

How Apple Avoids Paying Billions in Taxes - jonah
http://www.theatlanticwire.com/business/2012/11/how-apple-avoids-paying-billions-taxes/58681/

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Blara
A better headline would be "How _insert multinational coprp_ avoids paying
billions in taxes" I'm no apple fan, but this is the norm for most (all
maybe?) big corps.

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stock_toaster
I wonder why Ireland doesn't change their "if the Irish subsidiary is
controlled by managers elsewhere, like the Caribbean, then the profits can
skip across the world tax-free"[1] law. If so many huge corporations utilize
the tax loophole, you would think it would be in their interest to tax that at
least _somewhat_.

[1]:
[http://www.nytimes.com/interactive/2012/04/28/business/Doubl...](http://www.nytimes.com/interactive/2012/04/28/business/Double-
Irish-With-A-Dutch-Sandwich.html)

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Scorponok
Because as soon as they do that, there's less of a reason to spend a lot of
money setting up an expensive corporate HQ in Ireland.

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stock_toaster
But is it actually that expensive to set up a corporation in Ireland?

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Centigonal
Oh man, the math behind this stuff must be fascinating -- designing a system
to shuttle money around while minimizing latency and tax rates would be so
much fun.

The economic/ethical implications of what Apple and others are doing according
to this article are considerable and worrying, but all I can think of right
now is some kind of sim-tax-evasion game.

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taligent
What math and what system ?

It is simpler and easier the way Apple does it now. Money originates in each
country that a sale is made some of which flows into the regions e.g. Americas
or APAC. It would be much harder to be constantly moving money in and out of
the US.

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grecy
Why do we as a society let them get away with this?

They are benefiting from all the social services regular citizens are (police,
roads, water, public schools, etc.) without paying for them.

This is robbery. They are robbing America's future.

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whazor
The society let them get away with this because the earnings are outside of
the USA. If they do need to pay taxes for outside earnings then the company
will just move to an other country.

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grecy
Sounds great for the future of America

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taligent
The amount of stupidity in this article is startling.

There are plenty of legitimate and common sense reasons for why Apple would
keep much of their overseas earnings overseas. There are financial reasons
e.g. minimizing wasteful forex conversions. There are legal reasons e.g
posting collateral for court cases or tax disputes. There are logistic reasons
e.g. having money on hand to make it easier to acquire companies or hire new
stuff.

If Apple really wanted to avoid paying taxes then they are plenty of ways they
could do this. But they DO pay taxes. Just not US taxes for non-US revenues.

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clobber
NY Times infographic here:
[http://www.nytimes.com/interactive/2012/04/28/business/Doubl...](http://www.nytimes.com/interactive/2012/04/28/business/Double-
Irish-With-A-Dutch-Sandwich.html)

Sadly, this is the 'norm' for many, many corporations - including Google.

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paulsutter
Your criticism may be better directed at those who write the laws, not those
who follow them.

It's not only the norm, it a company's fiduciary responsibility to minimize
tax liabilities. If these activities are against the intent of the law, a
simple rule change should suffice.

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clobber
I certainly can't blame a company for taking advantage of existing loopholes
and we _should_ challenge our lawmakers to close said loopholes. However, I
can question their ethics, stock market be damned.

This whole "it was my duty" mentality and shifting the blame... hmm, now where
have I heard that before?

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paulsutter
If the behavior is unethical, what exactly would be the correct and ethical
way for these companies to calculate their taxes? If it's so cut and dried for
you, maybe you can help us all out here.

You call it a loophole, suggesting that there is a design flaw in the law that
is being exploited. What specific part of the law is flawed, and what was the
drafting intent that has been misapplied in the law as it stands?

I'm really serious. It's disappointing to me that so many people are ready to
assume unethical intentions, when the details and issues are far from clear to
me (and likely not clear to them). Maybe there is a country that has done it
correctly?

Accounting for business in multiple tax jurisdictions is really complex, and I
can only assume that we had some really thoughtful people drafting the
existing laws.

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2buckchuck
its despicable that companies like Apple reap enormous rewards and take
advantage of American infrastructure and consumers, but don't have the decency
to pay their fair share of taxes. I'm not a lover of taxes or the American
government, but I think that successful corporations (and people) need to give
back to the countries in which they operate.

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tzs
For 2011, Apple paid $8.28 billion in income taxes, on $34.2 billion income,
for an effective rate of 24.2%.

Similar for the other companies mentioned in the article. For instance, I
believe Google paid around 20%.

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buro9
Are those taxes that Apple paid because they were taxes on Apple as a
corporate entity, or taxes paid by Apple onbehalf of its' employees who were
being taxed on their income?

I don't believe that there is an accusation that the workers at Apple are
avoiding tax, but that the company is avoiding tax.

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ridiculous_fish
It's corporate income taxes. Apple does not pay taxes on behalf of its
employees.

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buro9
Ah, my ignorance of US financials comes through then... so there is no US
equivalent of the PAYE system or a withholding tax to ensure non-avoidance by
employees?

When tzs refers to income tax, that traditionally means personal/employee
income in the UK whereas corporation tax is the tax on profits levied to
corporations.

Hence, tzs's statement above reads as if Apple did pay income tax on behalf of
their employees, but makes no mention of corporation tax or an equivalent.

Too many similar terms used differently from one place to another. Now I
understand the downvote.

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sk5t
Tax witholding for salaried employees is entirely normal and customary in the
US, but the article is not about those individual taxes, and US taxpayers
wouldn't ever describe the taxes as being paid "by" the employer on employees'
behalf.

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tptacek
Careful. Employers shoulder half the burden of payroll taxes, which take the
largest bite out of most employee paychecks.

