
Paradise Papers: Dear Tim Cook - mpweiher
https://projekte.sueddeutsche.de/paradisepapers/politik/dear-tim-cook-e322998/
======
styx31
What annoys me the most is that, as a small company, I can't evade from my
country tax system. I pay the taxes. All of them, at full rate.

But there are these big companies which can afford to create offshore
companies/holding just to evade some tax system, and lower their tax rate.

So, what? The tax rate of a country is now "artificial", because it will never
be applied to all revenues from all companies, because the higher profiles
will be able to evade a part of it.

If governments want to reclaim more, they could raise up the tax rate,
considering that the biggest players will only pay a fragment of it. But the
small companies, the one that can only follow the rules? They are screwed.

All companies should be considered equals regarding the tax system. It is
simply not the case when such schemes are used.

Edit: exactly the same point of view as jitbit:
[https://news.ycombinator.com/item?id=15651457](https://news.ycombinator.com/item?id=15651457)

~~~
nickpp
By default, big companies always get preferential treatment from governments.
Open a mega-factory? They get tax cuts, cheap real estate, free utilities.
Why? Those shiny new jobs look great on a politician's resume for the next
election...

What does the little business guy get? A letter of "don't forget to pay your
taxes in full or else"

It's time to accept the fact that governments are NOT a fair and impartial
warden of the economy. Therein lies the problem. Reducing their power of
meddling in the economy is the solution.

~~~
sfifs
Those with wealth will always try to capture the system - whether its formal
or informal. The natural state of any business is to try and become a monopoly
because that maximizes rent taking ability - NOT competition.

Practically the ONLY power able to stop monopolies from forming is the
government. In absence of the government's ability to "meddle", businesses can
and will cut deals with big competitors and squelch smaller ones through anti
competitive practices to dominate

~~~
nickpp
Monopolies are granted by governments. The free market has a natural solution
to monopolies, it's called competition - startups.

Big Cos will always lobby governments to add rules and regulation to raise the
barrier of entry on their market and thus reduce competition.

They, in fact, buy their monopoly from the government.

Solution? Take away the government's ability to grant monopolies.

~~~
adamlett
_Monopolies are granted by governments_

Sometimes, sure. But far from exclusively. Monopolies arise naturally in
unregulated markets.

 _The free market has a natural solution to monopolies, it 's called
competition - startups._

That’s like saying that natural selection is the solution to hereditary
diseases. Not so comforting for those suffering now.

~~~
nickpp
You're right there, free markets take while to break monopolies. Time is a
price we have to pay.

Because the alternative, govt intervention, in the long term is much more
expensive: it corrupts the market and impedes the natural mechanisms from
working. Interventions beget interventions.

This leads to heavily regulated markets, where the biggest players buy
themselves monopolies. Exactly what we were running away from. :)

~~~
adamlett
_Time is a price we have to pay._

By which you mean that time is a price _you_ think we ought to pay. I mean, we
do actually have options.

 _Because the alternative, govt intervention, in the long term is much more
expensive: it corrupts the market and impedes the natural mechanisms from
working. Interventions beget interventions._

I struggle to come up with any example anywhere, where this is true.

 _This leads to heavily regulated markets, where the biggest players buy
themselves monopolies_

I don’t see how that follows from your previous paragraph. But never mind, I
get what you are trying to say, and I agree that there are plenty of examples
all over the world of regulation that has the effect you describe. Sometimes
simply because it’s bad regulation. But other times because it’s a worthwhile
trade off. I bet you don’t mind the pharmaceutical industry being regulated.
Or how about the aircraft industry. Even taxi medallions serve(d) a purpose.

------
wjnc
Dear Herr Krach, thank you for your letter.

I think you misunderstand how business works.

Apple is a profit seeking corporation. Profits we make, we hope to distribute
to our shareholders. Paying taxes is an obligation with which we comply, both
to the letter and in spirit. We meet such obligations, but not nilly-willy.
Our shareholders would not look kindly upon executives who pay more taxes than
necessary.

Avoidance of taxes is not illegal. We even enlist the help of tax offices in
many countries, like the Netherlands, Ireland and perhaps some countries
internationally deemed 'tax havens'. We pay what through mutual understanding
with tax offices worldwide is necessary.

If you conclude that you find tax evasion a problem, this would be a political
problem, not one of enterprise. No enterprise would knowingly pay to much and
no construct of 'corporate social responsibility' could make paying too much
alright. We should seek to minimize cost, and we do.

Governments should fix tax evasion, not corporations. It's not my role to
point out the obvious, but if you find the VAT customers pay on our products
insufficient and were hoping on a larger slice of our 'foreign income': fix
your tax code.

Kind regards, TC ;)

~~~
jacquesm
Dear Tim,

You don't understand how shares work. Shareholders can only benefit from
shares in two ways: through speculation about the share price or through
dividends. I'm kind of disappointed that I'd have to explain to a man of your
stature that money that Apple parks abroad will not benefit the shareholders
except in the most indirect ways.

If Apple brought home their overseas funds then it would benefit the US and
Apple shareholders in general in two ways:

The taxes paid would go towards infrastructure, education, health care and
other items that benefit all people in our society, and by extension also to
us shareholders.

Money left over could be used to pay dividends to shareholders or to do tech
acquisitions or long term investments in Apple projects which would benefit
the shareholders in a more direct fashion.

Having money parked abroad waiting for a tax amnesty that may never happen
does not have these positive effects and essentially ties up a lot of Apple
capital in ways that are not beneficial to anybody except for the banks that
get to lend this money out at prime rates while not paying Apple much of
anything.

best regards

~~~
wjnc
Dear Jacques (i'll stop with the game now ;) - I really emphatise with the
social responsibility part of the story. The game Apple is playing with stored
cash abroad is abject. Nobody is profiting from that.

But we can agree that it's not the nature of a corporation to pay more taxes
than necessary? If people offer you crazy deals: agree. Governments should
coordinate not to make crazy offers and perhaps even tit-for-tat those that
do.

~~~
onion2k
_Governments should coordinate not to make crazy offers and perhaps even tit-
for-tat those that do._

A preferable alternative would be for customers to consider a company's ethics
in their purchasing decisions, and to encourage their peers to do the same. If
it became socially unacceptable to have a new iPhone because of Apple's choice
to pay such a trivial amount of tax (legal or otherwise, that's besides the
point) you can be absolutely certain Apple would quickly stop funnelling money
to tax havens, and they'd probably have a big marketing drive about how much
they care about paying tax to fund better wages and welfare for soldiers,
teachers and nurses too.

Social pressure is far more powerful than governments. It's just harder to
'control'.

~~~
y4mi
no, they'd have another smear campaign about the governments interference and
get the populus to vote to abolish any kind of taxes just for apple. and
they'd probably succeed as well, considering how delusional and outspoken
apple zealots are.

------
jitbit
While I do agree with the point that "govs should fix taxes, not
corporations"... Still.

It's a fact that (at least in the EU where I live) the majority of tax burden
ends up on small companies - mom & pop shops, little bakeries etc. Who simply
can't afford these global tax avoidance tricks (or can't use them because
they're "local")

Not that this is wrong or right, just a fact you can't argue with. I run a
small software shop in the EU (4 ppl) I know what I'm talking about.

~~~
Cakez0r
I'd like to see some specific examples of tax avoidance tricks that Apple are
using. There are a few mentions of how the "techniques aren't affordable for
small business", but what are the techniques?

~~~
toyg
Basically they suck profits into Ireland, by stating in other EU countries
that they will pay corporate taxes there; then in Ireland through "IP
licensing fees" they paid all the money into a company that was declared not
resident on the island for tax purposes, and was basically stateless - so not
taxed. That company would then send this money to the various Caribbean shells
they use as safes, when necessary, or just hang on it.

When the EU told Ireland to stop this behaviour, Apple was pushed to declare a
location for that stateless company; they picked one of the UK Channel
Islands, a crown dependency with no taxes, and started funneling money through
that. In the process, they got another special deal from the Irish government
to keep a chunk of "IP ownership capital" on the island, which resulted in a
much lower rate of tax on that money than they would have otherwise had to pay
(but ever-so-slightly higher than if they had just put everything in Guernsey,
so they could save a bit of face).

------
hiisukun
I have nothing against companies minimising their taxes in legal ways. I
understand the various incentives at play, and it makes quite some sense - all
parties concerned appear to be acting predictably.

However: I do take issue with companies minimising their tax in ways that are
not legal, but appear legal unless discovered.

I haven't the time or knowledge of various countries' tax laws to discover
which is the case in this round of leaks, and unfortunately it seems the above
two views are conflated in all the articles on the subject I have so far read.
It'd be great if this caused some illegally hidden/minimised/shuffled/moved
profits to be taxed appropriately, but it is all too easy to covet the rich
man's "hidden wealth" and proclaim his methods "cheating" without knowing
whether they were simply the same as you claiming your dry cleaning.

p.s. The adult in me suspects that is (as with most things) isn't a black and
white issue; that the line between "legal tax minimisation" and "only legal so
long as you don't find out about this part you have no way of finding out
about" is both bent and blurry.

~~~
mattmanser
In the UK, for example, you have to register any tax avoidance scheme that
you're using (as an individual at least).

If the HMRC then look into that tax scheme and deem it against the rules, you
pay the tax, but without penalty.

As I understand it, if you don't register the scheme and you are found to be
using the previously grey-area avoidance scheme, then you get done for tax
evasion.

That's how it's supposed to work at least, but companies seem to get
sweetheart deals in these circumstances.

~~~
daxelrod
I'm super curious about how this works in practice. What's the bar something
has to meet before being reported? Do decisions made about how to do
accounting count? How about decisions when filling out tax forms? (US example:
itemizing deductions vs taking the standard deduction).

~~~
mattmanser
[https://www.gov.uk/guidance/tax-avoidance-an-
introduction](https://www.gov.uk/guidance/tax-avoidance-an-introduction)

------
hop
In Mexico, people don’t finish their houses and leave rebar coming out the
roof to pay less tax. In Vietnam, the houses are really thin because property
taxes are based on width. For an American company selling things overseas,
they’re going to setup in Ireland or wherever else because the laws make it
advantageous. All these decisions are functions of the laws written, so if
they want to complain and write open letters, it should be to lawmakers, not
the heads of companies operating logically.

~~~
jason_slack
> In Vietnam, the houses are really thin because property taxes are based on
> width.

Really? Interesting. Can anyone explain how taxing the width of the house was
established?

~~~
yathern
It's similar in many places in Europe, where you see houses laid out like
this:

[http://c8.alamy.com/comp/F56ABW/old-and-narrow-houses-in-
str...](http://c8.alamy.com/comp/F56ABW/old-and-narrow-houses-in-street-of-
gdansk-poland-europe-beautiful-F56ABW.jpg)

Your property size, and subsequent taxes were decided based on how much of the
road you took up, ie the width of the house. This practice dates back
surprisingly far (1500s?)

~~~
jason_slack
oh, that kind of "this". I was thinking the walls were thin. Width meaning
taller and skinnier....lol

~~~
yathern
Haha I was thinking the same thing - until I remembered some trivia I learned
on a recent trip to Germany

------
mindw0rk
The point about Apple hiring best graduates who got their education mostly
free of charge cause of all the tax payers really shift my mind about the
whole tax-avoidance thing.

~~~
fastball
Yes but the moral burden is not on Apple, it's on those graduates. If you got
your education for free and now you make a fat salary from Apple, it's your
job to give back. Not Apple's.

~~~
n4r9
Why is the burden not on both? Both Apple and the graduates are profiting from
the subsidised education.

~~~
fastball
Because a corporation is not a person? It's a collection of individuals, and
if you are taxing all of the individuals fairly why do you need to tax the
collective as well?

~~~
n4r9
I feel like this is sliding towards a debate about the virtues of corporation
tax full stop, which is a slightly different matter.

I actually think the idea of a moral burden could reasonably be extended to
entities such as corporations, but let's put that to the side for now.

At some point in the process a decision was made - collectively, by _people_
\- to avoid paying the stipulated rate of tax in countries in which Apple had
profited. These people benefit from the educational system in those countries,
but they also reap rewards from tax avoidance. The moral burden lies
somewhere. Tim Cook would have known about this decision if not played a role
in it, in contrast to previous statements he has made. That is the hypocrisy
highlighted in this article.

~~~
fastball
How is that hypocritical? Individuals try to minimize their taxes. So do
companies. Except a company isn't actually benefitting because a country is
just a collective.

Do you have a child? Do you not deduct that child in your taxes? What about a
mortgage? Donations to charity? Etc. etc.

~~~
n4r9
The hypocrisy is that he's publicly taken a principled stance about paying
taxes whilst actually going against that in private.

> Individuals try to minimize their taxes.

This is an oversimplification. For example, I might vote for a party that
would raise my own taxes, and happily pay those taxes if I thought good use
was being made of them.

------
boramalper
> "I guess the trouble was that we didn't have any self-admitted proletarians.
> Everyone was a temporarily embarrassed capitalist."

> \- John Steinbeck

Reading some of the comments here which rationalize, justify, and even defend
corporal behaviours such as Apple's nauseate me. How (and why) can you, YOU as
a mere individual (or the owner of a small start-up if you'd like to think
that way) who pays taxes for nearly every single transaction, can justify
these kinds of "tax optimizations"?

Speaking from experience, this is how _things_ (countries, organisations,
etc.) corrupt: when people start rationalising (and then justifying) the
behaviour of those who are breaking the rules and sitting at the top. The
corruption happens when ordinary people looks above and thinks that "I would
probably do the same, why would one obey the rules where it can be evaded?".
Since everyone except those at the very bottom is above some others,
corruption spreads like a bushfire and everyone starts breaking the rules s/he
_can_.

It would be naive to think that only top 500 companies evading tax. Those at
the scale of Apple break the rules at their own scale, and smaller ones break
it at a smaller scale. Whilst, here I am in the UK, have to pay 10 GBP for a
pack of 20 cigarettes because of the taxes.

------
bryananderson
It is so, so important to our social contract that everyone plays by the same
set of rules.

Right now, I think that a lot of people (such as small business owners who
will never employ an army of offshore tax lawyers) are realizing that this is
not the case.

Hopefully this disillusionment will be a vehicle for positive change, but the
past and present provide abundant evidence that there are tyrants and
charlatans aplenty waiting to capture the popular anger and turn it to their
own purposes.

It is in all of our interests - from the richest to the poorest - to keep this
from happening.

We need to return to the lesson of the Progressive Era. There is an
alternative to chaos, and it is to build a society in which the average person
can justifiably say that the system works for them, too, and not only for the
wealthiest.

------
jarym
"Such “tax optimization” – albeit legal – is only possible because specialized
law firms such as Appleby devise complex company structures inaccessible to
most other firms"

Maybe governments should simplify their own tax rules. Then you wouldn't need
specialised law firms and simpler tax systems are harder to bypass.

To add, there is nothing 'moral' about tax - you have no choice but to pay
what you're legally obligated to pay. Given the lack of choice in the matter,
since when did it become a crime to do what you need to do to stay within the
law?

~~~
speedplane
In these situations they always say, "everything we did was legal". But the
problem is that powerful individuals and companies get to make the rules. They
have lobbying power and a legal budget that allows them to influence the rules
themselves. They get to decide what is legal, and use the legality as a
shield.

~~~
nickpp
The government makes the rules. The problem is that the government is made of
politicians and they are by definition open to corruption (lobbying,
contributions, etc). Those campaigns cost and administration salaries are not
that big.

The solution? Reduce the government's power and you take away the incentive of
the whole sick system.

~~~
Tasboo
Or reduce the amount of influence money can have on an election. Reducing the
government's power will just enable them to continue skirting around the law.
If the government has no teeth, then why would any business (or anyone for
that matter) follow any rule to it's fullest.

------
snappyTertle
I don't get why people think paying more taxes is "moral". There are a lot of
things the government spends on that I don't agree with...and I'm sure I'm not
alone on this.

~~~
jaymzcampbell
I would be happy if we were paying taxes on a level playing field - but we're
not. That is the "moral" part of it for me. How that money is spent is another
argument.

~~~
pitaj
Why should any company pay taxes on profit?

I think that corporate taxes shouldn't exist _at all_ as they are merely an
abstraction over sales taxes, income taxes, or capital gains taxes.

~~~
ionised
Why should anyone pay any taxes whatsoever?

Why should anyone contribute to the society that allowed them to make their
money the first place?

------
rootlocus
This sounds similar to what Amazon are doing with their latest HQ: making
states compete each other over what advantages Amazon would get if it opened
its HQ there [1]. I'm terrified by the power big companies have over our
government.

[1]
[https://youtu.be/8bl19RoR7lc?t=2m52s](https://youtu.be/8bl19RoR7lc?t=2m52s)

------
almostarockstar
As an Irish citizen, I feel embarrassed by the way we have dealt with Apple
(and other behemoth corps). We simultaneously gave these organisations "free
parking" and a "get out of jail free card".

I don't blame Apple for taking advantage though. I would.

~~~
adventured
That free parking increased Ireland's economy by nearly six fold in a mere 25
years. It took Ireland from a second tier economy, to a first tier economic
power ($300b in GDP with a mere 4.7m people). From sub $15,000 GDP per capita
in 1993, to surpassing the US in GDP per capita at $62,000.

You can tell it's the large foreign corporations causing it, because of the
big gap between the growth in domestic income and the headline GDP figure.
However those companies still employ a lot of people and pay taxes Ireland
otherwise wouldn't have.

Huge companies like: Mylan, Alkermes, Medtronic, Allergan, Johnson Controls,
Accenture, Intel, Google, Apple, etc. would have likely not set up shop there
if not for the tax policies. One can say, in response to that: fine, let them
leave, we're better off -- except the Irish economy would get cut in half if
you pushed them out by raising corporate taxes significantly, poverty would
increase dramatically, unemployment would skyrocket.

~~~
mtremsal
GDP per capita doesn't seem like the best metric to track the growth of
"Ireland's Economy" if it doesn't translate into more jobs/taxes/etc. though.
Would you happen to know whether these development incentives have actually
befitted the Irish people?

~~~
dx034
Go to Dublin and you'll see that these are not just postboxes. Most of those
companies have a significant amount of employees in Ireland. They also pay
taxes to the Irish state (albeit at a low rate) which is used to further
develop the country.

Not a fan of what the Irish government did but it clearly helped Ireland to
become what they are now.

------
fauigerzigerk
I fear that Mr. Krach does not understand corporation tax.

Comparing profits from sales in a particular country to corporation tax paid
in that country by a foreign company makes absolutely no sense.

Apple's tax avoidance schemes are in place to avoid US taxes, not German taxes
or taxes elsewhere in the world outside the US.

I think Mr. Krach is right that global corporations do not pay their fair
share towards global infrastructure and education. But the reason for that is
not tax avoidance. The reason is that corporation tax, as it is structured
today, is unfit for porpose in a globalised economy.

Corporation tax is based on the assumption that companies primarily use the
public infrastructure of the country where they are incorporated. But for
global corporations this assumption is incorrect.

So Mr. Krach is barking up the wrong tree, unless his main concern is US tax
take. He should call on politicians to change the way in which global
corporations are taxed.

~~~
improbable22
Yes to this: "corporation tax, as it is structured today, is unfit for purpose
in a globalised economy".

Where Apple sold its computers is well-defined, you can count each one and tax
it. Where their employees work is also well-defined, they have desks, and
beds.

Where they made their profits simply isn't well-defined. How much was due to
the software (California), the marketing (let's say London), the assembly
(China), the logistics (in between)? These question don't have sharp answers.
Sure, Apple's accounting guys write down some numbers. But once you attempt to
tax them, you discover that they have great freedom in what column they write
those numbers in.

I increasingly think the correct corporate profit tax rate is zero. Tax the
goods they sell. Tax the salaries they pay. Tax the capital gains when
shareholders sell, if you must. These things all involve actual people and
take place in particular countries. The rest is an abstraction.

------
speleding
> In Germany, Apple is estimated (you don’t publish the exact figures) to have
> generated revenues in the billions last year – of which it paid 25 million
> euros in taxes.

I assume that Apple paid 20% German VAT on those billions, as well as paid
taxes on the salaries of the Germans it employed, and probably several other
taxes such as environmental tax on packaging. The article raises an important
issue but it's disingenuous to focus just on the profit tax, which is a highly
malleable number in the hands of an accomplished accountant.

But since they do focus on profit tax, they should have made it clear why
profit on a phone designed in the US and built in China should fall to
Germany, and they fail to do that.

------
nickpp
On thing I wonder about all these proponents for Apple to voluntarily pay more
taxes: do they themselves pay more taxes than strictly required of them?

I mean do they not take advantage of that child exemption? Do they not deduce
that mortgage? Those medical costs? That college tuition? Those business
expenses? Do they decide to voluntarily add at least 1% to their income tax
bracket?

Do they practice what they preach?

~~~
jaymzcampbell
There is a world of difference in the moral intent of claiming tax credit that
the government itself publicises in order to help the people in their society
and the likes of "Double Irish" tax schemes. It saddens me that this argument
is always rolled out. As a global population (not thinking about individual
countries, however unrealistic) - it depresses me that people try to justify
these blatant abuses of legislation.

------
jansho
Genuine question. Are there actual large, profitable companies which are tax
responsible? I.e. companies that follow ethical accounting practices to
minimise their tax and none of the dodgy off-shoring stuff

------
lucozade
As the "editor-in-chief of the Süddeutsche Zeitung, Germany’s leading daily",
why not do something?

I don't mean complain, that's already happening, I mean actually do something.

For example, ban all Apple products from the paper. Lobby the German
government to ban all Apple products until Apple pay a sufficient amount of
tax. Use the paper's influence to get people to stop using Apple's services.
That sort of something.

If not, then why not? Is it possibly that you don't really care? It's just a
fun story that helps circulation a bit. Or, maybe, that you don't believe that
you'll get much support and having a campaign that fails is bad for
circulation?

Possibly it's because this would have a direct negative effect on you and
yours and, well, we wouldn't want that.

Personally, I'm fine if you don't do anything but complain as protecting your
circulation and your convenience is a perfectly reasonable thing.

But don't be surprised that nothing changes.

~~~
dx034
> For example, ban all Apple products from the paper. Lobby the German
> government to ban all Apple products until Apple pay a sufficient amount of
> tax. Use the paper's influence to get people to stop using Apple's services.
> That sort of something.

Not sure if they even issue company phones. But if, that's maybe 100 iphones.
And how should they lobby a government to ban iPhones? As official phones
they're not used anyway (for security reasons) and the state has no say in
what people use privately. Boycotts almost never work.

~~~
lucozade
> As official phones they're not used

I mean lobby for the ban on the sale of Apple products in Germany. As in, make
it illegal to sell Apple products. And if you really want to put the cat
amongst the pigeons, make it illegal to buy them.

> Boycotts almost never work

They absolutely can if they're popular enough. And they can in Germany too. If
you don't believe me, check out the Shell boycott. And that wasn't officially
sanctioned. I think it's reasonable to expect that a 40% reduction in sales in
a market as important as Germany would cause Apple to think seriously about
its position.

Now, I'm not suggesting for a second that a ban on Apple, or even a boycott,
would occur let alone be successful. But that's kind of my point. No-one's
going to call for it because it's just not important to anyone. It's
posturing.

------
fgvqdc
I have a simple solution:

Create a business which behaves and acts the same way as Appleby but for small
enterprise of lets say 30k revenues a year only. You provide the service on a
almost non profitable way to attract the vast majority of enterprises in this
revenue sector. Ultimately, governments will see the effect of lost taxes and
act accordingly.

------
importantbrian
I think the real issue is that taxing corporations is the wrong approach.
Companies don't and really can't pay taxes. The burden of the tax always falls
on some individual or group of individuals, not the company. When try and tax
a company they can pass on the cost of that tax in one of 3 ways. They can
pass it on to shareholders in the form of lower dividends. They can pass it on
to customers in the form of higher prices, or they can pass it on to workers
in the form of lower wages. Several CBO studies have show that it is workers
who bear the primary burden of the tax. Which I think is probably the exact
opposite outcome of what people who argue for corporate taxation want.
However, it makes perfect sense why it is that way. The shareholders are never
going to agree to pay the tax in the form of lower dividends. The company has
limited ability to raise prices in many cases without losing customers, so the
easiest way for them to pay the tax is to reduce the total wages that they pay
out. Taxing corporations is nonsensical. Some individual is always going to
end up paying the tax.

------
bambax
> _since 2010, Apple’s foreign-earned income has been taxed at a rate of
> between 1 and 7 percent. Mr. Cook, do you believe this comports with the
> “moral responsibility” you have advocated?_

No, he doesn't believe that. He also doesn't care about "moral
responsibility". He's the CEO of a mega-corporation. He cares about world
dominance, competition, and profits.

It's completely useless to appeal to CEOs' moral sense; they probably don't
have one and even if they do, they don't let it run their lives.

> _Such “tax optimization” – albeit legal..._

That's the whole problem. What would be useful would be to make laws that
force corporations to pay proper taxes, and then ruthlessly enforce them.

Shame can help a little, maybe, but laws first.

------
cjsuk
I think we can bitch all we like and nothing will happen. International
taxation is complicated and part of a multinational's business model revolves
around exploiting that for shareholder gain.

What this points to is that we need a new global trade and taxation agreement
for handling this. But the policy makers don't want that because they benefit
from it.

Ergo, it'll always be like this.

At best you can add additional sales tax for non-resident companies at the
point of sale to kill their bottom line. But no one will do that because the
government will be the target of the abuse from the consumer.

~~~
LiamMcCalloway
Countries can unilaterally have taxes based on the share of total company
profit generated in the country, rather than just profit in the country.

~~~
thomasahle
That doesn't prevent companies from moving all profit generation out of all
countries but the lowest taxed.

~~~
Maarten88
Good luck Apple selling iPhones in Jersey. They'll need to sell everyone
hundreds of iPhone X's there to keep profits up.

------
thisrod
Australia taxes shareholders instead of companies. Companies pay tax on paper,
but it gets refunded to their shareholders when they pay dividends, and those
dividends are taxed like any other income.

If other developed countries did the same, these problems might be easier to
manage. Investors could still get bigger dividends from these transfer pricing
rorts, but they would have to hand them back as income tax at home, and the
rorts might stop being worthwhile.

------
monktastic1
It seems like a lot of people here are looking for "the" root of the problem,
as though there is one person or small group of people or laws that could fix
the whole mess. The truth is that we are pretty much all complicit in small
ways that add up, and that complicity generally takes the same form: I want a
little more for myself, and have a convenient blind spot when it comes to ways
in which systems and processes help bias things in my favor.

Elsewhere it's been pointed out that there's no (non-arbitrary) way to
distinguish a "tax loophole" from a "tax code." It's sort of an "I know it
when I see it" thing. But how many of us have the courage to stand up and say
"hey, this is unfair for others" vs "hey, this is unfair for me"?

Until that happens, this kind of thing will continue in a variety of forms
that may seem unrelated but profoundly aren't. But something inside us is
scared of giving up any ground.

So what's the solution?

Well, meditation and psychedelics are showing tremendous promise in awakening
the sort of "universal empathy" and profound sense of fundamental safety and
security that can shift the balance.

We can't get on that train fast enough.

------
otakucode
There is a question in that letter which I wonder if it is intended as a
threat. I might just be misguided. But asking about the questions asked about
'credible opposition party' and 'movement that may replace the current
government'... I think Tim Cook (and others in his tax bracket) might see such
a question coming from a media outlet as a bit of a threat. The general public
think of the rich as simply normal people with way more money and power. They
have no concept of how differently they relate to the world, governments, etc.
They've got no idea that once you get beyond a few million dollars, once
you've surpassed whatever an individual would reasonably ever need... you
start planning for your family. When you get to a billion? Then you start
planning for your legacy. You don't think "what will make me some money this
week" or "month" or "year". You think on the scale of centuries. And you fully
intend your dynasty (for some reason all rich come to fetishize bloodlines and
draw irrational conclusions about the superiority of their genetics, likely a
psychological defense mechanism against a sort of survivors guilt born out of
all their compatriots they've seen fall/destroyed) to outlast flimsy flash-in-
the-pan happenings of history like the rise and fall of currencies or
redrawing of national boundaries.

When people talk about things like a large movement to automation, or things
like Apple having a value greater than the GDP of nations, and things like
that... they don't tend to follow through and consider things like... people
have fought very, very large wars and killed many, many people over sums
smaller. Those who think it isn't a game are only those expendable enough to
be fodder for it.

------
steve19
"The iPhone not only changed the world, it did so faster than virtually any
other technological innovation in history."

This seems a little over the top.

------
qaq
OK could someone explain to me why people in US would be complaining about
evil Apple or any other major US company ? It's not owned by some evil rich
dude largest Apple shareholder is Vanguard second Blackrock and so on. It's
owned by you it creates value for your pension I'd rather trust Tim Cook than
Donald Trump with my pension $.

------
l8again
>> Did you want to make zero-tax status a precondition for establishing tax
residency there? What gives you the right to do so?

This is a pretty twisted way of publicly shaming someone for just asking. They
have all the right to put whatever condition on any country they want. Any
country has the right to not accept their conditions.

If the intent of the author is to publicly shame Apple and paint them as being
somehow culpable for the poor conditions of the said countries, then its not
working. There are jobs that Apple bring to these countries that kick start
their economies. Again, its not for nothing that countries _agree_ with their
pre-conditions.

The other argument presented here is that smaller companies don't get to play
by these rules. Again, they can. Just that there is no incentive for a country
to not tax smaller companies.

Bottom line: Apple brings more to the countries than just its taxes, and
that's why the countries are fine with their special tax status.

------
bantunes
For people talking about how the solution is to fix the tax code: the problem
is not the tax code or the rates. Even if the tax rate was 2%, these people
wouldn't pay it.

I feel the problem is much deeper than that - the fact that Tim Cook, and
others, do not see it as "fair" to pay for the use of public facilities and
services. That they fail to grasp the notion that by helping a nation create
better, more educated, healthier citizens will effectively improve their
bottom line in the future. That levelling the playing field creates more
customers for their businesses. Unfortunately you can't put that on a
quarterly profit report, so let's just make more and more money and screw
everything else. That's not success. That's a virus in economical form, slowly
killing the host.

------
Marazan
At the core of many of these tax avoidance schemes is wholly owned
subsidiaries making intra-group loans that are treated differently in
different tax jurisdictions.

Imagne there is subsidiary X & Y in jurisdiction. In jurisdiction A the parent
company declares those two subsidiaries should be considered a single entity,
in jurisdiction C the parent company declares they should be considered
separate.

This allows intra-group loans between those two subsidiaries (and other
subsidiaries outside jurisdiction C) to appear and disappear from the
accounting as necessary for the purpose of tax avaoidance.

Whilst the declared company structures are perfectly legal in jurisdiction A
and C the fact that the parent company has declared different corporate
structure for the same entities is deeply suspicious as an activity.

------
ech085
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.

------
makapuf
I cannot count the number of times I've heard the word "Legal" in the news in
the last few days. As in "everything we do is legal". What's implied is
therefore ... I can do it. What I understand is : therefore... change the
'fing law. And make it very public who is blocking this change of laws. Any
country such as isle of Man or Ireland can have its own laws. My country has a
system where infrastructure is build from transactions. You don't want it, you
cannot have access to its customers. simple on principle. Some laws can be
bent to avoid it ? change them. Have issues changing them ? Please explain
them clearly. Act on those & iterate.

------
jokoon
I don't care about a lot of political subject, would it be inequality,
welfare, immigration, racism, etc.

But tax havens seem like a huge threat, and my favorite subject of opinion of
all, and they are a big source of problem in how the economy is unfair and how
any country's budget is unbalanced. Weirdly, libertarians will defend the
existence of tax havens.

I'm really happy to see that some political actors are finally advancing on
that subject. Even in terms of geopolitics, it will be delicate, but I don't
care, this is the largest abscess to burst, and it's crazy it's not a bigger
issue and that it took such a long time. It's really time that this gets
fixed.

------
tareqak
Is there a sort of international tax agency (hopefully with the proverbial
teeth) like there is the World Trade Organization [0] (WTO) for trade or
Interpol [1] for policing?

With my colloquial/urban-legend-style understanding of the fear of being
audited for taxes in both Canada and the US, I would be mildly entertained if
I ever heard that the "Global IRS" was auditing a multinational corporation.

[0] [https://en.wikipedia.org/wiki/WTO](https://en.wikipedia.org/wiki/WTO) [1]
[https://en.wikipedia.org/wiki/Interpol](https://en.wikipedia.org/wiki/Interpol)

------
wslh
ELI5: why Wolfgang Krach needed the paradise papers to write this letter? Are
paradise papers just an information leak that don't contribute to solving any
problem? Except obviously when you can find plain corruption based on these
papers.

~~~
Tepix
Perhaps you missed these parts towards the end of this letter:

"But what unsettles me the most is the way in which Apple instructed a law
firm to obtain an “official assurance of tax exemption” from the government of
a country."

and

"And what understanding of democracy are we supposed to discern from the
question you had this law firm ask? The one about whether the country had a
“credible opposition party” or “movement that may replace the current
government?” Were you trying to ensure that you would be able to retain tax-
free status even after elections or a change in government?"

~~~
wslh
I don't find this strange when you are looking for a long term tax strategy
and trying to reduce the involved risks.

For example, when Intel invests in chip plants there are big discussions about
tax privileges [1]. I know this is different because it doesn't involve a big
R&D but it is natural to big company plans.

[1] [https://www.reuters.com/article/us-israel-intel-
plant/israel...](https://www.reuters.com/article/us-israel-intel-plant/israel-
approves-intels-6-billion-investment-in-chip-plant-idUSKCN0HH1F720140922)

------
henvic
Let people protect their finance in peace.

If I earn money by creating a good product that consumers love I have the
right to do whatever I wish with this money.

Socialism is evil. Let people be free to use their wealth for the benefit of
society by producing more, donating, and so on. Why the hell would I want to
give money to politicians to generate war and tragedy? It is a shame so many
socialists try to destroy California and whatever is left of free-market in
America.

------
jrobn
Apple and the like are just being “smart businessmen” as our current tax
evading president once said. I never really minded paying taxes. Sure, I was
upset sometimes when I learned how some of it is spent. After Trump said that,
I made it my duty to pay as little taxes as possible to the federal gov’t. The
US election taught me that a total morally banktrupt asshole can win the
presidency of the United States and flaunt his disgraceful behavior, I might
as else enjoy what he enjoys.

------
angel_j
Whose torch are these media co's carrying? I'm not so quick to swallow a
newspaper editor's moral indignation about taxes. Much ado about symptoms, not
so much a cause.

Our governments waste so much money, even Apple's lost taxes are a drop in the
bucket. Should we all join in crying about that loss? We know 90% of it would
go to military and corrupt, partisan, spending.

I say spank the news media along with the government, for being partners in
the inertia. At least Apple innovates.

------
webXL
> Many of these institutions of higher education are entirely or partially
> funded with taxpayer money.

This is a _tell_. I should have seen it coming. Another "you didn't build the
ROADS!" guilt trip. As if a big part of the rationale behind all government-
funded activities (wealth redistribution) was to promote the importance and
preservation of the state, not what the citizens couldn't do for themselves.
The same goes for the "freedom isn't free" bullshit. A "security" argument
could have just as easily been substituted for the "education" argument.
Citizens all around the world are paying double for this self-aggrandizing
propaganda, some with a mountain of subsidized student loans, others with
their lives.

The fundamental goals of government (that I think that most people could get
on board with) are to provide law and order, and if it has the resources,
promote the general welfare. If the welfare is being promoted and increasing
by other means, why do we need the state to continue that role? The pie is
growing in the form of a piece of technology that is improving your life, and
the private sector doing more, more efficiently. Just because the guy next
door struck it rich in some risky investment or startup doesn't mean you were
made worse off or will be made worse off. The sooner we can stop flirting with
that flawed, quick-fix socialist thinking, the better off we'll all be.

------
m_st
Great letter that is part of a great movement right now. It's not just Apple,
but they're an easy target and rightly so. It has to start somewhere.

I'm confident they're doing their usual 'wait for a week' until we get a
reply.

And then I hope, just like with the ecological issues after the Greenpeace
accusations, Apple will finally start doing the right thing and pay rather
than trying to escape.

\- A happy Apple user

------
vfulco
There are a sea of lawyers, accountants, investment bankers et al., using the
best intelligence the marketplace has to offer, to move money around the world
for corporations in a game of (don't) whack-a-mole. Until these guys get a
kick in the teeth and some semblance of honor, the game will go on because it
pays top tier compensation. Scoundrels.

------
smilangalang
Not to be a jerk, but I do not agree that Apple makes outstanding products any
longer.

In particular the quality of UX has decline rapidly since jobs' decline. Have
you looked at the stopwatch app for example? Where did the seconds go?
Milliseconds?

There are many many more things like this that have changed for the worse. And
their hardware has always been sub par afaik.

------
ttul
Tim Cook could be sued by Apple shareholders if he _didn’t_ pursue the most
efficient organization for tax purposes. It’s actually his legal
responsibility - not some evil thing he’s doing because he is a heartless
capitalist.

If you don’t like what Apple is doing, don’t blame Apple. Blame government,
and use the power you do have to make change happen.

------
rajacombinator
Y'all should hate the game not the players, c'mon. -50 Cent

(ie. Pass bad laws/tolerate bad governments, get bad results.)

------
0xbear
The article is mis-addressed. If the goal is to change something and not just
pointlessly grandstand, it should be addressed to the lawmakers who wrote the
laws that make this legal. Nobody should be required to pay more taxes than
the laws tell them to. Anything else is frivolous and arbitrary.

------
arshaanb
You can’t blame the people taking advantage of the loops holes, you have to
blame the countries which allow it, and then stop them, thus putting all
business owners on a level playing field. They are driven by capitalism and
money, they aren’t going to not do it for moral reasons.

------
m3kw9
This guys seem to know nothing about economics. A company can be enticed with
tax exemptions to setup shop there and in return help the count in many ways.
The tip of the iceberg is employment, talent generation and the surrounding
areas where the office is placed.

------
qaq
I am a bit confused what does sales in a given jurisdiction have to do with
amount of taxes payed on profits in that jurisdiction? Apple does same thing
every german company in US is doing e.g. shifting money flows in such a way as
to optimize profits.

------
qaq
There is significant trade imbalance between US and Germany as in Germany
exports 2X more goods to US so if laws would be passed that make you pay taxes
on profits proportional to sales in a given jurisdiction Germany would suffer
greatly.

------
ainiriand
It is funny to see that here in Dublin there are so many homeless people.
Almost one in every street. This tax evasion is not the direct responsible but
it is another symptom of this 2-speed society in which inequality separates
citizens.

------
lxchase
Would it be possible to create a "Tax evasion as a service" where one can buy
shares, and said company will offshore the pool of money allowing individuals
to get benefits of big corporate tax?

------
danra
A lot of the responses here are missing the point. It's not that Apple _must_
behave morally with regards to taxes, and not just legally.

It's that Apple _claims_ to behave morally, and doesn't.

------
fredgrott
here is what the average American does not know...read?

US collects $2.5 trillion in corp taxes...guess how much revenue is earned by
US corps? $27Trillion...US corp effective tax rate tan is exactly
10%...contrasty that with China where the effective tax rate for corps
counting corruption is at somewhat 45%...

Somewhere there is something wrong with US corp claiming they need lower taxes
when they cannot increase the number of those hired..at leas that was the
former social contract they were operating under when getting those lobbyist
tax breaks in the first place.

------
stesch
David Mitchell on Tax Avoidance: [https://www.youtube.com/watch?v=m2q-Csk-
ktc](https://www.youtube.com/watch?v=m2q-Csk-ktc)

Makes some good points.

~~~
OJFord
Working link in the UK:
[https://youtu.be/xc8epam4NyY](https://youtu.be/xc8epam4NyY)

------
jbaudanza
If we want the rich to pay more taxes, it would be simpler to just raise taxes
on the rich individuals. Things get more complicated when you try to tax an
abstraction (a corporation).

~~~
adventured
Everybody else has already long since figured that out of course and are
cutting their corporate income tax rates significantly, while half the
political sphere in the US is still arguing about taxing corporations more.

Meanwhile, in Sweden: 22% statutory corporate income tax rate; Finland: 20%;
Denmark: 24.5%; Norway 27%. Those horrible socialists!

~~~
Synaesthesia
But you have to look at the effective rate after deductions, which are very
significant in the US.

------
known
[https://en.wikipedia.org/wiki/Stockholm_syndrome](https://en.wikipedia.org/wiki/Stockholm_syndrome)

------
jlebrech
people avoid tax all the time, when VAT goes up do you buy that new TV or do
you wait for the next budget. of if it's a laptop do you wait to buy it at
duty free?

------
mementomori
Even though I don't believe that articles like this would make the slightest
bit of difference, I sincerely admire the sentiment of people who write them.

------
Davidbrcz
Want to prevent this ? Use your ultimate weapon, your wallet. Start boycotting
Apple products (all other companies that appeared in the leak such as Nike).

------
xapata
Income tax is hard to collect. Sales tax is regressive.

Solution: sales tax with lump-sum redistribution to make it progressive.
Forget income tax.

~~~
aembleton
But then you just buy from overseas. Or if you have many land-borders like
Germany, you just drive across a border.

~~~
xapata
Import tariffs are possible, set to equal the sales tax. Enforcement for large
corporations will be relatively easy. I'm not worried about individuals.

------
ninjabeans
By how much would the country's tax income increase, percentage wise, if all
these companies started paying full tax?

------
nobodyorother
What is Apple's effective tax-rate, world-wide (for, e.g., 2016)? I've not
seen this spelled out anywhere, yet.

------
drraid0
Hacker News Staff: can you please publish stats on how many of the comments on
this thread are posted from Apple devices?

------
m3kw9
This paper seem to be made to stir stuff up amongst people who thinks this is
a simple matter

------
jon49
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.

------
bsaul
i think pressure should also come from apple ( and google and amazon..)
employees. They work for an objectively "bad behaving" company, they should
tell their management that they're not ok with it.

------
fatjokes
> Apple bills itself as a transparent company.

lolwut? Secretiveness is kind of their thing.

------
justacat
All I want is a world with a single flat tax, is that too much to ask?

------
dontreact
Is there anyone here who is enough of an expert to propose changes to the U.S.
tax code that would actually get rid of all of the tricks that multinationals
play to avoid taxes? Or knows of where to find such a thing. I have responded
in subthreads to at least 3 people who think they are but curious if there is
anyone out there with actual expertise on the topic.

My sense is that it's easy to feel that the solution to the problem is simple
(like this xkcd: [https://xkcd.com/793/](https://xkcd.com/793/)) when in fact
it is tremendously complicated: perhaps even intractable. It may be that it
there is a sort of Godelian way of always finding a loophole given the
emergent complexity of the interactions between the tax codes of ~200
different countries, many of which are incentivized to have a lax tax code to
promote local job growth.

------
rimliu
I wonder, does the author pay more taxes than he legally owes to.

------
stesch
70% downvotes on /r/apple, posted 17h ago.

------
known
Tax revenues, not profits on all listed companies

------
thisisit
John Oliver did a piece on this last Sunday:
[https://youtu.be/8bl19RoR7lc](https://youtu.be/8bl19RoR7lc)

------
therealmarv
No comment. - Best regards, Tim Cook

------
karl11
Why do we expect Apple to be altruistic instead of expecting governments to
have sensible tax policy?

------
artur_makly
apparently that xtra $ isnt quiete reaching their IOS 11 team in constructive
ways.

------
philliphaydon
As Long as tax’s remain high, they will be avoided. Raising taxes on the 1% or
raising corporate taxes on businesses it only going to make the issue worse.

America probably wouldn’t need such high tax if it didn’t have such a terrible
government system.

------
DoctorPenguin
That really hurt to read. What I get from this article is: "I use apple
products every day and now I feel bad for using them. But I won't stop anyways
because who cares really. Please do anything to make your company less
profitable so I can feel better again."

~~~
martin_a
You obviously misread it. Try again.

------
dennis_jeeves
Got to chuckle when articles like this appear. Essentially it means this:

I paid my taxes, you haven't. Translated it means ( in my opinion): I got
robbed, but you didn't get robbed, and I feel envious of you.

Taxes are an extortion by the government and it is fair game that anyone
should try and evade it legally or otherwise. Extortion cannot be justified
even if some of the money is used to deliver useful services to the people who
have to part with the money.

Summary: people get the government that they deserve.

~~~
soVeryTired
Let me guess. You're in favour of private healthcare, private security,
private education, and no social safety net. In short, nothing to aid social
mobility, and nothing to restrain powerful people who have gained the upper
hand.

You know, to some of us, that libertarian utopia sounds like a fucking
nightmare.

~~~
dennis_jeeves
>You know, to some of us, that libertarian utopia sounds like a fucking
nightmare.

Correct, nobody is obliged to help you. What a sense of entitlement!

So your only option is go ahead ask your government to arm twist rich people
into funding your healthcare etc. ( and the rich includes the ones that have
both legitimately and illegitimately obtained wealth).

~~~
ionised
> Correct, nobody is obliged to help you. What a sense of entitlement!

Actually, they are.

It's an innate instinctual behaviour inherent in all healthy human beings and
we are social creatures that have succeeded through co-operation. If you have
never felt the urge to help someone, prevent abuses and exploitation you might
actually be a sociopath.

In the wild, members of social species that don't conform to this become
outcasts and eventually die off as they cannot contribute to the group. It's
an evolutionary weakness.

People like you try to wax philosophical about self-reliance and pulling
yourself up by the bootstraps, but it's simple greed masquerading as some kind
of stoicism and self-reliance.

The simple fact is, neither you nor Apple nor anyone else in this vein has
made their living without the benefits and support that a tax-paying society
has afforded you. Considering especially that it is people like you that
espouse this naive view of the world and your support for companies like this
engaging in these socially-damaging practices, it is interesting that it also
happens to be these very same 'captains of industry' that receive all manner
of corporate welfare, bailouts and handouts.

Privatise the profits, socialise the losses. Capitalism when you are winning,
socialism when you are losing.

It's interesting how that works isn't it? Almost like it isn't some kind of
profound personal philosophy, but rather just simple greed.

~~~
dennis_jeeves
>Actually, they are. >It's an innate instinctual behaviour inherent in all
healthy human beings and we are social creatures that have succeeded through
co-operation. If you have never felt the urge to help someone, prevent abuses
and exploitation you might actually be a sociopath.

Agreed it's all innate as you said. But think of it for a moment. If a poor
man forces me to part with my money, I sure won't be happy. I would tell him
to f __k off. But if I voluntarily donate, that is another story. No one
should be allowed to calibrate my urge of having to have to help someone
though force(taxes), it 's my decision entirely.

>People like you try to wax philosophical about self-reliance and pulling
yourself up by the bootstraps,

You are putting words in my mouth. Stop that.

