/business/archive/2011/09/how-holl...

To my understanding, this is money that is actually made outside the US. If Apple (US) sells an iPhone to an American customer, they will pay US corporate income tax on the profits from that sale. However, if Apple (Italy) sells an iPhone to an Italian customer, the 'double Irish' arrangement lets them avoid paying corporate income taxes on those profits. There are two issues here: 1. Some might argue that because Ap…

Thanks for the explanation. I agree with you that (1) is rather questionable, but to me, (2) seems like a fair tax.

Re: Apple's $348M Tax Settlement In Italy Bodes Ill For Google, Facebook, Microsoft

#160

Post by gozur88 » Thu, Dec 31, 2015, 6:56 PM UTC

nodamage wrote: post #130

gozur88 wrote: post #116

Earlier quoted context omitted.

>If Apple (US) sells an iPhone to an American customer, they will pay US corporate income tax on the profits from that sale. Except they don't, really. They use the same "double Irish" scheme in the US. Apple has offshore holding companies that own the IP for that iPhone. When a US customer buys an iPhone, much of the actual profit gets shifted to the offshore subsidiaries as an expense. That's how they ended up with…

Please provide a source for your claim. Everything I've read indicates these tax arrangements are only effective for foreign profits.

Would it be too much to ask that people looked at the wiki page before they demanded sources? The page for Double Irish mentions Apple by name.