If you unplugged Apple's board (or given decision-making apparatus) and plugged in a (currently nonexistent) AI with the parameter "Maximize Profit," would you see a different result? I think not. I think we'd see things far more morally horrifying, in fact, with just enough PR makeup to ensure "maximized profit."
Unsure why we laud capitalism and then act horrified at the result. Here in America we've made our decision - profit rules above all else. It is more profitable to lobby congress than it is to upgrade a refinery, it's more profitable to auto-deny every health insurance claim than it is to provide the services your customers think they're paying for, it's more profitable to avoid taxes than not (as long as you can avoid breaking the law TOO hard).
This is not the fault of Capitalism alone. In a healthy democracy, the people vote in the Government, who can impose fines, tariffs, penalties and such on companies and business practices that the people (via the people they elect) deem to be working against them. Sadly, as you point out, this creates a direct incentive to lobby or otherwise attempt to control Government by large and powerful companies. The only way to prevent this is to impose fines, tariffs and penalties on businesses undertaking this behaviour (effectively disincentivising it financially), since it fundamentally unbalances the power dynamic between Government and business. However if you've got nobody left to elect who will fight that corner for you, you're kinda stuck.
Pure free market Capitalism is playing a game of Monopoly where after each time anyone passes go, the player with the most money gets to create a new rule. Guess what? The game is gonna get pretty skewed, pretty darn fast.
Consolidated money is power. The only way that capitalism can work long term is if there are rules actively countering/fighting using that power to change the rules.
Money is power and capitalism consolidates money. So capitalism consolidates power. Consolidated power can change the rules in its favor to consolidate more.
The only options are prevent entities from consolidating money (which means you're risking losing capitalism), Or prevent entities from using money and power to change the rules (which, if you think of all the ways gratuitous money could be used to influence, is the social equivalent of solving the halting problem).
> Pure free market Capitalism is playing a game of Monopoly where after each time anyone passes go, the player with the most money gets to create a new rule. Guess what? The game is gonna get pretty skewed, pretty darn fast.
I think you've misunderstood the free in free market. If anyone is allowed to make rules like that, it is not a free market, not superlatively, not normally, not even slightly.
The problem here is that you have a government apparatus which has outgrown its mandate in ways that were not adequately accounted for, which makes it ripe for the picking.
I'm not sure why you're being downvoted, you actually make a great point. If there exists a Govt. which has the power to impose certain rules which change the markets, its by definition not "free". If there was no Govt. to create and enforce these rules, corporations could not influence said Govt. to create unfair rules (since it does not exist).
But I don't agree with your conclusion. If there were truly no Govt. creating and enforcing rules, there would be Guilds/Cartels that would (e.g. see how criminal gangs behave and operate). Which is why we do need an overarching authority that has the power to create, change and enforce rules that make the market less free, but potentially more beneficial to more rather than a few.
The problem isn't that the government apparatus has outgrown its mandate. Its that its become more easily influenced by money. Reduce that influence and you will have a Govt. that works for the general interests of its people.
> Reduce that influence and you will have a Govt. that works for the general interests of its people.
I recently found out about an old solution that would achieve that goal: Sortition. Instead of having elections every few years, we could randomly pick a hundred people from the population and task them with creating a law. After an initial preparation, they would deliberate like a jury and their decisions would be written as law. After a single task, they should disband and new groups should be selected for new tasks. With a country of hundreds of millions of people, it would be a light burden on the population to serve from time to time.
The benefits are: 1. by random selection, every social category is represented equally, 2. there is no need to have elections, so no lobbying and money in politics, and 3. because the legislative group only works on a single task, once, they can't grasp power, like politicians do.
I believe a group of 100 random people would make more heartfelt and wise decisions than a parliament full of professional liars. Regular population is more in touch with reality. Regular population needs to be heard directly because politics sucks, and this is a way to do it.
>1. by random selection, every social category is represented equally
No, every social category would be represented similar to their ratio in the rest of society. This wouldn't line up well with many groups that want much stronger support for minorities.
Take Native American concerns for example. With just over 1% of the population being Native American they will probably only end up with a few representatives out of the 100. The remaining ~98 people are going to be spending a bunch of time concerned about their own problems and won't put effort into making sure Native Americans get equitable treatment due to past issues.
In other words, by cutting out the ability to lobby for rich people to help themselves, you also cut out the ability to lobby for legitimate issues as well. Lobbying has (rightfully) been seen as a terrible thing, but it does have the legitimate purpose of bringing issues to a representative's attention that he/she would never even think about otherwise.
There's also the point that 100 random people won't have any background on the topic in question. Who's going to help them understand it? Most likely the same vested interests that today lobby the government.
It's a fun solution to consider, but I'm also concerned in that lobbying for this solution already exists - mass marketing, which has already been mastered.
My parents had me at 17 and had no idea how to raise kids. They see a commercial of kids eating cereal and poptarts, so they feed me cereal and poptarts under the false assumption that that is a healthy meal, and that plus other factors led to me growing up fat and unhealthy.
Basically, if lobbying is a problem, disinformation through mass marketing is a MAJOR problem.
> The problem isn't that the government apparatus has outgrown its mandate. Its that its become more easily influenced by money. Reduce that influence and you will have a Govt. that works for the general interests of its people.
I think it's simpler than that: you need to have one entity which could ever possibly have the mandate, and then bind them eternally never to use it. The supreme court is supreme, but it also has rules. When the supreme court plays by its rules, it does not create a power vacuum for violations, it creates an assurance against them.
I think their point is that in a free market, the vacuum of power leads to organizations (with the means to) filling that vacuum and establishing rules that rationally favor themselves.
Which is why you have to constitute a power structure which is actively prohibited from the unwanted behaviours, while filling the void of an organization with said behaviours. This is partially accomplished by the U.S. constitution, but there are some holes either in the formulation or in the interpretation.
> each time anyone passes go, the player with the most money gets to create a new rule. Guess what? The game is gonna get pretty skewed, pretty darn fast.
We call that crony capitalism and it is very much the opposite of a free market. I do agree with you however that we don't have effective barriers between money and government (or other forms of) power and therefore the stable state for liberal democracies with capitalist markets is crony capitalism and regulatory capture.
>>Consolidated money is power. The only way that capitalism can work long term is if there are rules actively countering/fighting using that power to change the rules.
Yes. This is why I'm in favor of term limits, as well as a rule that outlaws "revolving doors"[1].
That sounds nice, but why don't proponents of term limits ever offer evidence for their claim? We already have term limits in California. The result? Politicians spend a lot of their time in office figuring out how to leapfrog up the political ladder - usually city/county school board, to supervisor, to state assembly, to state senate, to Congress. They are never in one place long enough to build stable networks of influence (superficially a good thing) but that just means they're easier for lobbyists to manipulate (definitely a bad thing).
I have an open mind on term limits, but since they exist in multiple jurisdictions why don't you show, with data, that they are leading to qualitatively different outcomes where they have been implemented?
Sad but true. In California the legislature is just a tool for the bureaucratic state to pander To itself. Legislators who fulfill the wishes of the state bureaucracy get favorable treatment on the career ladder. I often suggest we should have term limits on laws, not politicians. An absolute sunset on every law and regulation with up/down votes only, no debate, will do a lot to show whether elected public servants are on the job and who they are working for.
Elsewhere in this thread, the concept of lobbying is being questioned as well. Find a way to prevent this and that removes a huge chunk of the problem, in my mind. Not that I can figure out how to prevent it.
Stopping corporate donations to political campaigns would be another thing.
This is why I favor making our representatives an actual representative population using random selection.
Our current selection process overwhelmingly favors white male lawyers who are good at talking corporations into giving them money for their election campaigns.
It's a noble idea that government should exist to protect consumers from corporations. But it will never work unless there is some authority that could protect the governments from the corporations.
> The only way to prevent this is to impose fines, tariffs and penalties on businesses undertaking this behaviour (effectively disincentivising it financially), since it fundamentally unbalances the power dynamic between Government and business.
That is neither the only way, nor a particularly effective way. I think we should go back to having representatives who represent a reasonable number of people (~100-500), and who are not full time politicians. Then regulatory capture would be much more expensive and difficult.
>The only way to prevent this is to impose fines, tariffs and penalties
The ONLY solution to an abuse of power by government is more government exercise of power? How about limiting the powers of government to remove the "direct incentive to lobby"?
So they only players left are the large corporations? I don't think you can have thought this through, so I'll take you through it:
Nation states are social constructs, whereby some people collectively lay claim to some land, and have their claim recognised by all the other states. In order to be able to do this, a key thing you must be able to do is defend your patch of land. This requires some sort of military, who will need paying. You can further entrench your position and standing amongst the group of nation states by doing trade with them. The greater your economic output, the more likely the are to treat you well, be your ally, and do trade with you in return.
However, keeping a military, and generating power and providing infrastructure to enable economic activity (roads, ports, airports, healthcare(?), fire, police etc.) costs money, and to raise this money, the state charges people tax. All states raise money via taxes, and it's the predominant way they do raise money. So there's the question, who do you tax, and how much? Do you tax everyone the same (a poll tax), or do you tax people who have less money less? Or people who have more money less? The power to decide who pays is one of the key roles of Government, and one of the main expressions of Government power.
I would be interested to hear how you would see a limitation of the powers of Government, by which I assume you mean limiting their ability to set tax law would work.
Thanks for "taking me through that." Never thought about that before now.
Let me take you through your scenario.. you give government increasing power to censure corporations it doesn't like, effectively making it kingmaker of the economy. You end up with something like China where every company is state-sanctioned, and there is widespread graft and corruption.
My point is not about increasing or decreasing the power of Government (in a democracy, Government power cannot really be 'increased' or 'decreased', but it can be concentrated or spread out though). The Chinese Government is not a democracy, so not really relevant to this discussion.
I think most Irish people are aware that the primary appeal of the country to multinationals is as a tax-efficient English-speaking common law bridge into the EU, in approximately that order. The specific amounts flowing across the bridge, no, I don't think people are generally aware of the numbers.
But because it is a bridge, we Irish don't really have a strong claim on that money: the revenue was generated somewhere else, and it's going somewhere else, it's just resting in Ireland for a while.
There's a bunch of hypocritical talk from other EU countries criticising Irish tax rates, all the while having lots of carveouts and tax breaks of their own that reduce supposedly high rates to nearly nothing in various deals. For example, France has an effective rate of about 8% on profits for companies in the the CAC40. Luxembourg is much worse, it's practically a tax haven that avoids being listed as such somehow, probably down to location.
In principle I'm in favour of something like the common consolidated corporate tax base. The problem with taxing multinationals comes down to game theory: if there's a common market between countries, there's a race to the bottom in tax rates for hosting multinationals. So there needs to be a pact.
It's about 3,500 pages long, written in esoteric accountant speak. Considering that in the USA "32 million adults in the U.S. can’t read. That’s 14 percent of the population. 21 percent of adults in the U.S. read below a 5th grade level, and 19 percent of high school graduates can’t read," I think it's an unfair burden to place on a population.
I do agree that the tax code should be simplified, I would advocate for a flat tax with a high personal deduction and few other deductions. The voters seem to disagree with me and prefer the complicated system currently in place.
It would seem to me that with compulsory education everyone was afforded an opportunity to learn to read and write, if they choose ignorance I would not say it's an unfair burden. I managed to learn to read and write before my compulsory education began. Using this rare and mysterious ability I incurred about a dollar fifty in late fees at the library and became very well educated. I do find most people to be quite ignorant, but I must respect their choice to remain ignorant while surrounded by knowledge.
It's certainly an unfair burden if they were never afforded an opportunity to learn, however, in the United States I think you'd have to agree that if you don't know how to read and write it's a matter of personal choice rather than lack of opportunity.
I don't personally know the tax code as well as I'd like as it's not my area of expertise but I do consult with those much more well versed in it.
>I managed to learn to read and write before my compulsory education began.
>Using this rare and mysterious ability I incurred about a dollar fifty in late fees at the library and became very well educated.
>with compulsory education everyone was afforded an opportunity to learn to read and write,
I have enough respect for your intelligence that to expect if you're here, you're aware of the vast educational chasms between the privileged and unprivileged. Basically, I'm confident you're aware that your experience is not necessarily the norm for every American. With that in mind, I'm curious why you still maintain such high expectations for tax code knowledge, especially considering all the evidence to the contrary of American financial literacy.
> I think it's an unfair burden to place on a population.
If the population is unable to read the code that is used to relieve them of wealth, something is off--in both their own ignorance and in their inability to appoint people they trust to handle that for them.
That seems unsupported by the article, in 2015 Ireland changed its laws, Apple consulted a law firm on advice on how to proceed and sought assurances from the govts involved that it's understanding of the law was correct.
Of course there is, this is what tax evasion is about. There's a decent case to be made that the Apple and Ireland were wrong in Apple following Ireland's tax code, we'll see how the case turns out on appeal.
I would say that when the sovereign is in agreement the payment of taxes that it can't be construed as evasion, however, I'm not super well versed on how much of a sovereign Ireland really is given it's membership in the EU. Perhaps the EU is the real sovereign in this case and Apple has erred in consulting with the Irish government who lacks authority to set tax policy in its territory.
>Here in America we've made our decision - profit rules above all else. It is more profitable to lobby congress than it is to upgrade a refinery, it's more profitable to auto-deny every health insurance claim than it is to provide the services your customers think they're paying for, it's more profitable to avoid taxes than not (as long as you can avoid breaking the law TOO hard).
This is not the decision "we've made in America". What you're describing is the behavior of some giant companies. There are millions of small to medium sized businesses that operate within the rules just fine and don't use the "corrupt the politicians" move as part of their business strategy.
If you unplugged the government's board (or given decision-making apparatus) and plugged in a (currently nonexistent) AI with the parameter "Maximize Power of Government," would you see a different result? I think not.
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My point is that you are implying government is the alternative ("they will govern morally! academics will keep them in check! journalists will keep them in check!") then you need to rethink your conclusions
Didn't see that implication. Isn't the more obvious solution to have a mixture of effective government and business? We're not talking about going from capitalism to communism, we're asking one of the wealthiest companies in the world to pay their fair share of taxes like the person making $40k does. It's not either or.
We The People don't have any other suitable mechanisms to reign in businesses. I'm a citizen first, and a buyer of stuff and owner of shares a distant, distant second.
The laws, that I get to, in at least some way, help craft as a citizen of a country are the only real voice I can meaningfully exert, far more than a boycott or trying to buy shares and sit on a board. And that's a power every voter has.
Heck yeah I want to maximize the government's power to make a better life for me and everyone else--the corp's not looking out for us, but we are.
Government, by definition, has total power over it's space. That power is systematically reduced by the law (every positive individual right is a restriction on government). Reductions (law) are enacted by the people (in the US, the members of Congress are "the people"). If we can speak, if we can vote, then we have, theoretically, the ability to set the dial of government power anywhere from 0 (Somalia) to totality (North Korea).
There are obvious constraints on this slider. Set the slider too low, and a weak government is vulnerable to take-over. Set too high, the people are oppressed, unhappy, and will revolt.
The West's slider is pretty firmly in the middle, although it's uneven from policy to policy (it's set very low on gun ownership; it's set very high on commercial flying).
The US Federal government could acquire far more power in a variety of ways. For example, they could federalize local law-enforcement. They could run drones within our borders, for both surveillance and assassinations. They could outlaw independent media and control all media output (a la Russia). They could require us all to carry Federal ID and require us to show this ID to any law-enforcement on-demand, for any reason. They could require us to run special DRM/tracking software in our smartphones, and fine/jail us if we remove it.
Government, by definition, has a monopoly on the legitimate use of force within its territory. But it doesn't (even in theory) have total control over its space. It's constrained by its ability to fund and apply force (military dictatorships aren't inherently stable), by its relationships with stakeholders both inside and outside its borders, and to some extent by the consent (or at least the acquiescence) of its public.
To put it in a more concrete sense, the government can decide to tax whisky at a rate of $1m per barrel. But it almost certainly doesn't have the power to enforce this against moonshiners, rights and law or otherwise.
If it's some kind of representative government, then it would be "the government will push back on anything that threatens the interests of the majority." If you had a power-maximizing AI instead of politicians, it should still court voters.
What’s horrifying about paying every cent of tax you are legally obligated to pay?
If i own a stock that increases 50% this year, am I doing something unethical by not selling it until january so i don’t have to pay taxes on the gain for another year?
That’s equivalent to what Apples doing. It pays all the taxes it owes in every country it does business in. It pays taxes in the US, UK, France, Germany, etc, etc, and what’s left over from the foreign profits it chooses not to bring back to the US, or leave in France, Germany, etc, etc.
Instead it moves those profits to Ireland or the Channel islands so it doesn’t have to pay more taxes on their interest every year while it waits for US corporate tax policy to no longer be so irrational so it can directly return that money to its owners, Apple shareholders.
Are those not in opposition? Another solution is a better breed of business that doesn't see $ as the most important thing in the world, but not sure how you change that. Capitalism can and should be a conduit for innovation without outright greed.
I was working for a tech company that liked to pride itself on being "one of the good guys". They gave us pretty lavish benefits, that often seemed kind of silly, and had a massive well-designed office. Although the office was still an open office, and suffered from those aspects.
They recently had to lay off 60 of their ~200 people.
What would have been better? Should they have been greedier, given fewer benefits, and prevented the layoffs? Or should they have given more benefits, and not had layoffs, and simply collapse in bankruptcy in a couple years?
Money gives you options, and it is the tool which enables us to provide for people. I think your anti-greed position just... misses the point.
Not using a "massive well-designed office" would be a start. They probably didn't need 200 people, either.
If you will look at most tech companies, they are poorly run. Github lost $66 million in 2016 hosting code. You don't gotta be Warren Buffet to know that something is wrong with that setup.
The greed aspect comes into the everything needs to be big, because for too many companies the end goal is not the product, but money. That's greed. That's not just a failing of morality but a practical failure of building sustainable businesses.
They are in opposition in the same way 'we need to drink water to live' and 'don't drown' are in opposition.
Just because something is bad at the extremes doesn't mean it is always bad. We need a government that steps in to address the well known issues with unfettered capitalism (externalities, tragedy of the commons, etc).
Isn't that a board's fiduciary duty to their stockholders? To put it differently would you buy stock in a board that doesn't act this way, would a mutual fund?
Which way do you expect the mutual fund's proxies to vote when electing the board?
Multi-polar coordination (competition markets) have a lot of bad Nash-equilibrium states, but they are better than any command market in history.
So to take your differently put question, would I buy stock in a company that doesn't act this way? Hell yes I would. It means they're likely adults and not just looking out purely for the bottom line. Which tends to lead to bad results.
No, not fiduciary duty. One theoretical approach to corporate governance/management, but it's not a legal duty.
A competing theory is guaranteeing the long-term health of the company instead of short-term profits (current shareholder value). Another is being a good corporate citizen in society.
These are usually all at least in a bit of tension.
The reason shareholder value is often (almost always?) pushed at any large company is because it so often aligns with the boards' and managers' short-term goals, i.e., make lots and lots of money while the making is good.
For a long time, and perhaps even still, Amazon has been held up as an example of a company that is not especially driven by the theory of maximizing shareholder value.
To put it differently would you buy stock in a board that doesn't act this way, would a mutual fund?
YES. I don't want to maximize profit, I want sustainable profits and minimal externalities. The economic logic that says all considerations can be reduced to a single metric of utility are extremely suspect (per results from behavioral economics, in both humans and animal species), and also rest on a false utilitarian conceit of perfect foresight that leads its adherents to wildly overestimate the quality of their own judgement (which is one factor in the failure of command economies).
I will support in any business that ascribes to the 3 Ps: people, planet, profit, in that order.
If a business maximizes its dividend payouts by stiffing its workers (i.e. potentially my neighbors, friends, family), it's a shitty business and I want it to go away.
If a business maximizes its payouts by wrecking the planet (i.e. my future kids' playground), it's a shitty business and I want it to go away.
BUT, after a business looks out for its people and the planet, I want it to make as much money as possible.
Anything else, what kind of shitty life is that to live, or legacy to leave behind?
Part of the sacrifice you make to live in a stable society, governed by laws, is that you have to contribute some of your labor in the form of taxes to maintain the upkeep of that society. If you don't like it, you're free to try and eke out a living in a failed state somewhere.
We have a system of taxation. I pay my share. I expect others to pay there share. But when the other has found some legal loophole (perhaps one they helped to put in place or at least to maintain) and avoid paying their share, then yes, I'm upset and I want them to pay their share.
Why do you try to cast this as a matter of greed. Apple is getting billions of dollars in benefits from being a US-based company, directly and indirectly.
You mean you pay what the government says you owe, just like Apple does... Or are you saying that you don't claim any deductions and pay the maximum allowable by the system?
I don't have the power to entice politicians to enact loopholes which I can then take advantage of.
A ambassador might take advantage of his diplomatic immunity to commit a crime with impunity. One could say, "what's wrong with that? he was acting within the law." Or one could say, "That ambassador is a vile person and is taking advantage of the system."
I see where you're coming from (we're in agreeance that Apple is paying what the law says they owe), I think what people are discussing is that these loopholes probably shouldn't exist (i.e. that the spirit of the law is Apple should be paying ~30% tax on ALL profits, instead of just 50% of profits).
GP made a specific point about the fact that companies lobby for the creation of such loopholes, a point which has been made over and over in threads on this subject and even in this thread. Why are you misrepresenting their argument?
Virtually everyone lobbies for tax policy, like most everyone the policy Apple lobbies for is not the policy in existence. Tax policy is generally a major election issue and politicians offer a wide variety of policies to attract votes.
However, what I have noticed is that like Apple those who lobby for a different policy do not pay what they advocate for but rather the minimum (like Apple).
I'm asking if anyone on this thread who thinks Apple should not avail themselves of these deductions or loopholes knows of deductions or loopholes available to them that they don't take because it doesn't represent their views on tax policy.
Given the predominant view amongst those that advocate for higher taxes that paying more tax improves their lot in life it surprises me that they don't take individual action to purchase more government. For instance I think technology improves my life so I purchase a lot more than the average person.
I always find what people do to be far more instructive as to their views than what they say, the general consensus seems to me to be that paying more tax generates poor returns on investment so people minimize these costs.
I'm also wondering due to people not purchasing much lobbying if it's really as effective as they say it is, surely if a few million dollars would result in drastically higher taxes that someone would make a kickstarter to lobby for more tax and then voila a year later they're paying more tax. Could it be that increased taxes is not something that is palatable to a large segment of the populace and thus it is the votes and not lobbying dollars that results in the current tax policy?
Just wondering... is purchasing the services of lobbyists something that is not available to regular citizens and only corporations may purchase?
I've also noticed the poor spend a lot of money on lottery tickets, cigarettes, and alcohol so I surmise there is available funding amongst the great unwashed masses to purchase lobbying, however they find lotteries and various vices to be a better way to utilize their capital.
The issue is not capitalism and existing law, but the interpretation and enforcement of the law. The issue is that we have removed rational judgement from legal proceeding with regards to tax law. Its clearly demonstrable that Apple is not following the spirit of US tax law, but simply sidestepping the law by offshoring its money in this way. Does anyone with more legal expertise know of a more concise way of expressing this? Could the state simply sue apple and if they win then this establishes a new precedent for not offshoring money to dodge taxes?
- The US federal government cannot sue someone for not following the spirit of the law. Thankfully.
- Per Justice Learned Hand: "Over and over again courts have said that there is nothing sinister in so arranging one's affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant."
- "Offshoring" isn't the right word, because it implies that the money was in the US and moved offshore. In fact the money is from product that was sold outside of the US, and the money is remaining outside the US.
- This is really crazy sounding, but can individual or a group of individuals sue a corporation for what they view as an attempt to sidestep the law in civil court? Since the burden of proof is different in civil court?
- Did Justice Learned Hand make this statement with this type of scenario in mind where the amounts of money are on the level of an entire small country? Isn't he just talking about private citizens?
- The point is just that they didn't pay taxes, either to Ireland or to the US. To the extent that they could have paid those taxes to the US government, its still dodging taxes.
- No, in order to sue you must have standing, which in a super short version means that the plaintiff has to be really close to the harm, not a bystander who witnesses something.
- Obviously Apple did not not exist when Justice Hand said that, but I think he would be fine with it. Apple is complying with the letter of the law, and their responsibility on that issue goes no further. Apple is in no way obligated to pay more than what the law requires. If there is a problem with the tax law, then it is up to congress to address that.
- I guess I am less bothered by it than you are. Apple paid what it owed under the law. A lot of corporations pay 0 tax because they are set up as pass-through entities, like S Corps. Is it OK to set up a S Corp for tax reasons?
Then really I guess we need to work harder to change the letter of the law. I was under the impression when I started the conversation that the tax havens were more of a loophole or ambiguity in the law and that you could prevent this behavior by showing intent to dodge taxes but apparently it is a long standing explicit component of the law. Id be happy to read up more on the existing laws if you would be willing to provide links
I do not have any links, the best I can say is that these pieces usually reward close reading and diagramming of the facts.
My understanding (as a person who has taken a couple tax law classes) is that it isn't an explicit law but a combination of things, all of which are reasonable, which yields what could be said to be a surprising result:
- companies pay taxes on profits
- profits = revenue - expenses
- It is OK to expense licensing of IP
- It is OK to sell IP to a subsidiary
So Apple creates a subsidiary in Jersey, transfers IP to that company, then charges the Irish subsidiary fees which are more or less equal to the revenue for selling the phones. In this way the Irish subsidiary makes no profit, so there is nothing to tax. All the profit goes to Jersey, which happens to have no tax.
It needs to be said that the money is stuck there, if Apple wants to get at the money then it would in fact be taxed depending on where it goes. So it is not even really dodging taxes, but more like delaying when they get paid (hoping for a better tax rate in the future, I suppose).
I am not even sure if US law is to blame here, it seems like the EU is the one that is upset at Apple, and Jersey is under EU law not US law.
This is not an explicit letter of the law. If they are creating a web of complex interactions to avoid paying tax at what point do we throw up our hands and call a spade a spade and say that its clear that they are just avoiding paying a tax.
I would say that its the "with some maneuvering" that we should re-evaluate as a society. If you can demonstrate clearly (and I think its clear to everyone here that they are dodging taxes) that they are attempting to sidestep the law even though its technically legal, then we should pursue precedents that prevent this.
Where would that end? How could anyone be confident that their actions would not land them in jail, if following the letter of the law did not guarantee safety, and judges or juries could decide that their interpretation of the "spirit" of the law was enough to result in a guilty verdict?
Im not a legal person so I apologize, but how does intent play into this then. If Im climbing with someone and I accidentally drop them and they die, then I have to show that my intent wasn't to murder them right? Can't you make the same argument here, the crime is that apple didn't pay the full taxes it owed the government don't they still have to prove that their intent wasn't dodging taxes?
If the state charges you with murder, the state has to prove beyond a reasonable doubt that you intended to kill. You don't have to prove anything. And that's the way it should be.
So why can't this be a scenario of the state charging Apple with tax evasion and the state proving beyond a reasonable doubt that this was their intention?
It's not evasion. They're paying everything they're legally required to pay. If the state proves that they didn't pay what was required by law, they'll pay it, with penalties.
To the extent of the law as it currently exists, but for the artificial scenario they have created the law is ambiguous and we shouldn't expect the law to be exhaustive of every possible permutation. We should be able to use common sense judgement to say they are clearly creating these complex scenarios to just avoid paying taxes.
Unsure why we laud capitalism and then act horrified at the result. Here in America we've made our decision - profit rules above all else. It is more profitable to lobby congress than it is to upgrade a refinery, it's more profitable to auto-deny every health insurance claim than it is to provide the services your customers think they're paying for, it's more profitable to avoid taxes than not (as long as you can avoid breaking the law TOO hard).