
Apple responds to NYT: "We're among top payers of U.S. income tax" - fhoxh
http://www.nytimes.com/2012/04/29/business/apples-response-on-its-tax-practices.html
======
foenix
Wow, the comments in this otherwise rational forum are astounding. Does no one
really understand the purposes of taxation? Or are you all too self-inflated
to realize that you are part of a public collective? Don't you find it strange
that things like roads to transport your products, education to give knowledge
to your employees (and consumers!), and emergency services to ensure the
safety and well-being of the public are all things we rely on to keep living
our individual lives? To replace these services with private entities would
take their control out of the hands of democracy and into selected special
interests.

I would say that HN readers and contributors are among the smartest people on
the web; they are the intellectuals. So please pardon my "rantiness" when I
say that it is the responsibility of intellectuals to facilitate growth in
their communities. And in this cyber-cosmopolitan age it becomes important to
understand where the most efficient contributions to growth are going to take
place. After all, life is infinitely finite. When you're 6 feet under the only
things that survive are your genetic progeny and your intellectual progeny.
Favouring conservative taxation in favour of purported "individualism" is not
only selfish, but highly inefficient. Charities and government subsidies do
not fill the voids required by collective resource allocation. To be more
concrete: you can't build a socioeconomic infrastructure on top of capitalism.
You have to do it the other way around. Philanthropy isn't as widespread in
Europe as it is in North America. That's because European taxation models are
such that there is a "safety net" (one which is akin to our emergency response
system, but more robust and covering more edge-cases).

Pardon my frustrated response, but I just don't think HN is on the same page
when it comes to the benefits of democratic "socialism".

~~~
jellicle
>I would say that HN readers and contributors are among the smartest people on
the web

But HN readers are almost exclusively rich white American males. They've never
had any adverse experiences in their lives. They've never been frisked by the
police; they've never gone hungry for even one meal; they borrowed money from
their parents to get started; their parents put them through college.

Having no experience of adversity is proven to produce feelings of excessive
competence/arrogance in people. And that's pretty much what you see here.

Very few of them have any sense of the society that they are coasting on top
of, nor does telling them that they are one injury from abject poverty make
any difference. They don't really believe it, not in their hearts.

So, sorry, but you aren't going to get a lot of sensible responses about
taxation here. They're incapable of it.

~~~
throwaway65
Textbook example of an ad hominem argument. Honestly, a basic understanding of
logical fallacies should be a mandatory prerequisite for posting on HN.

~~~
rsanchez1
That would preclude the vast majority of the Democrat audience from posting.
On the other hand, it would go a long way toward reversing the trend of HN
becoming more like Reddit.

------
andrewljohnson
There have been a lot of articles recently about how this or that corporation
pays their taxes. They are always shallow analyses, just info-tainment.

There is a broader question of how the US should structure corporate taxes,
but demonizing individual corporations for how they follow the crazy rules is
a silly thing. Perhaps useful to further the conversation, but not really a
reflection on ethics.

~~~
robomartin
There's a much deeper question on the whole concept of taxation in general.
What is it for and where should the limits be?

If you really look around you'll quickly learned that everything is taxed.
Everything. Politicians have gotten very good at finding all sorts of areas
where they can insert a probe and extract "blood". From gasoline to
telephones, communications, dogs, cars, food, air travel, tobacco, etc. Here's
one attempt at a list: [http://theeconomiccollapseblog.com/archives/taxed-
enough-alr...](http://theeconomiccollapseblog.com/archives/taxed-enough-
already)

Here in California it is not uncommon to hear of more hair-brained schemes to
levy taxes on more things. A little-bit here and a little-bit there and
politicians have collect billions to keep their gravy train going.

Regardless of whether we are talking about personal or corporate taxes, or
taxes in general, it is important to always keep in mind what the "mission
statement" might be for taxes. Lately the lines on this have blurred.

In general terms taxes should be used to run the government, military and
reasonable social services (the last one being debatable).

Lately, at least in California and other similarly-afflicted states, a huge
percentage of taxes are being dedicated to supporting a ridiculous pension
infrastructure and a bloated government and public employee sector. Tax
increases are being proposed with the sole purpose of finding funding for
union pensions. We, then, exist to ensure that the union "class" gets to live
happily every-after with their wonderful lifetime pensions and healthcare.
This is beyond wrong. This is criminal.

I don't have a problem with the idea of questioning if large companies are
paying what they are legally supposed to. At the same time, the system should
also demand that government be responsible and not exist to create and
maintain their own ecosystem through the abuse of taxation. Name one
government entity that, over the last few years, has put forth cuts and
savings measures on par with families and businesses across this nation.
Exactly.

Watch closely what is happening with the post office. Here's a clear case of a
government entity that should start to see massive cuts and reorganization.
What do you want to bet that we carry these people on our taxes for the rest
of our lives? So, rather than being able to devote our money to the furthering
of our own kids and culture we are obligated, through taxation, to support
useless hordes of government employees. This isn't going to end well.

~~~
jbooth
I don't want to get in the way of some nice comfortable randian ideology, but
you could at least read a wikipedia article:

[http://en.wikipedia.org/wiki/2008%E2%80%9311_California_budg...](http://en.wikipedia.org/wiki/2008%E2%80%9311_California_budget_crisis)

The Cali budget crisis was caused by a _decrease_ in revenue. Let me repeat
that. _Decrease_.

Similarly, federal spending on domestic discretionary (what you're complaining
about) has been flat or almost-flat for a decade, while spending on
defense/security has been skyrocketing.

Lastly, if you want to reduce government spending on employee benefits, the
first, second and third things you should think about are healthcare reform,
not pensions. Healthcare costs are and have been inflating a lot faster than
any other cost-of-living cost. Compound 15% over 10 years and see where that
gets you.

~~~
bcx
I found that wikipedia article pretty interesting. In particular that "over
40,000 public employees in the Bay Area alone earned over $200,000 in 2009."
To be fair when you look at the source data:
[http://www.mercurynews.com/salaries/bay-
area?appSession=1633...](http://www.mercurynews.com/salaries/bay-
area?appSession=16339427271864&RecordID=&PageID=2&PrevPageID=&cpipage=8&CPISortType=&CPIorderBy=)

You'll see that many of the top paid state employees are doctors, or
policemen/firefighters who get paid a ton of overtime.

But you'll also notice things like the director of IT for Alameda County was
paid 430,312 with a 266,760 base salary. Where as the direct of IT for San
Mateo country had a base salary of 175,775 and had pay around to 330K. Which
is probably market for someone like that in the Bay area, but sure seems a lot
for a government position.

I think it is reasonable that if salaries go up in a good year, that salaries
should go down in a bad year. I'd be interested in seeing the change in
government employee pay over time relative to tax revenue.

~~~
jbooth
With police/fire, those numbers are a little distorted because often a lot of
the overtime is detail pay, which is paid by private parties (bars, concerts,
etc) after routing through the department. So it shows as a government payroll
but it's not coming out of your tax dollars.

And I'm sure there are plenty of idiots who got entrenched and earn more than
they're worth, but that's the same in any large bureaucratic org, public or
private.

------
corin_
The amount they do pay is fairly irrelevant, it's the equivilent to a single
person saying "I know I owe taxes, but hey I've already paid a lot, so..."

The more relevant part of their statement is "Apple has conducted all of its
business with the highest of ethical standards, complying with applicable laws
and accounting rules." That's their _actual_ response, the rest is just
decoration.

I also like the irony (though to be fair you can see why they said it) of
saying "We have contributed to many charitable causes but have never sought
publicity for doing so"... in a press release.

~~~
orangecat
_The amount they do pay is fairly irrelevant, it's the equivilent to a single
person saying "I know I owe taxes, but hey I've already paid a lot, so..."_

"So I'm not going to pay more than I'm legally required to". I have no problem
with that.

~~~
eagsalazar
I'll add:

"...because we're super rich and can hire ultra clever accountants to abuse
loopholes in your tax laws that were put in place by politicians paid by other
super rich corporations specifically to get away with paying less taxes
thereby grossly violating the trust of the American public and the spirit of
taxation in general."

Are you still ok with that?

~~~
jimmyvanhalen
if you're the CEO/CFO and you're not looking for every legal way to maximize
shareholder value, then you're not doing your job.

~~~
eagsalazar
What a bizarre and unfortunate opinion. Too bad so many people actually
believe that is the way it should be.

~~~
jimmyvanhalen
what they're doing is legal so what's you're problem?

Apple pays billions in taxes, pays dividends to shareholders, employs
thousands, etc. if you're not happy with that, maybe you should move to
countries with higher corporate tax rates, i'm sure they have a better/bigger
economy than the US (they don't, take a good guess why.).

~~~
eagsalazar
Because the US has a population of 400 million?

[http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_...](http://en.wikipedia.org/wiki/List_of_countries_by_GDP_\(PPP\)_per_capita)

~~~
jimmyvanhalen
How about China and India.

~~~
corin_
Unless the only difference you can think of between China/India and the US is
their tax levels then I'm not sure what your point is.

------
k-mcgrady
The NYT 'attacks' on Apple recently have annoyed me. Firstly the Foxconn
story. All the attention was focussed on Apple and the other companies using
these factories didn't get any bad publicity. If the NYT actually cared about
what was going on there they would have exposed all the companies with issues
in China.

Same applies here. Paying less tax in this way is something every multi-
national company does and yet the NYT has once again decided to focus on
Apple. Let me be clear, I'm not an Apple 'fanboy'. I think if the NYT actually
cared about these 'issues' they would expose all the bad actors. They're just
trying to get page views.

And honestly, this is not even a story. Apple are acting within the law,
trying to maximise their profits. They sell their products worldwide and can
take advantage of that to pay less tax.

~~~
kristiandupont
Well, maybe they are going after Apple because they are the worlds most
valuable company. I think that is reasonable.

Also, the "within the law" argument has a bit less weight when you operate at
this level. They have a lot of power to affect the law and its interpretation.
I think it's probably impossible or at least not feasible to make laws that
force a company like Apple to pay "normal" taxes for some definition of
normal, simply because it's an international issue. But that makes an article
like this even more relevant because it allows consumers to take this into
account when they choose which product to buy.

~~~
k-mcgrady
"But that makes an article like this even more relevant because it allows
consumers to take this into account when they choose which product to buy."

That's the problem though. Consumers will take this into account. But because
the article only focussed on one company they will just end up buying from
another company doing the exact same thing.

~~~
lflowers
I think the goal is to get Apple to respond to the criticism.

------
lolcraft
TLDR seems to be: we may pay a much lower tax on profits than most individuals
do on income, but at least we have so much profit that we still pay a lot.
Also, it's technically legal, so it must be ethical. And we donate to charity
and stuff, so whatever.

Funny that they recognize in the response that they are primarily an US-based
company, with US labour educated in the country, but instead want to pay Irish
taxes. Or maybe they _do_ get 30% of their worldwide profits from Ireland, who
knows...

~~~
hej
Apple's EMEA headquarters are in Cork, Ireland. 2,800 people (and growing) are
working there. In the last quarter, 23 percent of Apple’s profits were made in
EMEA (compared to 33 percent in the Americas, 28 percent in Asia-Pacific, 16
percent in Japan and seven percent in retail). The article on The New York
Times quotes numbers from 2004, then EMEA made 28 percent of Apple’s profits.

I don’t think it’s a problem when Apple decides not to move money made
overseas back to the US. That's their decision and there is nothing shady
about it either way. I can't think of any moral objections.

Purposefully moving money somewhere in order to avoid taxes, however, could be
if not a legal at least a moral problem.

~~~
georgemcbay
"I don’t think it’s a problem when Apple decides not to move money made
overseas back to the US. That's their decision and there is nothing shady
about it either way. I can't think of any moral objections."

I don't think this is a problem either, unless they lobby themselves a holiday
under which they can move it back on the cheap. Which is something they have
been trying to do for a while now (to be fair, Google, Cisco and others have
been pushing for this with them, so it isn't just Apple).

[http://www.bloomberg.com/news/2011-09-29/google-joins-
apple-...](http://www.bloomberg.com/news/2011-09-29/google-joins-apple-
mobilizing-lobbyists-to-push-for-tax-holiday-on-profits.html)

------
abalone
This is crazy, but I actually have a comment about Apple's response, not a
political rant on the general idea of taxation.

Apple includes "income taxes withheld on employee stock gains" in "Apple's"
tax payments. But aren't these employees' income tax, not Apple's? Is this
another instance of creative accounting?

Sure, Apple can claim that they helped create that income, just like they
helped create the job. But I'm talking specifically about their claim that
they are a "top payer of U.S. income tax" because of their employees' tax
obligations.

------
wsc981
I'm not sure why so many people seem to think this is such a big deal. It
happens everywhere around the world. Companies like Shell and bands like U2 do
the same. It's called tax avoidance and it's not illegal and personally I
wouldn't even call it immoral or unethical. Business has little to do with
morals or ethics as far as I'm concerned. It's the task of the lawmakers to
decide the borders of morality / ethics and make clear laws and business just
has to abide by the laws.

Personally I strive to pay as little tax as possible as well. I can't blame
businesses for trying the same.

------
nQuo
Favourite part of the article: how NYT describes each apple that the tax
subsidiaries are named after.

"Braeburn is a variety of apple that is simultaneously sweet and tart."

"Baldwin apples are known for their hardiness while traveling."

------
frankydp
The idea of taxing corporations on the very arbitrary definition of profit is
a big issue imo. It would be more accurate to tax when money changes hands
going in or out, not as a sales tax but a resource tax. This approach may
decrease the need for the 50k page definition of profit vs investment. I have
not given t his much thought but taxing the end state seems wishful thinking,
because anyone would decrease there end state as much as possible before
getting there?

~~~
cperciva
Applying taxes every time money changes hands creates huge market distortions
and gives big business a tax advantage over small businesses: Compare the tax
burdens paid by a vertically integrated conglomerate which cuts down trees,
converts them to lumber, builds furniture, and sells the furniture at
BigCoRetail with the total taxes paid if those four steps were performed by
separate logging, sawmilling, furniture-building, and retail-selling
companies.

Moreover, applying taxes to gross sales rather than profits eliminates some
profitable business models. Suppose I can hire someone for $50 to take $49 of
lumber and build $100 of furniture. I make $1 of profits and even if I pay 50%
tax on my profits, everybody is still happy. But if you tax _revenues_ ,
unless your tax rate is less than 1% I'll be going out of business -- at which
point there is less government revenue, less value created, and Joe Carpenter
has lost his job.

~~~
whatusername
Doesn't a sane Sales Tax approach deal with the first issue?

If I buy Lumber with a Sales Tax of $X and Sell Furniture with a higher sales
tax of $Y, then I send the $Y-X in Sales Tax to the Government. (At least --
that's essentially how the GST works in Australia).

BigCoRetail has better accountants and can deal with the processing more --
but the ultimate tax collected is the same.

~~~
cperciva
Yes, that's the difference between a Sales Tax and a Value Added Tax. The
Australian GST (and the Canadian GST, but unlike most Canadian provincial
sales taxes) is a VAT.

It doesn't solve the "not profitable to hire someone to produce stuff" problem
unless you count employee wages as inputs though.

------
brown9-2
_In the first half of fiscal year 2012 our U.S. operations have generated
almost $5 billion in federal and state income taxes, including income taxes
withheld on employee stock gains, making us among the top payers of U.S.
income tax._

"among the top payers" in absolute terms, right? I don't think that's the part
that is being debated - the amount paid by Apple relative to total earnings is
what is being discussed.

------
Havoc
>The vast majority of our global work force remains in the U.S.

lol. Clever phrasing of outsourcing work to foreign countries.

~~~
dasil003
What's clever about it? It's pretty straightforward. Despite the fact that
they are a global retailer and they manufacture electronics which are pretty
much impossible to manufacture outside of Asia, the majority of their
employees remain in the US.

------
savrajsingh
Of course they'll say they comply with the letter of the law. That is the
'highest ethical standard' any large public corporation will claim. If we as
Americans believe Apple, however noble, is evading the spirit of the law, we
need to make the letter of the law more specific.

------
btian
3+billion is a huge amount of money the last time I checked. The fact is Apple
derives most of its revenue abroad, and it's unfair to subject their overseas
earnings to US taxes.

~~~
yequalsx
It's my understanding that overseas profits are only taxed when the money is
brought into the U.S. Do most countries do this? Is this abnormal?

~~~
officialchicken
Yes, most countries try to do this according to local tax/finance laws. The
problem with repatriating the funds back into the US is that the capital can
be allocated in other countries for better long term effect. Why would any
manufacturer pay taxes on income, then taxes on repatriation (into a low-
growth economy), just to then export that money the next quarter or year in
order to build a new factory somewhere. Just leave the money overseas until
you need it.

------
dotcoma
They should be #1, not "among the top".

------
georgieporgie
Summary:

* We make a lot of low-paying jobs for young people, hocking our foreign-made goods to Americans in every state.

* We may or may not create jobs as a bi-product of our app store, where developers can try to scrape in an environment where people will turn to piracy because $0.99 is _too expensive_ for an app.

* We pay more in taxes than any of you plebs.

(The last one is the Adam Carolla attitude: "I pay a large absolute value in
taxes, so you should thank me, regardless of any considerations of relative
value or overall rates")

