
Apple is currently holding $181 billion overseas - LaSombra
https://theintercept.com/2016/08/16/ceo-tim-cook-decides-apple-doesnt-have-to-pay-corporate-tax-rate-because-its-unfair/
======
sgentle
> Wouldn't it be great if you could refuse to pay your taxes until you decided
> your tax rate was “fair”?

If by "refuse to pay your taxes" you mean "refuse to pay tax on the portion of
your income that you have the legal ability to not pay tax on", then yes, that
is pretty great. I and many others do that on a regular basis.

If the tax department wants a company to pay more tax, it has two options: 1.
legally require them to, 2. convince them that there is some other reason to.
A great way to achieve option 2 is to threaten them with option 1.

Right now there's an extended negotiation happening between Apple (and
friends) and the government, where both parties sure would like to avoid a
whole bunch of new onerous legislation, and it would appear Tim Cook is
describing the situation under which Apple would be willing to come to terms.

If there's no deal I'm sure the resulting new laws will be a huge nightmare
for everyone involved, so both parties have an incentive to negotiate pretty
hard without actually backing away from the table. It's an interesting look at
what happens when you're a big enough company to negotiate with the
government.

Not sure what all the bleating in this article is about though. You pay the
tax you have to pay and no more. Has the author ever filed a tax return? Does
he pay more than his required amount of tax out of a sense of patriotic duty?
If not, I find this framing pretty deceptive. Nobody's giving gifts to the tax
department.

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davidiach
What people understand from that article:

\- Apple makes money in the US and because of various tax loopholes, does not
pay corporate taxes for those revenues

What happens in reality:

\- Apple makes money in many different countries and pays corporate taxes in
each of them (including the US), but if AFTER paying taxes (for example in an
European country) they want to bring back some of that already taxed money to
the US, they have to pay an additional ~40% in taxes.

Think of it this way, you as an employee go to work for one year in a European
country. There you pay all your taxes and after that year you want to return
to the US, but now the US decides you need to also pay income taxes in the US
for your salary in Belgium.

~~~
byroot
> if AFTER paying taxes (for example in an European country) they want to
> bring back some of that already taxed money to the US, they have to pay an
> additional ~40% in taxes.

Except this isn't what is happening. In Europe at least they practice the
double Irish [0]. So effectively the stash we're talking about haven't been
taxed yet.

[0]
[https://en.wikipedia.org/wiki/Double_Irish_arrangement](https://en.wikipedia.org/wiki/Double_Irish_arrangement)

------
OneOneOneOne
This article references an interview found in the Washington Post...
[https://www.washingtonpost.com/classic-apps/stepping-out-
of-...](https://www.washingtonpost.com/classic-apps/stepping-out-of-steve-
jobss-shadow-tim-cook-champions-the-promise-of-
apple/2016/08/12/fadb6c26-59cd-11e6-831d-0324760ca856_story.html?wpisrc=nl_draw2&wpmm=1)

In that interview Mr. Cook says "We’ve said at 40 percent, we’re not going to
bring it back until there’s a fair rate."

I wonder what he considers a fair rate?

~~~
jjn2009
It should be close to zero, why are we forcing Apple to pay taxes twice? Let
them bring the money back and they will put it to much better use than any
government organization. They could hire huge numbers of people and contribute
to a massive trade surplus.

~~~
ubernostrum
_why are we forcing Apple to pay taxes twice?_

We're not. The "Double Irish", "Dutch Sandwich" and other arrangements are
about funneling the maximum possible amount of revenue through subsidiaries
which can do tax-free or tax-deductible payments and transfers to each other,
until finally the money ends up on the books of a company whose tax residency
is Bermuda or the Cayman Islands, both of which have no corporate income tax.

As of a few years ago, it was reported that Google had gotten so good at this
that 99.8% of their revenue outside the US was showing up in a subsidiary with
Bermuda tax residency.

So that money wouldn't be "taxed twice" if brought into the US -- the whole
point of the arrangement is that _it hasn 't even been taxed once yet_.

~~~
jjn2009
Countries don't need to have a corporate tax, and if they do not have a
corporate tax it doesn't mean the US government should get a piece of the pie
because no one else decided to take it.

Just like a Comcast monopoly in a small rural town the US government without
competition would continue to soak up more money and spend it on increasingly
useless things.

~~~
ubernostrum
Don't look now, but you just moved the goalposts.

~~~
jjn2009
Governments are averse to competition, bureaucrats need to realize they cannot
bully companies into paying ever increasing taxes within a global economy. The
goalposts moved a long time ago, I did not move them.

~~~
ubernostrum
Well, the original complaint I responded to was "they shouldn't be taxed twice
on the same money", and I pointed out they're not being taxed twice on the
same money.

Meanwhile, if Apple wants to bring this money into the US, well, they can do
what the US tells them to do when it comes to taxes. Apple has benefited
enormously from services and infrastructure paid for by everyone else's taxes,
and shouldn't get to leech off that without having to play by the same rules
(and I say this as someone who pays a higher percentage of my own income in
tax than Apple would even if it repatriated all its profits).

~~~
jjn2009
I did not find that part of your argument to be substantial to the core of my
point, they followed whatever tax regulations they were subject to abroad and
if there are loopholes then those countries can close them if they so desire.

Overseas profits will end up paying for corporate infrastructure and jobs
elsewhere, penalizing global activities by taxing profits which do not occur
in the US is not a very forward thinking strategy for the US Government and
it's why we will continue to get killed in trade with deficits until it
obliterates our economy.

~~~
ubernostrum
_Overseas profits will end up paying for corporate infrastructure and jobs
elsewhere_

If those profits are never taxed, they won't. Of course, to avoid them being
taxed you have to leave them sitting in accounts in Bermuda and the Caymans
where that money can't be productive for the company either.

 _by taxing profits which do not occur in the US_

The US isn't asking to tax their overseas profits. If you can't make your
argument without openly lying about what's going on, I don't know how you can
expect to be taken seriously.

------
jjn2009
These are profits which are not being made within the US I am guessing? This
is something that seems to be glossed over but it's a really important
distinction to be made.

Apple's actions seem pretty reasonable, if you worked and lived abroad as a US
citizen would you be very happy if Uncle Sam reached into your back pocket for
a cut of your income after paying into the local tax system? This is
essentially what they are asking of Apple.. the US government should get a cut
of transactions which never took place in the US.

~~~
xbmcuser
Any american citizen that does not live in the US still has to pay taxes if
they have to pay I don't see why apple or other corporations can or should get
out of paying it.

~~~
jjn2009
I doubt any sane person keeps their US citizenship for very long if they are
living and working abroad. Apple should move out of the US in my opinion if
they are going to get taxed on transactions outside of the US.

~~~
netsharc
I'm of the opinion patriotism and nationalism are not sane, but most people
are pretty proud to have those traits:

[http://www.bbc.com/news/35383435](http://www.bbc.com/news/35383435)

------
Shugyousha
I'm not a fan of Apple or its business practices but that's exactly what
Google, Microsoft and all the other bigger IT (and other) companies are doing
too. No news here.

------
ckastner
Offer them a partial amnesty: repatriate the funds at a 20% tax rate or so.

The goverment wins because 20% of $181bn is way more than 40% of nothing, and
Apple wins because they get to use the money within the US.

Partial amnesties for repratriation have been been done before, most recently
in Greece as far as I know.

~~~
thingylab
Please look up what 'amnesty' means. Apple isn't doing anything wrong or
illegal by keeping its cash outside of the US. Also note the the US tax code
is the only one (in advanced countries) to try to tax earnings made outside of
its jurisdiction (e.g. for earnings made in Japan, and already taxed locally
there).

Cook is not saying Apple shouldn't pay taxes, he simply says the IRS has no
business taking 40% of earnings not made in the US. If you were an expat you
would strongly agree with him.

~~~
ckastner
'Amnesty' was indeed a poor example. Call it a special repatriation tax
rebate, or whatever.

Otherwise, you're reading far too much into my comment. With the current tax
rules as given, I merely suggested a possible compromise.

At no point did I argue for/against the rules, and at no point did I
agree/disagree with what Cook is saying.

