
There’s Nothing Apple’s CEO Cares About More Than Not Paying Taxes - Cbasedlifeform
https://theintercept.com/2017/05/04/theres-nothing-apples-ceo-cares-about-more-than-not-paying-taxes/
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pdog
Alternative title: there's nothing Apple's CEO cares about more than saving
$50 billion for Apple and its shareholders.

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nihonde
I find it a little mystifying when people act as if revenue earned overseas
ought to be contributed to US tax revenue. In the end, that kind of policy
would hurt the US at a time when America needs more winners like Apple and
less businesses that rely on the tax base to keep their failing concerns
afloat.

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mikeyouse
The rub comes from all of the effort they go through to make domestic income
look like foreign income. It's one thing to argue local income should be taxed
in the jurisdiction that it's earned in, but when you look at all the transfer
pricing games these companies play in _every_ jurisdiction, it's clear that
they just wouldn't pay taxes anywhere.

Edited to add example:

E.g. when Apple sells an iPhone in New Zealand for say $800, they are meant to
pay taxes on the difference between what the phone cost and the sales price.
Except, all Apple products sold internationally need to pay Apple Sales
International for their IP. This amount happens to eliminate the tax liability
in every country that they sell products.

So okay, then Apple Sales International should pay taxes on all of that IP
licensing cash, right? Well Apple negotiated an agreement with Ireland such
that all profits earned outside of Ireland are attributed to a "head office"
that literally doesn't exist. So the only taxes that Apple Sales International
pay are from sales in Ireland.

So they can make tens of billions in profit, pay a few million in taxes and
wait for a repatriation holiday to capture that money basically tax free.

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gozur88
>So okay, then Apple Sales International should pay taxes on all of that IP
licensing cash, right? Well Apple negotiated an agreement with Ireland such
that all profits earned outside of Ireland are attributed to a "head office"
that literally doesn't exist. So the only taxes that Apple Sales International
pay are from sales in Ireland.

Why does it matter to New Zealand whether or not Apple pays taxes in Ireland?

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ubernostrum
New Zealand (or any other country) would like to say that you pay tax equal to
some percentage of the profit on iPhones sold in New Zealand (or whatever
country is trying to tax them). Apple would like to route the money around
between its subsidiaries in order to say "well, we actually made zero dollars
of profit from selling iPhones in New Zealand this year, so we won't be paying
you any tax".

The fact that the money ends up in places where Apple pays very little tax or
even zero tax on the profit is just rubbing salt in the wound.

This is the kernel of usefulness in the border adjustment tax Trump has tried
to propose a few times. His version of it is way off from the original idea,
but the original idea -- to replace "tax profit made here" with "tax sales
made here" \-- is sound. You can hide the existence of profit all sorts of
ways, but it's much harder to hide the existence of a sale, and bordering on
impossible to hide the existence of millions of sales.

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gozur88
That's opening quite a can of worms, though, isn't it? If I were selling a
product that was barely breaking even, would you have the government tax me
into a loss?

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ubernostrum
Many countries already have VAT. And in the US, state and local governments
levy taxes on a percentage of sales, which are paid by the buyer. If this were
going to massacre gigantic numbers of businesses, or cause the number of
people willing to go into business to drop to zero, it would have already and
we'd have noticed.

So if a tax on money made from selling products is what's desired, this --
rather than an avoidable tax on profit -- is a way to do it.

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williamle8300
What's wrong with reducing a business' taxes? Aren't tax write-offs there for
a reason?

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arcticbull
Because society needs the money.

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wyager
Society has the money. If you mean "the US Federal government needs the
money", be explicit.

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mproud
Don’t put this on Tim. This isn’t about Apple. This is about large
corporations and tax laws.

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mjbadagliacco
It's NOT the governments money! Stop acting like the government is entitled to
a dime!

Cook is right to do everything possible to avoid paying this over bloated joke
of a Constitutional Republic! The founders would be screaming for another
revolutions years ago!

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refresh99
Actually many argue that taxes were originally meant only for corporations and
not personal income tax since personal income tax was not originally
collected. The thought is the profit of those companies are being generated
from the efforts of the citizens and corporations are not people. Instead of
asking the people to pay more so the fat acts could keep more of the money the
corps would fund the govt.

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yuhong
I think a compromise to cut US federal taxes to something like 25% is most
likely and what I would recommend.

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sambull
I think we should penalize them and add 10%.

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yuhong
I am talking about in general.

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jshute
How can you blame them? They're playing by the rules, the same rules their
competitors play by (Google also uses the double Irish). In that context,
isn't it far better to pay single digit interest rates on money when you're
backstopping it with overseas cash rather than taking a 35% haircut to
repatriate the same? Finally, what odds do you place on the one time transfer
of $88B to the US government with a love note ACTUALLY resulting in a better
quality of life for US citizens? It seems to me that regardless of regressive
policies and hero projects like walls and Mars trips, monetary policy is still
trying to get people and companies to reinvest to spur growth vs. sitting on
savings.

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GreaterFool
Also, let's not forget that the offshore pile of money has already been taxed
in jurisdictions where it was earned. The world is slightly bigger than US. If
Apple sells an iPhone in Germany it pays taxes in Germany. It is a bit silly
to then send the money home and pay another huge tax on top of it!

Yes, I'm aware that thanks to various tax shenanigans the offshore tax bill
might be artificially low. If that was the case though, Apple would've cheated
local governments and not the US government.

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deepsun
> If Apple sells an iPhone in Germany it pays taxes in Germany.

Not necessarily. See a comment above about New Zealand.

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GreaterFool
As I've mentioned in my comment "thanks to various tax shenanigans the
offshore tax bill might be artificially low". It would be up to New Zealand to
investigate and make sure Apple pays it's due. But I don't see why US needs a
slice of that particular pie.

