Paradise Papers: Dear Tim Cook • Hacker News Board

Re: Paradise Papers: Dear Tim Cook

#791

Post by ringaroundthetx » Fri, Nov 10, 2017, 6:26 PM UTC

ChuckMcM wrote: post #780

ringaroundthetx wrote: post #742

Earlier quoted context omitted.

So I foreshadowed this already but Americans can't have passive holding companies and expect to avoid US tax. (Holding company implies passive property ownership.) 1960s era Congress already created CFC, PFIC, FBSCI, FBHCI laws which ensures that compliant Americans can't have passive offshore companies to defer taxes indefinitely. You looked like you were on to an original idea but your grandparents already thought…

I didn't say it would be easy :-) Which is good in that it creates a nice moat around others entering the space. The question I would throw out to a tax lawyer that was operating at the level of Appleby would be this, "What set of relationships, companies, and structure would be necessary for a US person to shield all of their US tax exposure while living in the US?" Then I would ask my MBA friend, can we create such…

yeah that could be interesting, it just requires trust which could be undermined with no recourse. there are also so many on-shore methods for US citizens that it is less worth it.

A non-US citizen could set up a corporation in a zero tax jurisdiction and allow partners to come in and keep diluting their share as long as it remains over 50% .... or a few other stipulations when it got over a certain number of members. but then adding additional property to this gets murky, and the non-US majority beneficiary has claims on the direction of all the property.

If you are functionally able to control it then then US courts will undermine it anyway and levy a big tax bill on you.

Re: Paradise Papers: Dear Tim Cook

#792

Post by explainplease » Fri, Nov 10, 2017, 9:32 PM UTC

fastball wrote: post #787

explainplease wrote: post #710

Earlier quoted context omitted.

Most people who aren't murderers, and a few who are. Are you saying that murder is not wrong? BTW, please don't troll. If you're just asking, "Who says murder is wrong?" to be rhetorical or make a point, don't. Instead, make your point explicitly in the first place, so that we can move forward in the discussion. I'm not interested in playing games, but I am interested in seriously discussing the topic. So, either you…

Is killing in war murder? If not, why not? Is killing in self-defense murder? If not why not? If yes, how are they "objectively" wrong? If you're a pacifist that believes all killing is wrong, fair enough. But that doesn't make your standards "objective". There are shades of grey to all morality, you pretending otherwise does you no service. The same applies in this case. Having popular opinion on your side does not…

Yes, of course, the question is the definition of murder. How do you define it?

> There are shades of grey to all morality, you pretending otherwise does you no service.

I'm not pretending that. Please don't jump ahead in the discussion.

> Having popular opinion on your side does not make your morality "objective". That's not how this works.

Again, I haven't claimed this. It will be hard to discuss this if you ascribe to me positions I haven't taken.

Re: Paradise Papers: Dear Tim Cook

#793

Post by valuearb » Sat, Nov 11, 2017, 2:17 AM UTC

ehllo wrote: post #778

valuearb wrote: post #776

Earlier quoted context omitted.

Apples tax planning is no more “aggressive” than a person not taking money out of a retirement account. The US allows taxes to be deferred (not avoided, deferred) on foreign earnings until they are brought back in the US. That’s all Apple is doing, parking their after tax foreign profits in the cheapest location possible until the US fixes its awful tax code.

Sorry, but we are talking about evading tax in europe and that apple and many other big corps are doing this with aggressive tax planning is an undeniable and occupied fact. No offense, but you just try to "wash out" the discussion in the "whole tread" with the same generalized arguments over and over again - by simply deny the fact. Talking any further make no sense.

Explain then how they are "evading" tax? Every explanation attempted ends up back at "well what they are doing is legal, but they should voluntarily pay more". Just like the linked editorial.

Apple actually has a large reserve for taxes it owes when it repatriates it's foreign profits. It's choosing to legally defer that tax by waiting, just like a private citizen defers taxes by not selling profitable stocks before the end of the year, or by keeping money in their 401K instead of withdrawing it.

Deferral isn't evasion. It's an important legal part of the tax system to incentivize savings.

Re: Paradise Papers: Dear Tim Cook

#794

Post by valuearb » Sat, Nov 11, 2017, 2:31 AM UTC

dontreact wrote: post #697

valuearb wrote: post #667

Earlier quoted context omitted.

Apple takes advantage of no loopholes. By law profits in international subsidiaries aren't taxed in the US until they are paid to the US company. Apple is simply keeping the already taxed profits overseas in the lowest tax jurisdiction until the US gives them a repatriation discount.

We clearly have different definitions of the word loophole. They are moving profits around "creatively" in order to pay less than the corporate tax rate. Why should the U.S. have to give a repatriation discount when they have already paid a much lower effective tax rate than many other corporations?

There is no "repatriation discount". It's tax deferral just like a 401k or not selling profitable stocks at the end of a year. And Apple pays higher tax rates than most multinational corporations.

Apple can't return their foreign profits into the US or they lose this deferral, so where should they keep those profits until they do? Germany? France? Why on earth would you keep your money in higher tax countries? Why wouldn't you keep it in Ireland or the Channel Islands instead? It's not illegal, it's not even unethical.

It would be the height of stupidity to leave those profits in a high tax country. And the taxes they save are relatively minor overall. It works like this.

Apple earns about two thirds of it's profits in foreign countries. Over the last decade or so that's been around $225 Billion. They've paid about $25B in income taxes on those amounts (we'll ignore the huge amounts of VAT and employee taxes they've paid), so there is about $200B left.

If they brought it all back to the US, they'd owe the state of CA around $20B in taxes, and the Federal government around $63B in taxes. If they paid the $117B remaining as dividends, their shareholders would pay over $20B more in state and federal dividend taxes.

Let's recap. They made $225B, bringing it all back would mean mean various governments would get $128B in taxes, and the owners of the company $97B, a tax rate of over 60%.

So instead they keep the $200B in the lowest tax rate location possible while they wait for a US repatriation holiday with lower tax rates. They might earn 5% on that money, or $10B a year. If they kept it in a high rate european country, they might pay another $2B a year in taxes on the interest, but instead they got a deal from Ireland where they paid less than 1%. So they save $2B a year, but they will eventually pay nearly $100B more in taxes when they repatriate it. That's trivial in the grand scheme.

And that was a screaming deal for Ireland, because they didn't have to pay anyones unemployment benefits, or build any roads, or give Apple any "incentives" to build something. Ireland just let them make huge bank deposits in Irish banks, which turned around and lent the money out again, mostly to Irish companies, which created a massive amount of jobs and more taxes.

Not only is Apple doing nothing wrong, but they are doing a great deal of good too.

Re: Paradise Papers: Dear Tim Cook

#795

Post by valuearb » Sat, Nov 11, 2017, 2:40 AM UTC

dontreact wrote: post #702

valuearb wrote: post #685

Earlier quoted context omitted.

What Apple does is exactly what the US Tax code wants them to do, nothing secret about it. If it were to repatriate it's foreign earnings every year, it's tax rate would skyrocket from it's current 24.6% to around 50% (leaving less than 30% for shareholders after dividend taxes).

"Nothing secret about it" This is false. From the NYTimes article https://www.nytimes.com/2017/11/06/world/apple-taxes-jersey.... “For those of you who are not aware Apple are extremely sensitive concerning publicity,” wrote Cameron Adderley, global head of Appleby’s corporate department, in a March 20, 2014 email to other senior partners. “They also expect the work that is being done for them only to be discussed am…

Every accounting firm does all it's work under NDA. Apples public financials document everything you want to know.

1) They make huge foreign profits and pay substantial income taxes to those foreign countries. 2) They don't repatriate the remaining profits so they don't have to immediately pay the massive US taxes they'd owe if they did so. 3) They record a tax liability for the repatriation taxes they'll owe when they bring the money back. 4) They document they keep the money offshore in the lowest possible tax rate location, as is their legal right, so that they minimize the tax on the interest their funds earn, which is relatively trivial by comparison.

The Paradise Papers doesn't tell you anything other than the specific location. The only thing that would be unethical or immoral would be if they kept the money in London, Paris, or Bonn, because they'd be paying higher taxes on the interest (not the profits) for no reason at all. And since it's not their money, and belongs to shareholders, that would be very wrong.

Re: Paradise Papers: Dear Tim Cook

#796

Post by pfranz » Sat, Nov 11, 2017, 3:58 AM UTC

ttoinou wrote: post #785

pfranz wrote: post #777

Earlier quoted context omitted.

I wholly admit the government can do those things (that was the point in my original reply). https://en.wikipedia.org/wiki/Captive_market The only example there that could be remotely tied to the government is cable companies (I think the last-mile expense barrier to entry is the main contributor to those monopolies). All of them prevent a "free market" and the idea is that governments break those things up or regula…

All of them prevent a "free market" and the idea is that governments break those things up or regulate them What did govt do exactly to prevent, I quote the WP article, " food markets in cinemas, airports, and sports arenas, college textbooks, the Kosher food market in the United Kingdom, and phone calls and food in jails and prisons" ? maintain a legal system to facilitate agreements between parties Yes ! maintain a…

> What did govt do exactly to prevent,

Who said government is the solution to every single problem? I implied too much government intervention was also bad in my original post. I do think the phone call situation in US prisons are exploitative and I hope it does get addressed. Jail/prisons being the responsibility of the government, economic arguments don't apply and they shouldn't exploit prisoners (I'm also not a fan of the "slavery" exemption for prisoners). Just because a captive market exists, doesn't mean it's bad and it has to exploit them...capitalism just tends to push it in that direction. Teddy Roosevelt, who started the "trust busting" didn't have a problem with monopolies, only the monopolies that exploited their position. That still applies to today's anti-trust laws.

> If their currency was so great, why would it need force to make it mandatory ?

Because too many people cause shenanigans when they don't? I'm kind of surprised you were cool with a single legal system, but not with currencies.

> I didn't say that.

You said, "every government action steals resources from someone and prevents them to do it on their own." Maybe I should have been explicit and said "free market" but I figured it was implied. How is "every action steals resources" not oppressing the free market you describe?

Re: Paradise Papers: Dear Tim Cook

#797

Post by jon49 » Sat, Nov 11, 2017, 5:52 AM UTC

Apple is, by US law, required to maximize their profits for its investors.

I'm not religious, but I agree with the sentiment: "Thou shalt not covet." Rather than drag on Apple maybe we should be figuring out how everyone can lower their taxes.

Re: Paradise Papers: Dear Tim Cook

#798

Post by dangerlibrary » Sat, Nov 11, 2017, 5:58 AM UTC

Scea91 wrote: post #774

dangerlibrary wrote: post #721

Earlier quoted context omitted.

Imagine a world where there is no corporate tax. Apple does a price analysis and decides the profix maximizing sales point of a phone is $1,000. They price the phone at $1,000. Then, a 10% corporate income tax rate is put in place. Does Apple raise the price of the phone to $1,100? Is that now the profit maximizing decision? According to your claim "Ultimately, only people pay taxes," the answer is yes - Apple would…

> We already know that $1,100 is not the profit maximizing price point for a phone. $1,000 is a profit maximizing price point with 0 % taxes. With 10 % taxes it would be different.

Correct. Was that not clear?

Re: Paradise Papers: Dear Tim Cook

#799

Post by ech085 » Sat, Nov 11, 2017, 6:58 PM UTC

At the end of the article "Apple bills itself as a transparent company." . This is news to me. The Apple is famously (infamously) secretive.

Tim Cook is doing the job shareholders hired him for. Most boards would replace him if he made no effort to minimize taxes. It's the fault of the system that collects taxes, not Apple. If a system wants to govern and collect taxes it shouldn't rely on companies to donate more than they're legally obliged. Fix your laws, Germany, EU.

Re: Paradise Papers: Dear Tim Cook

#800

Post by fastball » Sun, Nov 12, 2017, 5:33 PM UTC

explainplease wrote: post #792

fastball wrote: post #787

Earlier quoted context omitted.

Is killing in war murder? If not, why not? Is killing in self-defense murder? If not why not? If yes, how are they "objectively" wrong? If you're a pacifist that believes all killing is wrong, fair enough. But that doesn't make your standards "objective". There are shades of grey to all morality, you pretending otherwise does you no service. The same applies in this case. Having popular opinion on your side does not…

Yes, of course, the question is the definition of murder. How do you define it? > There are shades of grey to all morality, you pretending otherwise does you no service. I'm not pretending that. Please don't jump ahead in the discussion. > Having popular opinion on your side does not make your morality "objective". That's not how this works. Again, I haven't claimed this. It will be hard to discuss this if you ascrib…

  fastball - Who says [murder] is wrong?

  explainplease - Most people who aren't murderers, and a few who are. Are you saying that murder is not wrong?

I'm sorry if I took your response of "many people think this" as a serious response. You are not giving me much else to work with, I'm afraid. You have also failed to answer any of my subsequent questions about murder and killing. And if you can't answer my questions about murder, which apparently is such an easy moral issue for you, then how can you possibly think you have a handle on the nuance of taxation?