
Apple's $348M Tax Settlement In Italy Bodes Ill For Google, Facebook, Microsoft - us0r
http://www.forbes.com/sites/timworstall/2015/12/30/apples-348-million-tax-settlement-in-italy-bodes-ill-for-google-facebook-microsoft-and-others/
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bpodgursky
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 up some good old nationalist
fury.

What do you legally owe? It's undefined. Or more, defined by whether the
country you are in likes you for PR reasons (Google is stealing our newspaper
jobs!) * the skill of your lawyers. Great!

How about, we admit corporate income tax is a stupid idea, get rid of it, and
raise capital gains taxes respectively (and dividends)? People have the great
feature of being corporeal beings which live in a country, which makes them
much easier to tax than ethereal corporations.

Of course there are rough edges to fix around overseas investors, but it could
not possibly, in any world, be worse than the system we have today.

~~~
jph
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 than ~35%.

Where Apple is located is clear to me: Apple products say Cupertino and
there's a gigantic new Cupertino headquarters in progress. Apple also has many
subsidiary locations worldwide, and occupies real property, and hires real
people; these locations should pay their respective country taxes.

Tim Cook and Apple have an opportunity and moral responsibility to help close
these tax loopholes that are siphoning money out of the U.S., California, and
Silicon Valley-- then do similarly with the EU and worldwide.

Specifically, the goal is to streamline tax codes to be more clear, more
consistent, and more algorithmic. This would be unpopular with stockholders
but it's the right thing to do for employees, customers, and countries.

~~~
bpodgursky
No! No! No!

What you legally owe in taxes, in a reasonable tax structure, has NOTHING to
do with your moral compass. You should be able to plug numbers into a
spreadsheet and get it.

I'm not saying that taxes are bad. We need tax revenue. I get that. But there
should NEVER, EVER, be two legally correct answers to how much you owe.

The fact that you had to spend paragraphs making your case, makes mine -- when
you resort to emotional appeal to try to get people to pay their taxes, the
system is completely broken.

Edit: the original comment said that this was clear to anyone with a "moral
compass"

~~~
hyperbovine
> You should be able to plug numbers into a spreadsheet and get it.

But we have that. Take profits and multiply by 0.35. Done.*

The fact that Apple effectively pays less than %10 corporate tax rate in the
US is, I think, what the parent poster was referring to.

~~~
bpodgursky
* except that's not really true

For it to be this simple, you're declaring that every company paying less than
35% tax is in breach of the law. Which is obviously not the case in the eyes
of the IRS -- there is totally legitimate foreign income, deductions, etc etc.

Whether you think those things are a GOOD idea doesn't matter, there are
plenty of companies paying way less than 35% which are not going to get
prosecuted, and the IRS would declare in the clear.

------
kmfrk
It also took Italy to remind Apple to honour the EU's consumer rights:
[http://www.wired.co.uk/news/archive/2012-04/03/apple-eu-
warr...](http://www.wired.co.uk/news/archive/2012-04/03/apple-eu-warranty).

Don't know what it is Italy's got going for it, but they're doing something
right.

~~~
solidsnack9000
They've been combatting organized crime for decades.

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tbarbugli
That's a nice discount from the 800M they were supposed to pay.

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rjayatilleka
Forbes doesn't even work with an adblocker for the last couple weeks. If you
want to hear about the actual settlement, here's a ReCode article:
[http://recode.net/2015/12/30/apple-to-pay-348-million-to-
set...](http://recode.net/2015/12/30/apple-to-pay-348-million-to-settle-italy-
tax-probe/)

Not sure if the article brings up the same discussion and conclusions as the
Forbes one though.

~~~
pen2l
Forbes is using the 'FuckAdblock' thing... so yes, it doesn't work when you're
using Adblock. But if you install the FuckFuckAdblock extension, you should be
able to see the article. Here's a link to the extension:
[https://chrome.google.com/webstore/detail/fuckfuckadblock/hb...](https://chrome.google.com/webstore/detail/fuckfuckadblock/hbpkckdpldklpnkfacfjpjhajmenaejo?hl=en)

~~~
nickpsecurity
I thought you were kidding until I clicked the link. Probably named with
intent to inspire comments just like yours. Lmao.

~~~
pen2l
Hah :) So, as it happens, I was just last night talking to a guy who was
basically attempting to make a 'FuckFuckFuckAdblock' \-- a js solution to
detecting the presence of FuckFuckAdblock extension. (I'm not sure how far he
got, I'll try getting in touch with him soon to see how that's going. And, the
guy was looking into creating this just for kicks, he's not in the ads
industry). Anyway, so naturally we might very well soon be seeing a
FuckFuckFuckFuckAdblock extension (or F^4, if you would).

~~~
nickpsecurity
The logical conclusion of all this is probably a FuckEmAll extension that uses
an ADsafe-style subset of HTML/CSS/JS, automatically transforms anything to
it, performs checks that focuses on attackers' goals rather than tactics, and
thereby prevents "all types of fuckry." [1]

[1]
[https://www.youtube.com/watch?v=dCIjukbIIWc](https://www.youtube.com/watch?v=dCIjukbIIWc)

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stefantalpalaru
> Italian prosecutors have been investigating allegations that Apple failed to
> pay corporate taxes to the tune of 879 million euros, sources told Reuters
> earlier this year.

So they negotiated that down to about 40%. Yes, that's how it works for the
big guys, they get to negotiate their taxes.

------
ShaggyStardust
Is this really more interesting than Ian Murdock death?

------
VeejayRampay
So basically Apple was evading taxes while benefitting from all the
infrastructure that said taxes help pay for. And when they got caught, they
got to negotiate what percentage of what they actually owed they would pay in
the end. That'll teach them :-/

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beatpanda
Good. All the companies listed in the headline are sitting on piles of cash,
benefiting massively from U.S. federal and local government spending on their
behalf, and paying a lot less than what they actually owe on profits earned in
the United States. All of them should face massive, confiscatory fines.

I'm also sympathetic to the argument that the United States should lower its
corporate tax rate, in exchange for corporations actually paying at that
lowered rate, but because U.S. politics are broken, this is never going to
happen. The next best thing is legal judgments against tax dodgers, and I'll
take it.

------
jph
Apple is doing the right thing by paying this to Italy.

Next up (I hope) is a similar agreement regarding Apple, the U.S., and
Ireland.

The primary goal is to get Apple to pay each U.S. taxes on U.S. sales: when
Apple sells an iPhone in the U.S, the profit should be realized in the U.S,
not in Ireland in a Irish shell company. Then do the same for all other
countries, so Apple pays fair taxes on fair profits to the right countries.

Forbes has a good introduction:
[http://www.forbes.com/sites/leesheppard/2013/05/28/how-
does-...](http://www.forbes.com/sites/leesheppard/2013/05/28/how-does-apple-
avoid-taxes/)

~~~
ryanwaggoner
_The primary goal is to get Apple to pay U.S. taxes on U.S. sales._

The linked Forbes article is a great introduction, but unless I'm reading it
wrong, it covers how Apple avoids US taxes on foreign sales, not US taxes on
US sales. How exactly are they avoiding US taxes on US sales?

The US practice of taxing entities (corporations and people) on their global
income based on citizenship instead of residency is just stupid, so Apple is
in the legal and moral right here in my view.

~~~
bryanlarsen
There are two distinct outrages here:

\- Apple avoiding paying taxes on foreign income to the USA

\- Apple avoiding paying European taxes to anybody

Your argument holds weight on the former. However, it obfuscates the second,
where Apple pays taxes on its European income at a rate of 0% to Ireland.
That's a true outrage.

~~~
ryanwaggoner
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 broad EU corporate income tax, is there?

~~~
Marazan
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

~~~
ryanwaggoner
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.

~~~
Marazan
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.

