I really respect this kind of activism. Fair taxation certainly isn't the sexiest topic to hold a protest about, but it is actually a huge fundamental issue for us today. Individuals, and Corporations we treat as legal individuals, produce value for our society in several ways, and paying taxes is one of them. When wealthy individuals or large corporations dodge taxes via off-shore firms, etc. they erode the basis of public services and increase the tax burden on less wealthy individuals and smaller companies.
Worse yet, they frequently seem to do this by subverting our public officials. It's reached the point where our regulatory institutions and even our government appear severely compromised by the financial concerns of corporations. If our elected representatives need corporate money just to get elected, how can we rely on them to represent us on issues that might run against the interests of those corporate donors? Direct public action, such as protests, seem to be the last recourse left available to us on certain topics.
When you have a large, enormously successful company sitting on gargantuan cash reserves not paying its taxes and getting away with it, you have a problem. Apple probably isn't even the worst offender, but they're famous and have a built in hate-club (anything that inspires fans also inspires anti-fans). While this protest only had a few hundred supporters, that's pretty incredible for this kind of topic. Hopefully this sort of protest happens more often and gives tax-evading corporations pause.
I'd respect activism advocating for simplified, hard to game tax codes more.
I don't think it's really sustainable for the public to get interminably worked up, protesting company after company in order to keep everyone honest.
In general, the best solution to corruption is simpler, more transparent systems. Corruption thrives in complexity and arcana. Deals happen in back rooms for a reason.
Wanted to comment that I think corporate shame is such a beautifully under-appreciated tool people should be leveraging more, and it absolutely is as much a pillar of the political process as the legislative branch.
Bringing back a societal-enforced code of ethics punishable by humiliation and public shame with a defined path of atonement is what’s going to put all corporations back in line. It absolutely has dangers and can go to far, but that is inherent in nearly every good political choice.
On a more scary note, a lot of security advisors have suggested we’ll be seeing a rise in terrorism against corporations and executives (very soft targets) in the next 10 years, probably coinciding with the next economic
bubble.
What other direct action can citizens take to force Apple to comply with the law?
Better to shut their stores down than let them keep operating illegally, the French tax authorities should be arresting and charging management with tax fraud for their illicit scam. Apple is stealing from you and me, increasing our taxes with these tax scams.
The law is not a mathematical equation, complying with the law not a boolean clearly true or false.
Apple makes huges efforts to violate the spirit of tax law (that a business making good profit should pay quite some taxes) while trying to avoid that authorities / courts can prove it. Actually they have been fined already, they are still appealing. So whether they comply with the law is formally undecided.
Edit: Not sure whether "fined" is the correct legal term. They have received some kind of "letter" that they have not paid what was legally required in the past and they are obliged to pay the missing sum (13 billion EUR).
In most courts, that is a crime. French courts tend to look primarily at the spirit of the law itself, rather than precedent and arguments over the letter of it to see how it should be enforced, unlike English style legal system where precedent and minor word choices can make or break the implementation of a law.
Its a very practical and approachable court system for the common person comparatively.
>Bringing back a societal-enforced code of ethics punishable by humiliation and public shame with a defined path of atonement is what’s going to put all corporations back in line.
Say that to Martin Shrekil. Big corporations are immune to shame, local business aren't.
In a country that doesn't treat it workers worse than trash, retail workers don't get screwed out of pay when their employer cancels their shift on the same day due to protests over their abhorrent practices internationally.
Here in America, workers are trash as far as our society is concerned. Work harder! Ask for less!
More than 60% of U.S. households would get tax cuts from the Senate Republican tax plan in 2019, while 8% would pay more, according to the nonpartisan Joint Committee on Taxation.
By 2027, after the individual tax cuts EXPIRE, most households would see little effect, as 61% would have either tax increases or tax cuts below $100. In that year, 16% of households would have tax cuts exceeding $100 while 23% would pay more.
That's not even the important part. I don't care if I'm paying a sliver less taxes, because it's all being paid for by ballooning the deficit, and higher earners are getting a larger share of that anyway. Why should I care that I'm saving 5% on taxes while those making 100x my income suddenly save 15%, when their effective tax rate was already low?
This is completely besides the fact that I find taxes to be a good thing, seeing as the only reason I even have a future is through publicly funded programs that helped pay for my education and subsidize the small town I grew up in and even my entire state. I'm plenty glad to pay back what the USA invested in me
> I'd respect activism advocating for simplified, hard to game tax codes more.
The problem is: the simpler the tax code, the easier it is to game. There's a reason why tax codes are universally huge and complex, and it's not just because of politicians giving tax favors to their donors.
Imagine a car manufacturer, headquartered in Germany where all of the R&D happens, and most sales outside of Germany.
Germany has invested lots of money into its education system so that the car manufacturer has a very large pool of talented and qualified personnel, but with a cash flow tax the manufacturer pays the most of his taxes in the respective countries, thus depriving the German state of the resources it needs to provide the companies in Germany with qualified personnel.
In the current scenario Germany loses tax money due to evasion, in the flow tax scenario it would lose tax money because it's paid where the cars get sold.
edit: whoops, I misread you - flat tax, not flow tax. A flat tax scheme would still put an inadequate load of taxes on poor-ish people. With a 20% tax, someone with 1M $ of yearly income has to pay 200.000 $ in taxes and takes home 800.000 $ while a poor person with 20.000 $ income pays 4.000 $ in taxes and takes home 16.000 $. The rich person most likely won't notice the 200.000 $ being gone, but the poor person will immediately notice it. It's not a question of gaming the system here, but of social fairness.
Whereas I think charging one person 20% and another person 50% is unfair. Is the person paying 50% using public services that much more?
Maybe there's an argument to be had for a forced charity fee, but that can be accomplished with one flat deduction across the board (say 50k). Again a simple rule that applies to everyone equally. H&R Block will hate it.
A flat tax is simple, more fair, and efficient. Plus it's pretty hard to dodge when there are no loopholes / 50 different forms to fill out and process.
> I'd respect activism advocating for simplified, hard to game tax codes more.
I agree. I feel like many of the protests are more along the lines of 'this company makes a lot of money so they should pay more taxes, regardless of the current law'. As a society we would get a lot further along making real changes if we protested the government who a) put these complexities in place and b) who seem to lack the will to change. In the end, a single corporation making a lot of money is easier to hate, rather than understanding all the backroom deals/lobbying to get the complexity added in the first place.
I feel some commenters are missing the point that these symbolic protests are only trying to bring the general issue of tax optimization to the public eye. I'm pretty sure no one went there thinking: "Ok let's shout a few slogans and then Apple will apologize and send a billion dollars check to the French government." They most likely chose Apple only because it is an easy target because of the ubiquitous Apple stores.
The most important that this activism achieves is getting mass consciousness. It's a small step to getting the common sense remember that there is something wrong with our society and there are people willing to do something about it.
Does this sort of activism really help? I mean, this isn't an Apple-only issue and if Apple is obeying tax laws, then are they really going to consider paying more just because a small group of people chanted in one of their stores for a while? Even if Apple is breaking the law, isn't it worth putting up with a handful of activists for a few hours if it saves them millions in taxes and makes their investors happy?
I think a more effective form of activism would be to flood representatives' offices with requests to change tax laws and to vote for candidates willing to do so. I think most governments and taxes in the world today render "fair taxation" an oxymoron. It is a mess at all levels and should be fixed, but I'm not sure localized protests at places of business are the most effective way to go about doing it.
Apple’s most valuable asset is its brand. The brand values include good citizenship, disability awareness, eco-friendliness and diversity. Appearing to be money-grabbing corporate assholes could cause them real damage, so protests absolutely can have an effect.
Why would you have that perception? Apple has said repeatedly that they are happy to pay what they legally owe, and that the issue is simply a matter of where they owe, not how much. Seems pretty reasonable to me.
Is there any reason people can't engage in both kinds of protest?
Also, I think the chances of Apple deciding to pay its taxes due to this kind of pressure are at least as high as politicians in X country closing loopholes.
People can protest all they like. It's just not going to achieve a single thing. Macron isn't directly targeted so where is the political pressure for him to change anything in France ?
It's exactly like Occupy Wall Street where people protested and camped outside the likes of JP Morgan. And what was the outcome of all of that ? Nothing.
The outcome of all that is that even insignificant people like you know that it happened and upset people. The alternative of protests that never happened certainly don't have your (or anybody else's) attention in nearly the same way, obviously.
Yes. It reduces the company's bottom line until they either inflict bad publicity on themselves, sit and cope with it silently, or submit to the demand to pay their lawful taxes.
>I think a more effective form of activism would be to flood representatives' offices with requests to change tax laws and to vote for candidates willing to do so.
You're getting downvoted because we've got a lot of Americans on HN. For us, that approach failed as of last night.
1) Anyone who thinks this will affect Apple's bottom line is delusional. The negative effects of the publicity pales in comparison to the tax benefits.
2) Protesting your local politicians always works provided you have enough people. You're just not doing a good enough job convincing your fellow citizens. That's how you really effect change.
I couldn’t care less about downvotes. Most of the time, they are indicative of disagreement more than anything else, and I come here for discussion, not glad-handing people for meaningless votes. Furthermore, the issue of tax law/enforcement isn’t going to be solved by whining at Apple. If you don’t like the laws that offer legal loopholes for large corporations to lessen their tax burden, your lawmakers are the ones you need to be protesting, not Apple.
Actually, given that lawmakers are in effect captured by large corporations, and Apple are the largest of all, what they think about tax law actually really matters. Tim Cook has spoken out about cash repatriation several times and the debate seems to be about where the tax is paid.
If a phone is sold in France, a corporation is making money from the French market, so given that that market has fixed infrastructure costs, shouldn’t actors in that market contribute to those costs through taxation?
France does receive tax on Apple’s business in the form of sales tax, VAT, property tax, corporate tax, etc., so I’m not sure what you’re insinuating here. Can you elaborate?
I don't think anyone democratically voted for enshrining tax arbitrage across the bloc - this is the Irish government, a massive recipient of EU subsidies, gaming the system.
As an Irish and European person, I want you to know that your comment is misinformed and misleading. Global tax avoidance and evasion by multinationals has no relation to the formation of the EU, and the Irish government are at a gigantic economic loss (not advantage) as a result.
That's not true. Tax authorities in France already fined Apple a 400 million adjustment last year for tax avoidance in FY 2011 and 2013. After 2013 Apple changed their practices to be more obfuscated.
'évasion fiscale' has to be tax evasion not tax avoidance which implies legally minimizing a tax bill which is what every rational organization and person does.
Its not that Apple doesn't care. The over-optimized consumption culture that props up an Apple does not care. We are way past the point of no return. Might as well be standing in front of a giant redwood and yelling at it to change direction.
I meant what I said. There are people who care in every mega corp you can find. But they are trapped by that same consumption culture. And unable to do jack. In a way they have become replaceable cogs of a giant machine they created.
Really ? This kind of activism is completely pointless and ignorant.
Apple is paying the taxes it is legally responsible to pay. End of story. If you want them to pay more tax then you should be protesting against Macron and the rest of the French government and get the laws changed. Multinational tax avoidance can ONLY be fixed through international cooperation of governments.
The protests are also a way to pressure the government to work on such legislation. A government can only do so much, and it usually prefers to prioritize voting laws that do not annoy their donors.
Also, few journalists would report on the protest otherwise.
I’m saying lashing out at a company that’s paying 9 billion in taxes as “stealing” is short-sighted. Especially if you’re going to make that your public activist stunt.
People have been trying that, for at least a few decades.
Do facts like almost every American wants a more fair system change it? No, because the governing structure has itself been corrupted after decades of abuse.
Therefore, it seems the most effective means of causing change -- given that what you suggest has failed for decades -- would be to cause direct financial harm to those who are actively corrupting the system for their benefit, as that changes the calculus for them and incentivizes stopping.
This is a downright civil way to do that when society breaks down -- the poor used to just stab people over bad tax law.
The comment I was replying to said "Apple is paying the taxes it is legally responsible to pay. End of story." My point is that it definitely wasn't the end of the story.
To those saying that Apple has a fiduciary obligation to maximize profits, shouldn't by that logic Apple respect the environment at the minimum required level by law? But on the contrary, Apple highlights in a lot of their presentation how green and environmentally conscious they are, going above and beyond what the laws require:
Maybe because today being seen environmentally conscious makes you more money than you lose by paying for greener technologies? If people can make avoiding paying taxes seen in the same light, things will change.
The issue with taxes is that they are proportional to how much you make (and for Apple, how much they sell), where as a lot of things that make you more "green" are one-offs.
If Apple's sales go up, but they're having to pay higher taxes to attract those sales, there won't necessarily be a net gain in after-tax profits.
As a contrasting example, installing solar panels is primarily a one-off cost, will probably end up saving you money in the long run, and if it drives sales, the costs of operating those panels don't increase proportionally with your sales.
--
Or, alternatively, maybe Apple wants to be green because that is something the upper management actually care about on a personal level. I don't think it's likely that Tim Cook feels the same way about increasing the French government's tax revenue. Why should he? He's not French. Which, coincidentally, might be the real problem with multi-nationals - at the end of the day, corporations actually are run by people, but most people won't care about more than one or two nations in their lifetimes. Hell, many studies indicate that the average person can't be emotionally engaged with more than a hundred people, much less a hundred countries full of people.
I personally have lived in four different countries, but would say I only care about the success of two of them.
> Maybe because today being seen environmentally conscious makes you more money
There is a generational issue as well. Cook (and before him Jobs) grew up in the '70s, when the political upheavals of the '60s had started to rot. The main ideals that survived that age were environmentalism and racial/sexual equality - likely because they could be coupled with aggressive capitalism relatively painlessly. What "big values" do companies like Apple push, today? Environmentalism and racial/sexual equality.
Fair taxation is an issue that started to be considered only since the late '90s, and really went mainstream only with Occupy. In the '60s and '70s high taxes were normal (the legacy of New Deal and war effort in US, and socialist movements in Europe); in the '80s and '90s cutting taxes became a mantra, a shortcut to political victory. By the early 2000s the cracks started to show. As the generations that grew up with Occupy start to get in positions of command, hopefully they will try to find ways to conciliate the search for private profit with the fairness of higher taxation.
> As the generations that grew up with Occupy start to get in positions of command, hopefully they will try to find ways to conciliate the search for private profit with the fairness of higher taxation.
You say that like "the generations" uniformly "grew up with Occupy". Lots grew up with other kinds of populism. Many grew up with online FPSs. I'll bet on a lot of diversity of perspective in lizardpeople^H^H^H^H^H^H^H^H Millennials over any sweeping prediction about Millenial culture and politics.
> shouldn't by that logic Apple respect the environment at the minimum required level by law?
No, because they believe that showing that they care about the environment more than the laws require will result in increased profits, otherwise they wouldn't do it.
These people are protesting against the wrong entity. Apple followed the tax laws at the time, so they should protest against their government for creating loopholes that can and always will be exploited by those with the resources to do so. Public companies have a fiduciary responsibility to their shareholders to maximize profits, which includes taking advantage of any and all available strategies to reduce their tax burden.
Just because you can doesn't mean you should. Taking advantage of others (such as lobbying for loopholes) falls under the umbrella.
Just because you can dump industrial waste into a river doesn't mean you should.
Just because you can steal doesn't mean you should.
Just because you can shortchange citizens doesn't mean you should.
Yes laws should be passed, I agree, but that doesn't mean we can't also multilaterally also go after others at the same time. Do you hold the parent responsible for the kid stealing? Yes. But you also hold the kid responsible for stealing.
Most of all, I want to get of this notion that public corporations have fiduciary responsibility to maximize profit. In the Supreme Court case Burwell v. Hobby Lobby, the supreme court stated that "modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not do so. For-profit corporations, with ownership approval, support a wide variety of charitable causes."
There is a better option, we just aren't taking it. As citizens, we should be supporting multilateral action for a more ethical capitalist economy.
So do you voluntarily pay more taxes than you are legally obligated to? Purposely fail to take deductions etc? Hopefully you’re walking the walk since you’re saying things like this.
Do you participate in every tax minimisation scheme you are presented with?
A few years ago a guy came to me with a scheme to reduce my tax. It took him a two-page diagram to show me how it worked. The gist of it was that participants could "work" for a few hours a week on a music project. The work consisted of providing feedback on the music of P Diddy (Puffy/Daddy/etc). Now just to provide some background, I don't know anything about music. I can't play an instrument. I don't have Diddy's cultural background. I don't listen to his music. I'm a financial coder who lives on a different continent.
Apparently as long as we could document that we'd done this work, it there would be a way to deduct some sort of loss.
I didn't take part.
There will always be legal ways to do things that are wrong, because just like the corner cases in code, there are corner cases in tax code. You can exploit them to make an exception, but you know what the point of the code is.
The problem is that you can only make use of loopholes if you are large enough. You need foreign entities, an army of lawyers, etc. Consequently, rich companies can use loopholes, but the smaller local companies that they are competing with cannot use the same loopholes.
Secondly, you would be surprised, there enough people who don't deduct everything possible. There are also enough people who don't take the cheapest energy, but choose a green option instead. Who don't buy the cheapest meat, but go for more expensive non-factory farm meat. Who don't take a plane, but take a train. Etc.
(Before someone starts to criticise green energy, bio meat, etc., that's not the point: people are willing to spend more for a more ethnical lifestyle. Why shouldn't we expect the same from a company that always talks about its ethical virtues?)
The green energy comparison is not apt because there isn't an ethical amount of taxes to pay. With green energy you are trying to minimize non renewable consumption.
What is the ethical amount of tax deductions to take? All, some, or none of the ones offered by the tax law?
You can pay more tax strictly required. But by doing so, you allow competitors with more creative accountants to get a leg up. Markets select for efficient companies, and companies that make large chartible contributions to the government will be undercut and replaced by less ethical companies.
Governments can and should make fair tax laws. They failed to do so, and now it’s Apple’s fault?
Why would we want to move the responsibility of setting tax rates out of the hands of government and into the hands of corporations?
Why shouldn't you avoid paying taxes? If it's legal and you get to make more money, I don't see the issue. Especially if you're using that money to make more positive change than the government could.
But I don't lose the benefit by not paying taxes. Plus those are only tiny percentages, which could easily be afforded from only 1% of your current tax rate.
a) what everyone else said, it's impossible to draw the line between what ordinary people do in all tax paying nations, i.e. look with a keen eye at all the possible deductions and tax incentives available to them in order to minimize how much they pay, and what huge corporations like Apple do which is essentially the same but with a multitude more laws and lawyers.
b) even if you could draw the line and somehow say Apple was doing something "more evil" than normal tax avoidance, what's the point in petitioning the corporation to stop doing that? A corporation is sort of a money-hungry optimization machine without a soul and the outcome you get with it depends on the environment it exists in, as a matter of mechanical logic. Would you hold a counter protest to bees because they sting people? No, that would be silly, it's just in their nature to sting people. Would you picket the Borg for trying to take over your star system? No, it's pointless to try and guilt the Borg and even more so to try to force them to change by such appeals.
even if you could draw the line and somehow say Apple was doing something "more evil" than normal tax avoidance, what's the point in petitioning the corporation to stop doing that? A corporation is sort of a money-hungry optimization machine without a soul and the outcome you get with it depends on the environment it exists in, as a matter of mechanical logic.
Simple: brand value. Apple likes to be associated with: privacy, green, etc. If their brand gets associated with greed and tax evasion, their brand devalues (at least in Europe), possibly leading to fewer sales.
For a company that that sells with high margins, like Apple, reputation is extremely important.
If you can do something lawful (which the most emotional if your examples are not) to increase your profits, it is your duty to your shareholders to do so.
Nope,
1)they don’t have a fiduciary duty to anyone in Europe
2) European doctrine in accounting is not that you can do anything as long as you don’t break the rules, but that you should account in a way that reflect the truth as much as possible within the rules
3) the European doctrine of tax law is that you should tax your profit where they are made
4) your headquarter for European tax purpose is not the address in your letterhead, but where the orders tend to radiate from.
I don’t think that will matter for a day or two. Honestly, if it became a long-term problem, people would just order online and have their stuff delivered anyway. One way or another, iPhones will still be selling in France.
Modern sales are driven by marketing: making you feel good about yourself by purchasing a certain good.
If your brand is actively associated with a controversial practice, then your sales will fall. There will be people that won't want to be seen carrying an iPhone.
Actually, protesting against their own (French) government would also be the wrong entity. The right entity is the US government, because almost all of the profit on iPhones sold in France is created in the US. For the same reason that Foxconn makes only $8 profit on each iPhone [1], the sales operations of Apple in France would generate very low profit per phone if it was an independent company. This is because almost all the value-added activity (eg. hardware design, writing software, designing ads, designing Apple stores, WWDC) is done in California, not France.
It's near impossible to not have loopholes. To this day nobody has a proposal on how that would work. Huge companies like Apple are always going to find a way and behave like greedy sociopaths - unless people stop buying their products because of this. Hence the protests are not misplaced.
> Public companies have a fiduciary responsibility to their shareholders to maximize profits
That does not automatically mean taking advantage of tax havens. Warren Buffett says Berkshire Hathway can save tax using such tax havens but he does not do it because its not the right thing to do.
Warren Buffett is Warren Buffett. He's an icon, and Berkshire Hathaway has been making consistent profits over decades.
Any enterprise which does not make consistent high profits eventually gets scooped up / controlled by "activist investor" scum which then demands profit extraction to shareholders at any level possible: tax evasion schemes, loading up the company with debt which then gets distributed to shareholders or other financial tricks that only benefits the shareholders, often at expense of the workers and society.
The only other exceptions to this rule I know are Amazon, Google and the various companies of Elon Musk - which are exceptions only because of their extremely charismatic and successful leaders.
> Apple followed the tax laws at the time, so they should protest against their government for creating loopholes
Ok, say we protest the Irish government, and they close the loophole. Next, they do the same from another country. What should we do when Apple uses another loophole?
While you're right, I think it's still a good thing, as apple is obviously on the border of legality (in fact, most of those tax evasion schemes are not proven legal). I read that they estimated that each technique they used had a 1/4 chance of being judged illegal in court.
Moreover, it raises awareness, and it is a good thing to blame publicly those society to help governments change the rules. If no one complains, why do anything?
You buy an iPhone in France, tax doesn't go to fund the French people, it goes into an offshore. You tell them to stop it, they find another loophole, even more protracted. That's quite upsetting.
So, Apple exploits both China and Europe to make a buck.
By that same vein, citizens have a civic duty to pressure their masters to do the right thing.
Hell, I even believe citizens have a civic duty not to contribute to corporations that make the nation a worse place. You are as selfish as your most sociopathic executive. You both contribute to the same bottom line, it is only compensation that is different.
Ireland allowed Apple a loophole where they were incorporated there, but non-resident, and therefore no tax. It was a sweetheart deal and Ireland got jobs and investment. The EU said no, wants the back tax to be paid.
> “Apple must stop denying the tax practices highlighted by the European Commission’s investigation, withdraw its appeal to the European Court of Justice and pay its fine of 13 billion euros as quickly as possible,” said Aurélie Trouvé, spokesman for Attac, according to the release.
A blurb from article. It looks like the government already went after Apple.
Potato, potahto. Apple must pay and Ireland must collect, dropping their insulting appeal. Whether it's a fine or backdated taxes is relatively irrelevant at this point.
While the root of the problem is not the companies' action (they do what is logical for their own benefits), this is very good to raise public awareness.
This could be seen as a negative externality, because it has a very negative impact on the economy of the countries they're operating in. They're basically sucking money out of the country without contributing back what they should
"According to one diplomat, the strongest level of opposition came from Ireland, Malta and Cyprus. Luxembourg was said to have raised a series of practical problems about the proposal, arguing it would introduce a lot of complexity into the tax system."
Go figure. Noncompetitive EU countries complaining the loudest.
France has a lower effective rate of tax than Ireland's for companies in the CAC40 - 8%. There's a lot of hypocrisy whirling around about tax. The larger a company is, the lower tax it pays in France owing to various breaks and deals. A bunch of this criticism is just another way of saying France First.
Can't help notice that three of the four are tiny countries. And the fourth, Ireland, is not that big either.
I'm starting to thing that there might also be a geopolitic reason to become a tax heaven, not just an economic one, something along the line "Let's convince Amazon to book profits here, and there let's see who will dare mess with us, given that Amazon will be protected by USA"
For a small nation, it's one of the few outsized competitive advantages they can try to offer (that is, something they can do that can benefit them far beyond the scale of their population).
Ireland's corporate tax rate + joining the European single market, resulted in one of the greatest booms in modern economic history. From $40 to $280 billion in GDP in just 17 years.
Given the extreme nature of the benefits, a small nation is probably crazy not to do it.
Ireland is closing its loopholes. Specifically, if a company is managed outside the country but registered in the country, it was considered non-resident for tax purposes. That changed in 2014, with a grandfathered provision that expires in 2020.
>More would be accomplished by protesting the government that allows certain loopholes.
I'm not so sure about this as I'd question that it's possible for a single government to close loopholes on its own. Arguably yes, governments should be pressured into closing "certain loopholes", but not because this necessarily leads to a better outcome.
>Apple is a public company with an obligation to its shareholders to make money
Not everyone agrees that companies ought to maximise only shareholder value.
> More would be accomplished by protesting the government that allows certain loopholes.
If such a loophole exists, and it's blatantly obvious that you're a dick for using that loophole, yes, that loophole should be fixed. But that doesn't mean you're not a dick for using it in the first place.
To put it in another perspective: If there was a loophole that allowed me to kill someone without facing any consequences, yes, that loophole should be fixed. But that doesn't mean that I'm not a dick for using it.
It’s relatively easy to argue that murder is immoral even if there was a legal loophole. It’s much more difficult to argue that employing legal methods to reduce your tax burden is immoral.
> It’s much more difficult to argue that employing legal methods to reduce your tax burden is immoral.
I mostly don't care, but for the sake of argument, setting up shell corporations and then saying they made this purchase or that deal for tax reasons isn't exactly being honest.
It reminds me of the "characters" Bunbury and Ernest from Oscar Wilde's "The Importance of Being Earnest":
"""
You have invented a very useful younger brother called Ernest, in order that you may be able to come up to town as often as you like. I have invented an invaluable permanent invalid called Bunbury, in order that I may be able to go down into the country whenever I choose. Bunbury is perfectly invaluable. If it wasn't for Bunbury's extraordinary bad health, for instance, I wouldn't be able to dine with you at Willis's to-night, for I have been really engaged to Aunt Augusta for more than a week.
Seems as dead simple to me as to argue about murder. If you're a company that's present in a certain geographic area, you're expected to pay taxes in that area. If you don't pay taxes and you actively work on not paying taxes, you're immoral. Done.
Yes, but the precise amount of taxes you should pay is not some moral principle. If the current tax laws were the “correct” amount, then the government passed a tax cut, are you morally obligated to keep paying the higher amount?
Western Europe consists of modern welfare states. This is the model that we, Europeans, chose democratically over the span of decades or even centuries. In a welfare state, people and companies that are better off pay (more) taxes to support welfare, education, infrastructure, etc.
Apple doesn't get to decide for us what our collective moral values are. If they don't like them, they should stop doing business in Europe. Otherwise, they should just pay their dues like nearly every person and small/midsize company in Europe does. Since Europe is a hugely profitable market, this is the better option for them.
This comment comes off as extremely offensive. You are basically saying that you, European people, democratically and unilaterally chose that you can extort people at gunpoint to make better living for yourself, parasiting on other peoples work.
This comment comes off as extremely offensive. You are basically saying that you, European people, democratically and unilaterally chose that you can extort people at gunpoint to make better living for yourself,
If you want to do business in a country, you have to live by the laws of the country. If a country's laws specify that a certain percentage of profit should be paid as taxes, it is like it is.
Some countries prefer free-for-all capitalism. Other countries prefer to have state-mandated universal health care, a decent amount of holidays, a certain income for unemployed, etc. Those facilities have to be funded somehow.
I wouldn't exactly call these values "moral".
Sure, for someone who believes in pure capitalism, it is not moral. For someone who believes in social democracy, it is. For a typical EU citizen (making a large generalization), US-style capitalism is immoral. Unfortunately, the US tries very hard to export their model to the rest of the world (which is of course in the interest of the US).
Apple should just pull out from Europe.
Even with the normal taxation tariffs (that smaller companies cannot dodge), Apple will make a large profit in Europe. So, that would be a large loss to them.
Taxation is the price of living (or participating in a market) in a developed country and benefiting from shared infrastructure. Apple needs somewhere for their distribution planes to land, their users need affordable electricity, no-one will buy new phones if they can’t afford to eat. Maybe we can obsolete airports, national energy grids and food distribution networks one day but until then, taxes need to be paid?
France does tax Apple on its own. They still pay VAT of course as well as on any profits classified as French (e.g. retail). The question is then everything else whose origin isn’t obvious.
The issue is using various IP transfer schemes to make it look like their French division has no profits while the Isle of Man division is earning billions.
Technically speaking, almost all of the value is created in the USA via R&D. I don’t think Apple has any significant amount of R&D creation in France (hopefully a lab or two). Then there is some by order manufacturing in China, along with component acquisition, leaving just retail and distribution for local markets. Now, Apple can and has done some dodgy IP transfers to tax havens, but France wouldn’t have been the wronged party in that, the USA would be.
Value is only created when you sell products, not when you create them (and especially not in R&D which is gamble cost for most companies), otherwise all the startups would be rich. If there would be no value creation in France, Apple would not have any business there.
Ridiculous, how would that even work? Profit is “sales - expenses.” So how would Apple account for the R&D in the states, or does Apple France just want to tax them assuming all the inputs don’t exist?
That’s why Apple USA sells iPhones to Apple France at some price above hardware production costs. It doesn’t make sense any other way. Value isn’t created on sale, it is only realized as money at that point.
Welcome to the world of tax avoidance. For example, if the software is assigned to a subsidiary in the Isle of Man, which "licenses" the use of the software to Google France, then Google France in the high tax jurisdiction pays these licensing fees to Google Isle of Man, shifting profits from the high tax to the low tax jurisdiction. This is one of many tricks available.
See this Forbes' article on transfer pricing as tax avoidance:
R&D is a cost center, not a profit center and as you pointed out, you need to sell your products at a higher price to recover that cost. If the value was created on R&D, it would mean that you could manufacture just about anything and it would create profit magically, which is obviously wrong as countless companies fail to monetize products. The value is created at the time you sell the product itself, by demand of consumers.
R&D is not a cost center, it is widely regarded as a profit center in a tech company. By your definition, Microsoft (assuming they aren’t selling hardware) should be paying all of its profits to where its software is sold vs. where it is produced, because it’s entire operation is just a cost center!
Like it or not, taxation internationally is currently based on where value is produced which is why...
> Under the current international tax system, profits are taxed based on where the value is created. The taxes Apple pays to countries around the world are based on that principle. The vast majority of the value in our products is indisputably created in the United States — where we do our design, development, engineering work and much more — so the majority of our taxes are owed to the US.
The value is not created at time of sale! Well, some value is created by virtue of the sale itself that go into retail profits, but the store has to pay its suppliers the price they charge regardless of the supplier’s markup. Imagine it’s a department store (Nordstrom’s or whatever) selling LV bags, LV is not charging the department stores just production cost. France in turn is taxing LV on the design value added in France, that tax money isn’t going to China or the USA where the bag is sold. France would be pissed otherwise.
If France wants to tax America’s R&D, then they can change their laws, but the USA isn’t going to be very happy about that, obviously.
Apple is heavily biased on the subject so I would not take their PR at face value. It's in their best interest to pretend that all the value is created in the US in order to reduce taxes.
Let's say I can recreate the new IPhone with only 1/1000 of the budget of Apple's R&D, would I make a profit? Yes of course I would. If Apple could create their new IPhone for only 100$ of total R&D, be sure they would do it.
On the other hand, ask yourself why there is no Apple Store in a lot of African countries. It's because Apple does not meet the local markets requirements for a store there to be profitable, so they would not get any value out of it.
R&D being a cost center is the reason most of the countries in the world have tax-breaks specifically on R&D and also why the copyright laws are that harsh to prevent ripping of all the value by selling copies of your competitor.
If Apple was able to realize their R&D value income taxes in France rather than the USA on all French sales, they would probably pay less, not more, than what they are now.
At anyrate, value is well defined across the world. If it was define the way you want, the countries would see all their exporters as freeloaders, not paying for the infrastructure that is realizing their profit. Heck, places like Switzerland and Singapore wouldn’t be able to survive.
> If Apple was able to realize their R&D value income taxes in France rather than the USA on all French sales, they would probably pay less, not more, than what they are now.
Tax breaks are on R&D, not sales and Apple does not have any R&D in France so I don't follow you...
> At anyrate, value is well defined across the world.
There's no common tax laws across the world so this does not seem to be true.
> Sales is not the only source of value to be had. It is weird that you are on this site and think development is value free.
I find it the opposite, I find weird that you are on this site and think value magically appears out of R&D since the countless startups which are failing every month... Just look at YCombinator data from the past 5 year and I bet most of the startups back then (which had products) failed because they did not generate enough revenue to sustain themselves.
I was talking to a teacher in management who worked with finance, he told me that tax havens will never get solved to this day.
Every developed country has its own tax haven. Even if a country manages to ban banks from transferring money to a tax haven, businesses would move to other countries or find other loopholes.
It's a race to the bottom. I guess the only thing that would solve the situation is a global agreement against tax havens, something that would require a lot of diplomatic work between countries, so I guess the UN would be involved somehow?
I hear so many people ranting about the government increasing their taxes, so often in their anger they sympathize with companies who use tax havens, surprisingly, saying it's the fault of politicians and their whole "gang".
I am still waiting for voters to be attentive to this not sexy problem of taxation, and maybe, maybe, if large companies's image suffer from it, maybe things will move... But it would require citizens to at least be aware of the accounting of all of this...
I believe governments (some of them, starting in Europe...) may very well be on their way towards harmonised tax levels because there is just so much money they are missing out on and they know it. Ireland may be reaping most of the benefit as it stands right now, but it is probably clear that a slightly higher tax in Ireland and a slightly lower one in other European countries may well net Ireland more in the end anyway.
If large megacorporations will be as affected by this general trend as small business owners remains to be seen I guess - I'm not too optimistic about that.
I don't want to be too pessimistic, but I'm doubtful about those initiatives.
Tax experts seem to be 10 steps ahead of legislators, not to mention lobbyists.
I really want to believe that tax havens could be solved, but if you think about it, it's a very hard problem and nobody has enough political capital to solve it. Even people who are in power have little interest in trying to improve the situation, and I doubt that voters would really give any damn, not to mention that there are many small businesses who already benefit from tax havens too.
The EU doesn't have general legislative competence for tax: it's reserved to the member States. To change this would (IIRC) require a new treaty, and the perceived loss of sovereignty would go down like a lead balloon with many of the governments - so that won't happen at least in the short term.
Taxation, like all things mandated by any government, is regulated by the legislation put in place by the respective governments. Everyone is entitled to use said legislation to minimise their burdens, everyone.
The problem that arises is that governments do not manage their responsibilities in these areas (or pretty much every area they have legislative control over) in any adequately honest way.
Instead of everyone being treated in the same way (including any entities created by fiat such as companies, etc) equally, we see all governments make special cases for various segments. So we see varying rates of taxes being applied across the population. Within that, what is never brought to account is how that government uses those funds.
Many years ago, if I heard it correctly, a new taxation regime was to be brought into a certain country. One of the ideas put forward internally was that a transaction tax be levied against all transactions passed through the banking systems use in that country. From what I gathered, it was something like, 1/100 currency unit per 100 currencies units.
The initial estimation (from what was conveyed) was that this would raise enough taxation to be able to remove all other taxation methods (including income taxes, sales taxes, government duties, etc). The richest companies and individuals would (by the nature of their transaction) pay the majority of this. It would also gather tax from all money laundering and criminal activities.
The burden on the least able members and small companies, etc would be less than what they were currently paying.
From what was conveyed, this specific option was given the death knell due to it being an incredibly hard sell to the country because all major companies and all major welfare groups would come out against this.
They settled for something that ended up not being capable of decreasing the basic taxation burden on the general non-business community.
The taxation law would have gone from 30,000+ pages down to probably less than 50 pages.
So how do you expect any sense to arise in this area?
How hard is it to solve the tax problem? France should abolish all income taxes, and put a 100% sales tax on iphone. Problem solved. Apple can dodge as much income taxes as they want.
Then Apple stops selling in France and continues to sell in Belgium, Germany, Spain, etc and people drive them into France by the truckload. Or Amazon just delivers them via post. No taxes to France at all. Problem solved.
That's ok. I'm sure sales will take a substantial hit if people cannot walk into a store and buy it. I mean there's a reason Apple sells directly in France, right?
Substantial? I doubt it. While Apple does a lot of retail volume, the big money-makers like the iPhone can be drop-shipped from anywhere in the EU. There are 20 Apple stores in France, but millions of iPhones there; I doubt more than 20% of French iPhone users purchased at an Apple store, and probably closer to 5%.
It must be, otherwise why would Apple even have a retail channel in France? I think the number would be closer to 50%. Keep in mind that iphones are purchased at all sorts of retailers apart from istores.
May be France's shitty tax regime is more to blame here. French government should work with Apple to come up with a simplified tax code or show some balls and expel Apple from the country.
Respect.
Id love to see the alt right and hard/extreme/radical/(or whatever else you are calling)the alt-left to do the same rather then attacking poor citizens.
Worse yet, they frequently seem to do this by subverting our public officials. It's reached the point where our regulatory institutions and even our government appear severely compromised by the financial concerns of corporations. If our elected representatives need corporate money just to get elected, how can we rely on them to represent us on issues that might run against the interests of those corporate donors? Direct public action, such as protests, seem to be the last recourse left available to us on certain topics.
When you have a large, enormously successful company sitting on gargantuan cash reserves not paying its taxes and getting away with it, you have a problem. Apple probably isn't even the worst offender, but they're famous and have a built in hate-club (anything that inspires fans also inspires anti-fans). While this protest only had a few hundred supporters, that's pretty incredible for this kind of topic. Hopefully this sort of protest happens more often and gives tax-evading corporations pause.