There is no Federal sales tax in the US. As it is a lot of US states don’t tax software. I have seen companies handle this in a couple ways. Some have actually moved to collecting tax for the jurisdictions where they need to pay it, others just pay the taxes out of their revenue.
App Store doesn't show the state sales tax, but the tax is added to your receipt from Apple, just like for music, TV, and movie purchases. It's all the same system. And if you've made multiple purchases simultaneously (Apple likes to batch transactions), then the total sales tax is added at the end rather than individually to the items.
Apple has stores so they would be subject to state taxes unlike Amazon and other online only retailers years ago.
You are 100% correct about software sales. Georgia law says since there is no property being exchanged it’s not subject to sales tax. I didn’t know this until today. The law is kinda weird.
There is a lot of weirdness around what's taxed and not taxed at the state level. You'll see things like books being taxed but magazines not, clothes not taxed but only up to a certain price point, food not taxed unless it's prepared, etc.
While it's feasible now, part of the reason it's historically not shown is that tax can vary by city borders, or even intersections of city/county borders where a city spans two counties. Zip codes aren't even enough granularity to get the right rate.
Apple USDJPY rate is going to jump from 120 to 160, that's huge jump but it's just applying real forex. Rate difference to real forex is same as last rate change in 2019 (about +11.2%, maybe for 10% consumption tax and exchange fee/margin).
As Milton Friedman said: "you cannot tax a company, you tax people".
This is the result of a law trying to get some of the money the big Techs make in Europe...
They still take the same money, but we have to pay more, so that our government can spend more money on us... oh wait!...
You argue that it is harder for smaller business to evade tax and easier for big business. So the playing field will be levelled by decreasing tax not increasing it.
I understand what you mean, but even in a thought-experiment it means you would have to lower the tax to the point that it's less economic for companies to maintain an already-existing tax-evasion scheme than just paying the tax.
Those companies would then still not play by the rules and contribute to society accordingly, you would have adjusted YOUR rules to match THEIR sole interest (which might be based on a completely different motivation).
The question is then: Is your (dramatically) lowered tax-income then still enough to serve its intended purpose (maintaining public goods etc)?
I think it's logical that if you define a set of rules for a society to live in and some of its members are so powerful that they can circumvent the rules, abandoning the rules is not addressing your actual problem.
I reckon it is better to make the game fair for all by closing holes and punishing rule-breakers, instead of allowing the powerful players to set the beneficial rules for themselves.
But again, I think that's more of an interesting general exchange than a discussion about this parent-topic ;)
The only aim we started was what will give small companies incentive, where I argued lowering tax is better for them.
If your only goal is to get short term public good, just ban all small companies, inceltivize government backed/owned monopoly and tax them heavily so that profit is just marginal. You would get lot of tax revenue in short term, but it will destroy economy in the long term. And it is not just as a theoretical example, there was an entire failed political movement for this.
Obviously like everything in life, there is a fine balance in tax rate and this knob has lot of consequence.
Isn't this more attributable to the high inflation rates currently? A roughly 10% increase corresponds to the 9.1% annual inflation (as of August 2022), with some margin for some previous years. Not to mention the USD/EUR rate, which also probably impacts them a bit. Which tax are you talking about?
Considering the amount of profits and cash reserves this company has, I don't see why some people are so opposed to taxing them. They're swimming in more money they can possibly use, what use is it? Close the loopholes and make them pay their fair share, they'll barely notice the difference anyway.
By "loopholes" I think they were referring to stuff like
>Apple relied on a “complex web of offshore entities” and U.S. tax loopholes to avoid paying billions of dollars in U.S. taxes on $44 billion in offshore income over the past four years, according to excerpts from a Senate subcommittee report to be released tomorrow as Apple CEO Tim Cook testifies on the company’s overseas operations.
>The maker of iPhones and iPads used at least three foreign subsidiaries that it claims are not “tax resident in any nation” to help it avoid paying billions in “otherwise taxable offshore income,” the Senate Permanent Subcommittee on Investigations said in a statement today.
I love that this comment is a response to a pricing scheme where developers are forced into pricing brackets. Apple are effectively hindering developers selling their apps on a free market.
But they also, you know, made the platform. Are you sure the platform would be there without their fees? Let's have a look at the Linux phone market...
Seems like they've chosen a different business model back then and since it didn't work out so well (compare Mac/macOS market penetration to iPhone/iOS) they changed it to something that allows them to capture more revenue and use the money to develop the platform much further.
And they're not forcing it on Mac because that would cause outrage and people not upgrading the OS, and desktop/laptop computers are dying anyways.
Also, App Store on Mac definitely has fees.
Perfectly understandable IMHO.
(Webkit might be a platform to Google but it's not from Apple's point of view, it's merely one part of their platform offerings)
Yes, it's much much smaller than the iPhone business. Of course, it'd be a huge company by itself, but Apple got to $1T thanks to iPhone, not Mac - by far.
Except app store is not free market but monopoly. So it should be treated like one. The moment sideloading/root or alternative appstores are allowed - then then can charge whatever they feel like.
Vendor lock in is bad towards the customer so limiting it actually increases the free market.
>Yes, Apple can dictate terms in its own store the same way that your local grocer can.
Would be all well and awesome if you had any freedom of choice on Apple's platform and weren't forced into being locked into their ecosystem where you pay a 15% Apple tax on every purchase. Say what you like about mobile platforms but making ridiculous comparisons like this doesn't help your case.
> Would be all well and awesome if you had any freedom of choice on Apple's platform
I don’t see how that is an argument against ”Yes, Apple can dictate terms in its own store the same way that your local grocer can.”. You don’t have freedom of choice as to who to buy from at your local grocer, either.
I think that, in principle, companies creating a market should be able to decide what gets sold there and demand any cut of sales they want.
That also is what I think laws say in most countries. It’s fairly normal with game consoles, for example, and I expect you can’t sell merchandise from studios competing with Disney (if they still exist) in Disneyland or sell ice cream there without Disney taking a significant cut, or sell Shell products at an Exxon pump.
The big question, though, is whether the market power of a few players in mobile apps is so undesirable that action is necessary, and if so, whether existing laws are sufficient to correct the issue, or whether the rules of the game should change and if so, how.
I think law will be changed, but how, I’m not sure about. Any law saying “this applies only to companies Foo, Bar and Baz” will be shut down in courts, so arguments must be formulated as to what exactly is wrong with the current situation, and decisions will have to be made as to whether those rules also should apply to, for example, game consoles.
luckily we have real lawyers that don’t just pull up irrelevant cases. The case in both the US and the EU was about MS forcing OEMs to psy for a license on all shipping computers whether or not the computer shipped with Windows.
Apple doesn’t license its operating system to other OEMs, it doesn’t have anywhere near 90% market share and EU case law is irrelevant in the US.
> In 1993, the American software company Novell claimed that Microsoft was blocking its competitors out of the market through anti-competitive practices. The complaint centered on the license practices at the time which required royalties from each computer sold by a supplier of Microsoft's operating system, whether or not the unit actually contained the Windows operating system.
The EU market will suffer this. Not apple. EU people will have to pay more for the apps. Apple will still make same many, just as before.
If you say: "yeah, but now less people is going to buy"
I say: I do not think so, the increment is small enough, that if you need or want the app or game, you still pay it.
The theory behind this is, that the EU will give back that money for the EU people, invested in Internet infrastructure or whatever... The problem is that in the middle that money will have to pay for TONS of bureaucrats...
This is off topic for this change. I don't like app store duopoly but this is just applying real forex for their rate. Still it could be said that it's pain that we can't price for each currency, for who want to price like Steam (make it cheap for Turkey). It seems that Google Play supports it?
The statement is correct, but I reckon the interpretation is not.
If a company has reached the dominance of being taxed above average (or fined) due to their market behavior, them continuing to take the same money from the consumer SHOULD create room for other entrants in the same market-segment to balance the competition.
If a company has reached such a state in a major market-segment that it can simply forward all additive costs for anti-competitive or market-dominating behavior to the consumer without consequences in sales, it probably means that the company is already way too big and should have been regulated much earlier...
However, I doubt that anything like this is at play here.
You can't tax a company you hate higher unless you make the market closed, and it has much more of country defining change than just being anti Apple. Fining a company also has a negative consequence as it makes less rewarding for small company to grow, which is directly evident by startup funding in US vs Europe.
Don't know where "hate" and "Anti-Apple" is coming from.
For sure, everything can have positive and negative consequences, it's rarely clear-cut.
It's also not about taxing a specific company, taxes are used to discourage/incentivize certain movement in a market.
If you (an individual) pay higher tax for using fossil fuels than renewable energy, you are incentivized to use renewable energy.,
If you have the option to tax-deduct your retirement plan, you are incentivized to invest in a retirement plan.
In a just system, a FINE is ordered for breaking rules. I doubt that fining a company for i.e. anti-competitive behavior makes it "less rewarding" for small companies in the same space to grow. Moreover, those small companies were likely affected by those anti-competitive behaviors, as they were competitors.
Not entirely true because this assumes people continue to consume the same amount. The provided value of the service is unchanged, so you would expect some drop in purchase as the price goes up.
Luckily for Apple the choice for alternatives is small as long as you're trapped within the Apple Ecosystem.
And changing the ecosystem is hard for most so now it's just the exercise to find out how much you can rise the price before people jump ship. I'm quite sure there is much room left for people who are ready to pay $1000 for a phone.
It seems to me that almost all app spend is optional. Sure, there is no other App Store to buy from on the iphone, but just buying less apps overall is an option that people will take.
There is nothing with "the result of a law trying to get some of the money the big Techs make in Europe".
There is nothing new here in Europe. It is what it is for 5 years now. What is different than before is the inflation and the massive devaluation of the EUR against the USD over the last year. That is the reason why the new iPhone 14 prices sharply increased in EUR.
The change with the tax only applies to Vietnam. To my knowledge as a European citizen, Vietnam is far far away from Europe and not anywhere near. I know, that US people have problems with Geography.
> The elementary fact is that “business” does not and cannot pay taxes. Only people can pay taxes. Corporate officials may sign the check, but the money that they forward to Internal Revenue comes from the corporation’s employees, customers or stockholders. A corporation is a pure intermediary through which its employees, customers and stockholders cooperate for their mutual benefit.
I would point out though that including stockholders into that quote makes it very different. I mean to me that is equivalent to the company paying the taxes.
The thing is, sometimes the company can get away with transferring the cost of taxes 1:1 to the consumer. Sometimes yes, sometimes no.
In the case of apps, the increment in price will be small (the prices are normally low anyway) so transferring the tax to the buyer is trivial.
I think the idea is that at the end of the day, the money always come from individuals - that companies aren’t some nebulous, ethereal entities with no connection to real people, and so you should keep those individuals in mind when levying taxes.
(I’m personally pro taxes in general, including for corporations).
