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Apple plans new U.S. campus, to pay $38B in foreign cash taxes

reuters.com

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Re: Apple plans new U.S. campus, to pay $38B in foreign cash taxes

#481
post #430
post #318

Earlier quoted context omitted.

Lol, only US Republicans can see US Democrats as "tax hungry". Both the Clinton and Obama administrations were extremely business-friendly.

Really? Have you investigated how many countries on the planet tax their citizens and corporations making money in other countries? The US marginal corporate tax rate is 38.92% compared to the worldwide average 22.5%. Until this recent tax bill passed, the US has had the 3rd highest marginal corporate tax rate in the world, surpassed only by the UAE and Puerto Rico. The US federal government is greedy for cash not bu…

A higher theoretical corporate rate is largely offset by lower income tax [1]. In the end, income taxes are basically a business cost for any company with employees. On top of that, actual tax rates after accounting for deductions are much lower [2], and then you have lower sales tax: in Europe VAT averages around 20%, whereas in the US sales tax averages well below 10% - which is why European tourists are notorious shoppers when going to North America.

You can argue whether your dollars are well spent or whether there are internal disparities, but overall the US is hardly a tax hell.

[1] http://www.bbc.co.uk/news/magazine-26327114 [2] https://www.npr.org/2017/08/07/541797699/fact-check-does-the...

Re: Apple plans new U.S. campus, to pay $38B in foreign cash taxes

#482

This discussion is missing context. The whole reason that Apple has to pay taxes on foreign income is because unlike almost every other developed nation the US has a worldwide tax system. Almost every other nation has a territorial tax system. The rest of the world with their territorial system taxes income earned within that country, the US rather taxes income worldwide, regardless of where it is earned. For example…

Wait, is that actually the case here? For example, if a British company earns income in Germany, its pays German taxes on its German income. But if a US company earns income in Germany it pays both German taxes and US taxes. If a British company sets up a company in Germany and that 'subsidiary' earns income in Germany and pays tax in Germany, and then wants to send its money back to the British company, does the Bri…

Not answering your question, but the companies do tricks so they don't have incomes in some countries.

E.g. Starbucks in Germany... they buy their coffee from Sbucks Luxembourg, the amount of coffee needed to make a 7 euro coffee will also cost close to 7 euros, payable to the seller, Sbucks Luxembourg. So the German subsidiary has very low profits (7 euros for coffee beans for 1 cup of coffee!), and pay very little taxes. The Luxembourg subsidiary pay the local taxes, which are much lower -- as arranged by their then premier, and now current head of European Commission, Jean-Claude Juncker:

> In early November 2014, just days after becoming head of the commission, Juncker was hit by media disclosures—derived from a document leak known as LuxLeaks—that Luxembourg under his premiership had turned into a major European centre of corporate tax avoidance. With the aid of the Luxembourg government, companies transferred tax liability for many billions of euros to Luxembourg, where the income was taxed at a fraction of 1%. Juncker, who in a speech in Brussels in July 2014 promised to "try to put some morality, some ethics, into the European tax landscape", was sharply criticised following the leaks.[52] A subsequent motion of censure in the European parliament was brought against Juncker over his role in the tax avoidance schemes. The motion was defeated by a large majority.[53]

> In 2017, leaked diplomatic cables show Juncker, as Luxembourg’s prime minister from 1995 until the end of 2013, blocked EU efforts to fight tax avoidance by multinational corporations. Luxembourg agreed to multinational businesses on an individualised deal basis, often at an effective rate of less than 1%.[54]

If you buy something from European Amazon, the bill will be from Amazon Luxembourg. Same with Apple and Ireland...

Re: Apple plans new U.S. campus, to pay $38B in foreign cash taxes

#483

Earlier quoted context omitted.

If you or I decided we just didn't like the tax rate that applied to us and didn't pay our taxes for decades at a time on income we made overseas, what do you think would happen? Corporations are treated as people only when it's convenient. You and I don't have high-powered lawyers, lobbyists, loopholes, offshore accounts, subsidiaries, etc to hide behind. This is an insult to every U.S. citizen...Apple wouldn't exis…

If they bring the money back then inevitably they'd spend it back into the US economy either through direct job creation or buying things. If they do create jobs, the US gets most of its money from income tax, which would increase from the more jobs/higher wages. It feels like double dipping if we expect them to pay taxes on repatriating the money and then also taxing the wages that the repatriated money allows them…

> If they bring the money back then inevitably they'd spend it back into the US economy either through direct job creation or buying things.

That is a misconception. It's not like they are storing dollar bills in warehouses on foreign soil. The bulk of the 'overseas' money is already invested, for a large part in the US. See page 49 in Apple's yearly report [1], to see how that money is currently invested: at the end of 2016 almost $42 billion dollars were invested in US treasuries, $131 billion in corporate securities. It doesn't say how much of those corporate securities are US companies, but it's probably the bulk. It's an accounting/tax fiction that it is currently 'overseas'.

[1] http://investor.apple.com/secfiling.cfm?filingid=1628280-16-...

Re: Apple plans new U.S. campus, to pay $38B in foreign cash taxes

#484
post #449

Earlier quoted context omitted.

If you are living abroad, you only have to pay tax on your income in excess of ~$110k

But you still have to file, which is not only a pain, rather expensive. My tax prep bill last year was around 1200 EUR in the Netherlands on top of my Dutch tax prep.

would it be hard to do it by yourself?

Re: Apple plans new U.S. campus, to pay $38B in foreign cash taxes

#485

This discussion is missing context. The whole reason that Apple has to pay taxes on foreign income is because unlike almost every other developed nation the US has a worldwide tax system. Almost every other nation has a territorial tax system. The rest of the world with their territorial system taxes income earned within that country, the US rather taxes income worldwide, regardless of where it is earned. For example…

Wait, is that actually the case here? For example, if a British company earns income in Germany, its pays German taxes on its German income. But if a US company earns income in Germany it pays both German taxes and US taxes. If a British company sets up a company in Germany and that 'subsidiary' earns income in Germany and pays tax in Germany, and then wants to send its money back to the British company, does the Bri…

[deleted]

Re: Apple plans new U.S. campus, to pay $38B in foreign cash taxes

#486
post #131

Earlier quoted context omitted.

This is exactly the thing that renders me speechless every time this comes up in casual conversation. People generally agree that apple and other tech companies hoarding money in Ireland to avoid tax is Bad™. Then, in the next breath, they say that removing the tax burden to get them to move that money back into a US bank is somehow Good™. But what does it matter if the government can't take a cut? Why do people who…

Also you seem to be under the incorrect assumption that capital will just sit in a warehouse as bricks of $100 bills collecting dust. Nothing could be further from the truth. In reality, one of a few things will happen: 1) Apple will spend it on capital investments (factories, campuses, data centers, etc.) in its business. Doesn't benefit the government, but benefits the country. 2) Apple will spend it on R&D / emplo…

You seem to be under the incorrect assumption that it is currently sitting in a foreign warehouse as bricks of $100 bills collecting dust. Nothing could be further from the truth. According to page 49 of Apple's yearly report [1] at the end of 2016 its cash and equivalents were invested as follows (amounts in millions): * U.S. Treasury securities 41,697 * U.S. agency securities 7,543 * Non-U.S. government securities 7,609 * Certificates of deposit and time deposits 6,598 * Commercial paper 7,433 * Corporate securities 131,166 * Municipal securities 956 * Mortgage- and asset-backed securities 19,134

The repatriation is just a tax/accounting fiction. Yes, Apple now has more flexibility to do with that cash what it wants (mostly return capital to shareholders through dividends and buybacks), but on aggregate for the economy it doesn't make a huge difference.

[1] http://investor.apple.com/secfiling.cfm?filingid=1628280-16-...

Re: Apple plans new U.S. campus, to pay $38B in foreign cash taxes

#487

Earlier quoted context omitted.

Well hopefully they well distribute the rest as a special dividend to the stock owners

You have the right idea. That's probably what they will do, but not as a dividend (those are taxed as ordinary income). Instead they will buy back stock, reducing the supply of stock and increasing the price. Long term sales of stock incur a 15% tax rate. I'm not saying this is good, but this is what they will do.

ahh so the bankers make $$ for an arcane opaque "buyback" I would rather have the $ now and as my apple holdings are in Investment trusts in my ISA I don't pay tax on dividends.

Re: Apple plans new U.S. campus, to pay $38B in foreign cash taxes

#488
post #306

Earlier quoted context omitted.

Yes you get a credit for the foreign taxes paid, but even still it's absurdly punitive for being an American corporation.

I would not consider taxes to be “punitive.” Taxes aren’t punishment. They are much more like a membership fee.

A mandatory membership fee.

Re: Apple plans new U.S. campus, to pay $38B in foreign cash taxes

#489

Earlier quoted context omitted.

=> But if a US company earns income in Germany it pays both German taxes and US taxes. This is not portrayed accurately. If you pay German taxes, you claim exception for that amount. So if you pay more taxes than the rate in US, you owe no tax for that income in US. If the rate is less in the country than in US, you pay the difference.

But of course Apple isn't paying no German taxes. They didn't pay taxes on any of this overseas money, and they had the gall to ask for an "repatriation holiday" so they could pay overall zero taxes on that huge heap of money. Now they are paying the US gov. Unless they can keep coming up with more Irish tax avoidance schemes, going forward they will probably also have to pay in Europe.

Apple paid millions in VAT, income tax for German employees, environmental (packaging) taxes, etc.

They did not pay much tax on their profits in Germany, but it's debatable which part of the profit of a firm designing phones in the US and building them in China should fall to Germany.

Re: Apple plans new U.S. campus, to pay $38B in foreign cash taxes

#490
post #380
post #370

Earlier quoted context omitted.

> The whole point is that earned income should not have to be repatriated to be taxed. Agree. They used the double Irish paying basically no income tax there. Then were trying to move to Jersey (the island). This isn't new though and other companies were doing it. Is there any realistic short term hope that we'll finally close all the loopholes and the Apples and Googles of this country will start paying their fair s…

My guess is that the path outside of the legislature doing anything is through the courts. Since corporations are citizens there must be some kind of constitutional law since human citizens don’t get the same benefit.

What they do is not illegal, so courts do not help. For example, see Fair Tax Town. https://www.independent.co.uk/news/uk/crickhowell-welsh-town...
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