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  (Source: Reuters)
Ireland also blasts U.S. criticism of "tax sheltering"

The Democratic-controlled U.S. Senate has turned its attention to Apple, Inc. (AAPL) by focusing on the low effective tax rates paid on the profits hauled in by the tech industry's most profitable firm.  Today as Apple's CEO Tim Cook -- who once suggested Apple has more money than it knows what to do with -- was grilled by Congress on his so-called "Double Irish With a Dutch Sandwich," which allows Apple to cut taxes by directing profits through low-cost Irish subsidiaries, the Netherlands and the Caribbean. However, Irish officials and some U.S. conservatives returned fire.

I. Irish Say Senate's Numbers Are Wrong

Apple's cash pile may grow to $170B USD by the year's end which is about 1 percent of the national debt of the U.S. Officially, U.S. tax rates on corporate profits hover around 18-20 percent after deductions, but Apple is accused of paying far less via using shell companies in low tax regions.

But in an interview with Irish news agency RTE Deputy prime minister Eamon Gilmore slammed accusations of wrongdoing, remarking, "They are issues that arise from the taxation systems in other jurisdictions, and that is an issue that has to be addressed first of all in those jurisdictions." 

A spokesman for Ireland's finance department said the nation's system was fully transparent and statute based.  He stated resolutely that there was "no possibility of individual special tax rate deals for companies."

A spokeswoman for Ireland's Office of the Revenue Commissioners adds, "All companies in Ireland pay the standard 12.5 percent rate on their trading profits arising in Ireland, and they pay a corporation tax rate of 25 percent on their Irish non-trading income."

Apple Operations
Apple Operations Inc. (A.O.I.) in Cork, Ireland reportedly received $29.9B USD in profits between 2009 and 2012, and paid less than 2 percent in taxes. [Image Source: Reuters]

Irish citizens are also defensive about the country's strategy of snagging multinational companies' outposts via low tax rates.  They say the nation's unemployment issues would be worse if it were not for companies like Apple.  Comments one worker to Reuters, "We're a small country and feel we can't say no. We know they'll just go off to one of these Asian countries ... They're a law unto themselves."

Apple maintains a three-story office building in Cork, which is currently receiving a shining new glass-and-steel expansion, funneling money to local builders and contractors.  Apple also directly employs 2,800 in Cork, and has promised to add another 500 employees shortly.

But according to the 40-page Senate memo released before the hearing, Apple hides much of its income in a trio of Irish subsidiaries that have no official tax residency in Ireland.  The Senate memo claims Apple has paid an effective rate of around 2 percent for the last ten years, versus the aforementioned "official" rate of 12.5 percent.  The report claims that between 2009 and 2012 Apple affiliates funneled $29.9B USD in profits -- or roughly 30 percent of profits -- into the Cork subsidiaries.

The average tax rates of the Organisation for Economic Co-operation and Development (OECD) -- whose member states include most of the nations Apple operates in -- had an average tax rate of 24 percent in 2012, yet Apple only paid 1.9 percent that year on its $37B USD in overseas profit that year, thanks to its clever positioning.  The memo comments, "Ireland has essentially functioned as a tax haven for Apple."

Ireland's European Affairs minister Lucinda Creighton claimed the Senate's figure of a 2 percent rate in Ireland was flat-out wrong.  She comments, "There is no such deal. There is no deal for any company to pay 2 percent corporate tax in Ireland - that is erroneous."

But Apple's accounting firm Ernst & Young LLP refused to confirm or deny the number, saying it was confidential information.

II. Conservatives in the Senate Blast Hearings

Scrutiny picked up steam in April 2012, following a report in The New York Times accusing Apple of dodging millions of dollars in taxes in California and 20 other U.S. states (and dodging billions of dollars in taxes worldwide).  Over the past year, British Parliamentarians have held hearings regarding Apple's behavior.

According to their figures Apple pocketed £6B ($9.50B USD) in profit from the British market last year, but paid only £10M ($15.8M USD) in taxes.  Apple in a statement denied it engaged in "tax gimmicks" and said it would pay $7B USD in the U.S. in taxes in fiscal 2013.

The Congressional hearing took place this afternoon.

In the hearing Tim Cook -- accompanied by Apple's Head of Tax Operations Phillip A. Bullock -- admits, "I have no current plan to bring them back at the current tax rate."

On Apple Operation Int'l, Tim Cook said, "[A.O.I.] is nothing more than a holding company — it’s not an operating company.  [A.O.I.] is nothing more than a company that has been set up to provide an efficient way to manage Apple’s cash from income that’s already been taxed.  In my view A.O.I. does not reduce U.S. taxes at all."

Tim Cook
Apple CEO Tim Cook defended his company at the hearing. [Image Source: Reuters]

He says Apple pays tax on profit from every single product it sells in the U.S.

Senator Carl Levin (D-Mich.) remarked, "The only reason you’re not bringing them home is because they were transferred to these three Irish companies.  That’s the reason why they’re there. It’s your decision not to bring those profits home, so now $100 billion plus is stashed away in those three Irish companies that you control but is nonetheless in their legal name. The question is, will you bring them home?"

He points to an Apple subsidiary to paid only $5B USD back to Apple's U.S. operations, but received a reported $74B USD in profit -- a net tax loss of almost $70B USD in taxable income for the U.S.

Sen. Levin suggests Congress should play debt collector, trying to recoup the lost taxes from Apple's cash pile.  And he believes it is possible to do so under the current law.  He comments, "It is possible to penetrate an entity’s corporate structure for tax purposes and to collect U.S. taxes on its income, [if it is shown that a foreign subsidiary is] nothing more than instrumentality of its parent company, a sham."

Some conservatives joined in the fray.  Sen. John McCain (R-Ariz.), a former Republican presidential nominee, remarked that, "Apple has violated the spirit of the law if not the letter of the law."

John McCain
Sens. John McCain (R, right) and Levin (D, left) were not satisfied with Mr. Cook's answers.
[Image Source: AP]

He argued, though, that the onus was on Congress to perform "comprehensive reform" of the tax system.

III. Sen. Paul Wants Apology From Congress, Reform

But Senator Rob Portman (R-Ohio), countered that Apple's South Korean rival Samsung Electronics Comp., Ltd. (KSC:005930) pays the same effective rate as Apple globally -- 14 percent.  But he comments that the real problem is the high tax rate in the U.S. -- he points out that South Korea's lower tax rate allows it to return its profits home.

Villanova University Law School Professor J. Richard Harvey Jr. seemed to echo this perspective in testimony as an expert witness.  While he accused Apple of dodging $7.7B USD in U.S. taxes, he complained that the U.S. tax code makes returning money onerous.  He suggested a "long term solution" of lowering the tax rate on overseas profits returned to the U.S. to 15 percent.

Tim Cook agrees.  In his testimony, he comments, "Unfortunately the tax code has not kept up with the digital age."

One of Mr. Cook's biggest defenders was Sen. Rand Paul (R-Kent.).  He said Apple should be cheered for, not "vilified", remarking, "Money goes where it is welcome.  Everybody talks about tax reform. Just do it."

Sen. Rand Paul
Sen. Rand Paul defended Apple and said Senate Democrats -- as well as some Republicans like Sen. McCain should be ashamed and owe Apple a big apology. [Image Source: The NYT]

On Twitter he posted:

While the debate is unlikely to be laid to rest easily, it should be noted that many other companies like Microsoft Corp. (MSFT) and Google Inc. (GOOG) also shelter money in Ireland.  Google recently came under fire for dodging about $1.6B USD USD (£1B) in taxes by way of the island Bermuda. Google sent £6B ($9.6B USD) through Bermuda over the course of last year, which halved its 2011 tax bill.

Other top companies like Starbucks Corp. (SBUX) and Amazon.com, Inc. (AMZN) also are accused of using Caribbean, European, or Asian tax havens.  Of course, such tactics could be argued to actually be performing a key duty to shareholders -- minimized taxes under the law and maximizing profits.

Sources: The New York Times, Reuters





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The World's Tax Collector
By Reclaimer77 on 5/21/2013 5:19:28 PM , Rating: 2
Apparently the United States is the tax collector for the entire world.

By what rights is tax revenue owed to the US Government for profits an American company generated oversees?

Apple is just making the most of this mess that it can, as anyone with half a brain would.




RE: The World's Tax Collector
By someguy123 on 5/21/2013 5:33:32 PM , Rating: 5
It's a bulk of their total profits funneled into overseas subsidiaries, including US sales. They aren't generating 70 billion in Ireland alone.


RE: The World's Tax Collector
By Solandri on 5/21/2013 6:05:51 PM , Rating: 4
According to this article, Apple pays an effective 30.5% corporate tax rate for U.S. sales. Very close to the nominal 35% corporate tax rate the U.S. charges (the missing 4.5% is probably due to various deductions).
http://www.forbes.com/sites/connieguglielmo/2013/0...

The problem isn't Apple or other "tax-dodging" companies. It's the U.S. tax code. The U.S. tries to tax everything an American or American company makes, even if it's made overseas. I ran into this when I was working abroad. Canada's tax laws make sense. My Canadian friend who worked in the U.S. only had to pay U.S. taxes (unless he lived in Canada more than half the time).

But I could live in Canada 100% of the time and earn 100% of my money from a Canadian company, and the U.S. would still try to tax my earnings simply because I was a U.S. citizen. This is why you hear about some rich people living overseas giving up their U.S. citizenship. It's not a tax dodge, it's to get the U.S. to stop trying to collect taxes on money that has nothing to do with the U.S. other than the person making it being a U.S. citizen. Fortunately the U.S. and Canada have a tax treaty which allowed me to take a deduction for Canadian taxes paid (essentially reducing my U.S. tax liability to zero since Canadian taxes were higher).

But you can see the problem with the tax definition the U.S. uses - if every country tried to tax the way the U.S. does, then it's possible to owe more than 100% in taxes. Say the U.S., France, and Ireland all had a 35% tax rate. A U.S. company's Irish subsidiary sells to a customer in France. The U.S. charges 35% tax, Ireland charges 35% tax, and France charges 35% tax. The company ends up owing 105% of its profit as taxes. That's a pretty good indication that the rule is silly. It's the U.S.' definition of what is taxable which is faulty, not what these companies are doing.

Foreign countries may have a gripe with Apple shuttling revenue from their country through Ireland for accounting purposes, but the U.S. has no grounds for complaining. Apple paid its taxes to the U.S. for sales that were made in the U.S. U.S. revenue is not being shuttled through Ireland as you claim.


RE: The World's Tax Collector
By Reclaimer77 on 5/21/2013 6:16:45 PM , Rating: 2
Great post, exactly what I'm saying.

People know I'm no fan of taxes in general. But the IRS claiming rights to ALL profits from everywhere no matter what is just patently overboard.

As Jason pointed out, would we even be seeing this debate if the IRS wasn't taking a beating in the press for a solid week?


RE: The World's Tax Collector
By mcnabney on 5/21/13, Rating: -1
RE: The World's Tax Collector
By Solandri on 5/22/2013 5:17:49 AM , Rating: 5
Except Apple doesn't do that.

Apple had $157 billion in revenue and $41.7 billion in profit in FY2012.
http://www.pocketgamer.biz/r/PG.Biz/Apple+financia...

About 40% of Apple's revenue comes from the U.S.
http://techcrunch.com/2013/01/23/apple-internation...

40% of $41.7 billion profit is $16.7 billion profit attributable to the U.S. It's probably a little higher because the items sold here are probably skewed towards the higher profit items (e.g. high-end laptops, and phones/tablets with 64 GB of storage).

Apple paid nearly $6 billion in taxes to the U.S. in FY2012.
http://www.forbes.com/sites/connieguglielmo/2013/0...

$6 billion / $16.7 billion = 35.9%

The numbers support Apple's claim that it's not playing any accounting tricks when it comes to U.S. taxes.


RE: The World's Tax Collector
By Spacy on 5/22/2013 7:59:47 AM , Rating: 2
Slight problem. Your math suggests a simple solution to a complex tax problem. The report indirectly reported that the actual expenses/profit for apple might have been off as reported. Ie reported expenses to Ireland given a tax reduction that are not really expenses but tax sheltering of income. The money of 70Billion is stored in the country held by the American branch that is not being taxed on ( The rich and every one have to payee taxes on money that earns interest). There for the company uses American investment funds they should be using to payee American Government on investment income. Instead taking the money out of the country to avoid paying American tax system and holding the money were it well payee less taxes on investment income. This is a big tax problem that cannot be solved with a simple equation.


RE: The World's Tax Collector
By dsumanik on 5/28/2013 5:22:32 PM , Rating: 2
TO EVERY POSTER IN THIS THREAD ARGUING APPLE ISNT DOING ANYTHING WRONG:

IF APPLE, GOOGLE, MSFT ET AL ARE PAYING THEIR TAXES LEGALLY AND CONFORMING TO THE NECESSARY LAWS... WHY ON EARTH ARE THEY STORING MONEY AND PAYING TAXES IN BERMUDA AND IRELAND?

ILL TELL YA WHY:

ITS CHEAPER

YES IT IS LEGAL, YES I COULD DO IT AND SO COULD YOU....

BUT,

IS APPLE, AN AMERICAN OWNED AND OPERATED COMPANY PAYING AS MUCH TAX TO THE US GOVERNMENT AS THEY WOULD BE HAD THEY BEEN DOING EVERYTHING ON US SOIL?

NO.

ITS EVADING TAXES LEGALLY.

OR CHOOSING TO LEGALLY PAY LESS TAX.

TAKE YOUR PICK.

AS A BUSINESS OWNER MYSELF WHO WORKS ON BOTH SIDES OF THE BORDER I CAN TELL YOU THERE IS ONLY ONE REASON, AND ONE REASON ALONE I WOULD EVER PAY THE COSTS OF SETTING UP, COMPLYING, AND FILING TAXES IN A FORIEGN COUNTRY:

TO SAVE MONEY.


RE: The World's Tax Collector
By dsumanik on 5/28/2013 5:25:19 PM , Rating: 2
quote:
In the hearing Tim Cook -- accompanied by Apple's Head of Tax Operations Phillip A. Bullock -- admits, "I have no current plan to bring them back at the current tax rate."


THAT SAYS IT ALL.

WE DO IT TO AVOID THE US TAX RATE


RE: The World's Tax Collector
By Mint on 5/22/2013 12:20:03 PM , Rating: 2
You are assuming that corporate taxes should be payed in the jurisdiction where the product is sold, not where it is developed/produced.

Are most foreign companies that sell product in the US doing the same? Does the US get a cut of their profits? I highly doubt it. They simply export goods to the US and pay taxes in their own country. Most free trade advocates want to keep it this way.

While Apple's physical products are produced overseas, the secret sauce that makes them so profitable (design, software, ecosystem, image) is produced in the US.

There's no easy way to decide how globally produced products should have their associated profit taxed. If we take your methodology, US companies exporting to others can pay taxes to other gov'ts, but others providing imports don't have to pay taxes here (I know you didn't explicitly say that, but impossible to enforce anything else). That means the US gov't gets the short end of the stick.


RE: The World's Tax Collector
By Mint on 5/22/2013 12:54:57 PM , Rating: 2
This illustrates how important repatriation taxes are.

If they were set low or even zero as some are suggesting, then virtually every company in the US can set up a foreign subsidiary, go through the accounting procedure you outlined above, and pay low taxes on ALL their income without the drawback of keeping it stuck in a foreign account. The owners/shareholders would then own those profits without any pending taxation (except capital gains).

Foreign accounts are basically just reserves, and repatriation taxes do nothing to impede companies from reversing the flow if they want to do legit domestic reinvestment/hiring (which is tax deductible).

The wealthy, however, want to dupe people into thinking repatriation taxes hurts investment. The reality is that they just want to pocket profits without paying tax. Investment is unaffected and already has trillions of idle domestic dollars to fund it anyway.


RE: The World's Tax Collector
By BRB29 on 5/22/2013 11:03:44 AM , Rating: 2
i agree with you except the 105% thing. That is not how it is done. I am in accounting.

It is charged the tax % every time it is moved so it is 1 *.65 *.65*.65. = .274

So if it is tripled taxed. Then the company will only get 27.4% of its profits instead of 100%

If it is taxed once then the company receives 65%.

This is a simple analogy of how it works. It is much more complicated on the statements.

I think the point here is that Apple created AOI so it doesn't have to transfer money all over the place and get taxed. AOI is there to handle money like Tim Cook said. It is not to dodge taxes but a method for a business to stay alive in the global mess. If governments would actually talk to each other and compromise then our economy would be so much better. But it's ok because accountants like myself can demand high pay since most people don't understand this mess.


RE: The World's Tax Collector
By EricMartello on 5/25/2013 3:31:56 PM , Rating: 2
quote:
The problem isn't Apple or other "tax-dodging" companies. It's the U.S. tax code.


We've needed tax reform for corporations and individuals for decades. It hasn't happened yet because the tax code bloat was lobbied for by special interest groups that want to use tax as a shield for their industry, to keep competition low. These same lobbyists will try to prevent any changes from being made.

quote:
The problem isn't Apple or other "tax-dodging" companies.


This is correct. The notion that corporations and wealthy people are tax-dodging charlatans is was contrived by liberals and their "occupy" movement to create a divide between people who have achieved success and those who have not.

The best way to "fix" taxes is to stop going after income entirely and to tax spending.

A flat 20% sales tax on all goods purchased for use (not for resale) would ensure that the tax revenues match the economy.

This would streamline businesses and let them focus on operating rather than complying with tax regulations.

It would be great for people not to have to file annual tax returns and lose a chunk of their money.

It would give the government an incentive to maintain a vibrant economy, because the better the economy does the more people spend and the more tax revenue they generate.

If the economy stalls or flatlines like it has with Obama, the government will feel the burn just as much as citizens do. It will not be like it is now, where DC has been thriving despite the rest of the country struggling.


RE: The World's Tax Collector
By JasonMick (blog) on 5/21/2013 5:36:30 PM , Rating: 1
quote:
Apparently the United States is the tax collector for the entire world.

By what rights is tax revenue owed to the US Government for profits an American company generated oversees?

Apple is just making the most of this mess that it can, as anyone with half a brain would.
But Reclaimer, we must divert attention away from the IRS crackdown on political dissidents, AP phone record seizures, harassment of FOX News reporters, warrantless drone killings of U.S. citizens, abusive executive orders, and special interest handouts like the NDAA/ACTA.

More hearings! More hearings! I hear Google might be evading some taxes!

( Side note:
Notice how McCain goes along with the Democrats in Congress all too often ... kind of like Romney in Mass. Gee, Republicans have nominated quasi-Democrats both of the last two elections and lost both of the last two elections... I wonder if they will look to run that streak to three?)


RE: The World's Tax Collector
By Reclaimer77 on 5/21/13, Rating: -1
RE: The World's Tax Collector
By bodar on 5/21/2013 7:28:09 PM , Rating: 2
Yep, it's pretty much been the White House's "Plan A" for the last 30+ years, and Obama is no different. "Plan B" is to sabre-rattle against an unpopular foreign nation.


RE: The World's Tax Collector
By Lord 666 on 5/22/2013 2:34:28 AM , Rating: 2
"You never want a serious crisis to go to waste."

Diversion tactics with the media is nothing new, but in the past 10 years it has become absurdly obvious.


RE: The World's Tax Collector
By Reclaimer77 on 5/22/13, Rating: 0
RE: The World's Tax Collector
By half_duplex on 5/23/2013 10:19:31 AM , Rating: 1
What was it we were talking about before "SUPER STORM SANDY"?

And how many "FISCAL CLIFFFFFFFFfffffsss" can we possibly go over?

And don't forget poor Hilary, she bumped her head.


RE: The World's Tax Collector
By superflex on 5/22/2013 8:08:44 AM , Rating: 1
I wouldn't be surprised if Google pressured the Senate on act on Apple.


RE: The World's Tax Collector
By Reclaimer77 on 5/22/2013 8:48:02 AM , Rating: 2
quote:
I wouldn't be surprised if Google pressured the Senate on act on Apple.


I would be. Why would Google, who also does everything they can to reduce their tax burden, want to bring this issue to the forefront? Any policy change directed at Apple, would also effect Google.

Google doesn't strike me as the kind of company who would cut off their own nose to spite their face.


RE: The World's Tax Collector
By half_duplex on 5/23/2013 10:15:00 AM , Rating: 2
Seems like the last handful of times the nation has turned it's focus to the criminal actions of the federal government, the federal government responds with a one of these such spectacles. Benghazi and Clintons concussion.

We need to keep the focus where it should be, on the IRS.

100 years ago, people would be ready to fight and die against this tyranny.

If I were Tim Cook, I'd have brought up the IRS situation, don't let pull another slick one.


RE: The World's Tax Collector
By MozeeToby on 5/21/2013 5:47:21 PM , Rating: 5
This isn't precisely how it works, but gives a good idea of how the basic system functions.

US Company A spends $100,000,000 developing cool new software. Company A sells or transfers the rights to the resulting software to company B for $110,000,000. Company B sells 100,000,000 individual copies of the software to distributors C, D, and E (again owned and operated by company A) for $100 a pop. Distributors C, D, and E sell the copies to consumers or retailers for $110 a pop.

Company A reports $10,000,000 in profits. Companies C, D, and E collectively report $1,000,000,000 in profits. Company B reports $9,890,000,000 in profits. Companies A, C, D, and E are based in the US, company B is in Ireland.

Company B is in a tax friendly jurisdiction, often employing just a few dozen people and with zero autonomy to make decisions without the OK from the home office. Despite the fact that the software was manufactured and sold in the US, less than 10% of the profits are taxed.

But, you say, you can't bring the profits back without being taxed, the money is useless to Company A! Well no, what company A can do is report that money as cash on hand, and then borrow against it at ridiculously low interest rates (because your collateral is perfectly liquid). Loans aren't income, so that isn't taxed. You can then use that money to do whatever you want, including paying your CEO millions of dollars or paying a dividend to the stockholders.


RE: The World's Tax Collector
By ptmmac on 5/21/2013 6:17:04 PM , Rating: 2
Tim Cook explicitly said that Apple does not do what you are describing. What they are doing is spreading the costs of the research and development across the whole world so that money from outside of the United States can be brought back to fund the development. What Apple can't do is use the money from over seas to buy assets such as Cap Expenses. Apple has one of the most conservative bookkeeping systems on this planet. Do you really believe if Apple was doing anything remotely shady that the CEO would agree to testify before Congress? Lying to Congress can get you sent to the poky. Tim Cook may not be prefect, but he is a straight arrow if ever there was one.


RE: The World's Tax Collector
By Mint on 5/22/2013 1:38:20 PM , Rating: 2
quote:
What Apple can't do is use the money from over seas to buy assets such as Cap Expenses.
Of course they can. All they have to do is shift profits back to the US, and then use them to cover the financing of the cap expense (which is tax deductible).

That's not an issue, though. The gov't wants companies to use profits to buy new equipment/buildings/etc, and it lets them deduct those expenses even when they keep all profits in the US.

What they don't want is for the company to put earning into a pile of cash without paying taxes.


RE: The World's Tax Collector
By Skywalker123 on 5/23/2013 4:20:31 PM , Rating: 2
Companies don't pay taxes, people do


RE: The World's Tax Collector
By Mint on 5/24/2013 7:41:56 AM , Rating: 2
That's like saying sales tax doesn't exist, only income tax does.

Would you like to make corporate tax zero and increase income tax to compensate? Let's assume companies give raises to their employees so that their net income is the same. Overall, the total tax burden is the same.

Individually, however, companies will feel different effects. Companies with a high payroll-to-profit ratio get punished, and companies with a low payroll-to-profit get rewarded. Great plan.

How you tax affects behavior.


RE: The World's Tax Collector
By StanO360 on 5/21/2013 6:32:12 PM , Rating: 1
Even if they did do what you're saying, Cook would and should be fired if he did not do it.

The problem is not Apple's, it's the government. Corporations are not the Devil incarnate as Obama would have us believe. A 35% tax (plus state, property, sales, and NOW hordes of onerous regulations) is crippling to many companies.


RE: The World's Tax Collector
By Fleeb on 5/21/2013 7:51:23 PM , Rating: 2
Only if we could bring those Foxconn jobs back to the USA. That is one indication companies like Apple invest back and bring jobs.


RE: The World's Tax Collector
By superflex on 5/22/2013 8:13:43 AM , Rating: 1
The EU has an effective flat corporate tax rate of 14% while the average American company pays 18% and up to 35%.
Senator Paul is 100% right. Goons like Charlie Wrangell and the other tax cheats on the Ways and Means Committee are to blame.


RE: The World's Tax Collector
By lewisc on 5/22/2013 3:53:12 PM , Rating: 2
Not quite sure what you mean with reference to the EU flat rate - within the EU, corporation tax rates are set at a national rather than supranational level.


RE: The World's Tax Collector
By dxf2891 on 5/22/2013 10:42:09 AM , Rating: 2
Well, Apple could always move their operations to China or even Ireland and pay tarriffs for their products to be sold in the US. Hmmmm, I wonder how their profits would be affected then? Of course this would increase their overall price and would also decrease their overall profits. Apple has to pay it's fair share just like everyone should. This is way the US should institute a flat tax. It should be 20% for individuals and 30% for corporations. No loop holes and no tax tricks. Flat means flat.


RE: The World's Tax Collector
By Mint on 5/22/2013 2:08:38 PM , Rating: 2
You think the US gov't gets tax revenue for profits that Chinese or European companies generated by selling products here?


Why do we owe takers?
By PontiusP on 5/21/2013 7:02:35 PM , Rating: 2
Why should Apple, or anyone else for that matter, have their wealth forcibly transferred to pay for more food stamps for lazy takers who do nothing but breed irresponsibly and live their lives in housing projects? Why should makers continually be forced to subsidize these people?

Kudos to apple for doing the morally correct thing and hanging on to their money.

My father always told me, "You don't owe anybody sh*t". Wise words.




RE: Why do we owe takers?
By PaFromFL on 5/22/2013 8:31:52 AM , Rating: 5
History shows that when a large percentage of citizens are driven into poverty, civilization is threatened (remember the burning US cities of the 1960s?). Governments exist to prevent such chaos, hence welfare, food stamps and senseless government jobs. Without tax revenue, governments would disappear. Without governments, civilization would crumble. Without civilization, Apple would have a very hard time making money and the rich would have a hard time keeping their heads.

Both Libertarians and Marxists make the same mistake about the desirability of the withering away of government. The flaw is the assumption that all people are born with a strong sense of personal responsibility and will cooperate for the good of society. The truth is that idle hands often do the Devil's work and some people are parasites. Past efforts to eliminate parasites or let the free market provide fair wages and full employment have ended badly.


RE: Why do we owe takers?
By KFZ on 5/22/2013 10:47:55 AM , Rating: 2
You've failed to allow for a stronger ecosystem without overbearing government bureaucracy, intervention and ignorant mucking about in the economy, through regulations and a convoluted tax code, including the massive corruption and incompetency that permeates state and federal agencies, not to mention lawmakers and the central power.

The answer to reducing much of the issues preventing a strong economy is to create a smarter, flexible, responsible government. Did you learn nothing from the banking system that was "too big to fail"?

This idea that we can't reduce our government one iota or civilization will implode is the most idiotic and insane thing I've ever heard.


RE: Why do we owe takers?
By Mint on 5/22/2013 1:15:31 PM , Rating: 3
Nobody said civilization will implode with reduced spending. What will happen is that the economy will either grow slower or shrink, and it's been proven throughout the world since the recession began. That's not a good thing.

History won't show you anything useful on this matter, because we have circumstances that never existed before. It used to be that less spending (gov't or consumer) means more investment and thus higher production. However, since the recession we've had surplus labor and capital, and production is instead limited by demand.

Simplifying the tax code is fine (as long as it doesn't get less progressive), as is sensible regulation streamlining. But net shrinking of the gov't will not help the economy.


RE: Why do we owe takers?
By PontiusP on 5/22/2013 12:44:58 PM , Rating: 1
PaFromFL,

You make the same mistake that all liberals make. Mainly, that welfare cures poverty. It does precisely the opposite, it creates poverty by making entire generations of people dependent on government handouts. You are *NOT* helping the poor. Take a look at any inner city welfare slum where the people live cradle to grave on welfare benefits. If such benefits helped, those areas would be improving. Instead, they've imploded on themselves.

Then, oddly enough, you contradict yourself:

"The truth is that idle hands often do the Devil's work and some people are parasites."

I agree 100%. So why then, are we promoting such behavior with welfare? Telling someone to sit home and do nothing and not take personal responsibility does not solve the problem. Rather, it exacerbates it.

The welfare state in America has grown completely out of control, as any rational analysis will show. The burden on the makers to pay for this has become absolutely crushing as our tax rate nears 50%. The modern generation will be working into their 90s to pay for this, mark my words.

Thanks to low information voters like yourself who actually think these failed policies are helping, nothing has been done and it's only gotten worse.

"Acceptamos EBT"


RE: Why do we owe takers?
By Mint on 5/22/2013 1:58:46 PM , Rating: 2
If the 'makers' actually spent/invested more of what they earned, then we would have low unemployment and the 'takers' would have jobs to fill. That clearly is not the case.

The richest 'makers' increasingly relied on banks to reinvest their savings (hence the astronomical rise in private debt since Reagan), and now that the banks screwed up and became more responsible and conservative, those savings aren't going anywhere.

Money is the power to control who produces what and for whom. If the 'makers' just keep saving (bastardizing the purpose money as a transaction tool) and don't make that choice, then they deserve to lose a chunk of their income and let the masses decide for them.


RE: Why do we owe takers?
By M'n'M on 5/22/2013 3:40:36 PM , Rating: 2
quote:
Money is the power to control who produces what and for whom. If the 'makers' just keep saving (bastardizing the purpose money as a transaction tool) and don't make that choice, then they deserve to lose a chunk of their income and let the masses decide for them.

Am I understanding you properly ? If I save my $$s instead of spending them or "investing" them, I deserve to be punished ? That I have some moral obligation to provide jobs for the masses ??


RE: Why do we owe takers?
By PontiusP on 5/22/2013 4:19:16 PM , Rating: 1
Good point. Mint is a Marxist, and therefore he, and all of the other San Francisco liberals who are so smart, know what's best for your money.


RE: Why do we owe takers?
By Reclaimer77 on 5/22/2013 7:04:36 PM , Rating: 2
Ahh Mint the Marxist . He might be an idiot, but he's our idiot :)


RE: Why do we owe takers?
By Mint on 5/23/2013 8:18:33 AM , Rating: 2
Mislabel me all you want. It doesn't change the truth.

Marxists don't encourage the rich to spend on themselves and keep the rest of capitalism intact. I'm not in SF, either. It's indisputable that the wealthy don't know what to do with their money, because we've had $1T deficits and they've funded it near 0%. Nobody saves money at negative real interest rate unless they don't know what to do with it.

In other words, we could cut spending by $1T and keep taxes the same, and the wealthy who bought ~0% bonds would simply put that money in equivalent ~0% bank accounts instead. All economic activity funded by that $1T along with multiplier effects simply cease to exist and 10% of jobs disappear. But hey, we got the balanced budget that you crave.

Then we can cut spending even more so that taxes can go down and create your 30% unemployment reduced-taker paradise.


RE: Why do we owe takers?
By Mint on 5/23/2013 7:50:13 AM , Rating: 2
If everyone was a cheapskate and non-investor, the economy would collapse.

If you want to save, then build assets, buy resources, whatever. You will own them, and if you want to spend in the future you can sell them. This is what I mean by the rich directing the economy.

A pile of idle money, however, has no productive value.

Do you know what the purpose of money is? It lets us evaluate the work we can do for each other so that we can conduct fair transactions. It is not meant to have a growing idle stockpile, because until we build a time machine we cannot transport this work into the future. Banks try doing this with debt, but there's a limit to how much can be created and we've all seen what happens when we create too much.

Before you or anyone else mentions the gold standard, it makes idling capital even worse. The more it's hoarded, the more it appreciates in value (through deflation), resulting in even more hoarding.


RE: Why do we owe takers?
By PontiusP on 5/22/2013 4:26:07 PM , Rating: 2
Mint, you miss the point.

Makers will spend their money if they see opportunity. We have to ask ourselves, why are they not seeing the opportunity? Could it be because of a crushing tax and regulatory burden? Could it be because of an out of control lawsuit culture? Could it be because the welfare state have turned inner cities into full on war zones, thus scaring away capital?

Further, regardless of how much the makers have, we shouldn't be obligated to give one dime of it to takers. Every productive member of society is forced to give to them and it's morally wrong.

You can beat down on capitalism all you want from your dorm room, but in the real world, it's what makes things tick.

The question you need to be asking, is how can we create an environment where capital is welcomed, rather than shunned?

Also, nice way to completely sidestep the issue of the exploding welfare state. That's quite a mobile goalpost you've got there.


RE: Why do we owe takers?
By Mint on 5/23/2013 7:10:35 AM , Rating: 2
quote:
We have to ask ourselves, why are they not seeing the opportunity? Could it be because of a crushing tax and regulatory burden?
No it's not. It's due to lack of demand, plain and simple. The poorer folk are unable to purchase more goods, and the richer folk don't want to purchase more goods.

Without more demand, there will be always be limited opportunity to invest.

I'm not beating down on capitalism. I actually WANT rich folk to live it up and spend their hard earned money on THEMSELVES. Capitalism will then find the most efficient way to do so.

The problem is that collectively they're not doing it, even if individually they're not doing anything wrong.
quote:
Could it be because the welfare state have turned inner cities into full on war zones, thus scaring away capital?
This is laughable. There is more than enough labor available everywhere, inner city or otherwise. If they want to open up factories in rural areas, they are free to do so and will have no problem finding workers who live there or move there.


RE: Why do we owe takers?
By half_duplex on 5/23/2013 10:26:26 AM , Rating: 2
You're pretenses are truly amusing.

You can explain away anything can't you?


RE: Why do we owe takers?
By M'n'M on 5/23/2013 3:59:35 PM , Rating: 2
quote:
The problem is that collectively they're not doing it, even if individually they're not doing anything wrong.

OK then, so they don't deserve to have a chunk of their $$s taken away.

But I have to wonder if what you call no demand is really just the true, "proper" level of demand. Afterall the people who spend and drive the economy are not the rich but those in the upper middle class and lower upper class, say the top 15% to top 5%. They're sitting on their $$ because they're uncertain of what the future will bring. They don't need any more HDTVs, the house they live in now is fine and maybe even too big as the kids move out. The 4 year old car still runs well and there's no need to buy a new one. There's no need to be on the spending spree they, and a lot of others who should have been saving towards their retirement, had been on in the prior decade. IOW this is what the economy looks like when people live within their means, not spending $$s like monkeys throw poo.

That this level of spending means less jobs for those who work in factories isn't the fault of the evil savers, but the result of a mature economy where there's more people than are needed to produce it's goods and services. If there are to be jobs for the masses here in the US, then we need to stop importing from the growing economies (China) and start exporting to them. And that's a very tall order to fill. The only light on the horizon is that wages in China are rapidly rising so that disparity might not be, in 5 years, the driving force that it is now.


RE: Why do we owe takers?
By Mint on 5/24/2013 7:09:38 AM , Rating: 2
quote:
They don't need any more HDTVs, the house they live in now is fine and maybe even too big as the kids move out. The 4 year old car still runs well and there's no need to buy a new one.
I'm glad you are acknowledging this, unlike most free marketers who think that every extra dollar given to the top quintile helps the economy.
quote:
That this level of spending means less jobs for those who work in factories isn't the fault of the evil savers, but the result of a mature economy where there's more people than are needed to produce it's goods and services.
So how do you want to deal with the implications of this? Let me outline the problem to you with an example.

Lets say we only need 1 worker to provide this mature demand of 3 people (not too far from today's world). Some of the non-workers will be dependents of the workers (lets say 1.7 dependents per worker), so they'll be supported, but not the others. Lets start with 300M people: 100M workers, 170M dependents, 30M moochers.

Now, if we switched to a purely free market with minimal gov't & redistribution, the unsupported starve and either die or become bums. Now there's only 270M people consuming, so the economy only needs 90M workers. 10M people get layed off, and they (along with their 17M dependents) stop consuming. So now we're down to only 253M people consuming, and this vicious cycle repeats until employment shrinks enough that it hurts productivity (that 3:1 figure).

That's what happens in a highly productive, demand limited world without redistribution. The economy shrinks.

Outsourcing to China/India is merely a preview of the incredible advances we're seeing in automation. Both drive down the need of domestic blue collar labor. Addressing outsourcing is a temporary fix (albeit a welcome one).

So what's your solution?


RE: Why do we owe takers?
By Mint on 5/24/2013 7:25:37 AM , Rating: 2
Savers aren't evil, just like soldiers that wind up taking innocent lives aren't evil. Savers have good intentions, but are taking advantage of money that loses value too slowly .

How do I know it's too slow? Well, there are no longer enough ways to build non-depreciating assets faster than the demand for them (hence low interest rates). Building more housing is useless without working people to live in them, mining more metals is useless without stuff to build from them, etc.

So that's another solution: increase inflation to stop the market from hoarding it, i.e. tax wealth instead of income. However, you can't increase inflation without higher spending, whether by the gov't or by consumers.


RE: Why do we owe takers?
By room200 on 5/22/2013 9:57:15 PM , Rating: 2
What does corporate welfare do? Farm subsidies? Oil and Gas subsidies? Are you as angry about THOSE types of welfare? You never post about that.


RE: Why do we owe takers?
By dxf2891 on 5/22/2013 10:54:55 AM , Rating: 2
Does that include the roads around their office buildings, police protection of their property, military protection, clean water and air in those areas, etc. We all want the above, but no one wants to pay for them. We all want great wages and rights in the workplace, but we don't want a union to fight for them. I guess those with the money and power should be able to force their employees to work for .01 and hour or go and work someplace else. Now if only we could begin this process with the CEOs of the world.


RE: Why do we owe takers?
By Dorkyman on 5/22/2013 11:27:15 AM , Rating: 2
Even FDR (no conservative, he) said that unions for government employees was a terrible idea. And he was a HUGE fan of unions in general.

People worked for government for a variety of reasons. Historically, "higher pay than private-sector jobs" wasn't one of them. Job security was usually a big factor.

Your "fat cat" rhetoric is a little tired.


RE: Why do we owe takers?
By room200 on 5/22/2013 10:00:44 PM , Rating: 2
You are such a coward. People like you sit behind a keyboard without an original thought in your head. It was only a few months ago the words "makers" and "takers" started to be used by Faux, and here you are. Furthermore, all of the little code you use is your ploy to continue the idea of the lazy black welfare queen. The southern strategy lost. Romney lost. When will you idiots realize that THAT technique doesn't win arguments OR elections anymore?


Jason's Wet Dream
By mikeyD95125 on 5/21/2013 5:33:51 PM , Rating: 4
Apple, taxes, and partisan politics all in ONE story!?!?

Let it commence!




RE: Jason's Wet Dream
By JasonMick (blog) on 5/21/2013 5:40:26 PM , Rating: 4
quote:
Apple, taxes, and partisan politics all in ONE story!?!?
They say only two things of which we can be certain -- Apple vs. Android and taxes. :)

(P.S. Does anyone else enjoy the new Lumia "flame wars" commercials... I was cracking up when the guys busts open his shirt to show the Apple tattoo then gets whacked from behind.)


RE: Jason's Wet Dream
By retrospooty on 5/21/2013 6:07:58 PM , Rating: 4
LOL... I like the one with the old lady and the guy says "Arent you a little young for an iPhone?". It particularly made me laugh as my mother and grandmother (in her 80's) both have iPhones.


RE: Jason's Wet Dream
By Mint on 5/22/2013 2:04:16 PM , Rating: 2
"Weeeeeeee!" I thought that was a nice touch.


RE: Jason's Wet Dream
By rountad on 5/21/2013 6:51:46 PM , Rating: 2
He gets hit with a chair, wrestling-style!

And did you notice that instead of bride and groom sides, it is Apple and Samsung sides?


crime
By cactusdog on 5/22/2013 11:08:02 AM , Rating: 1
Its so typical how all these conservatives come to the defence of these irresponsible corporations who are ripping off society. Changing the topic to blaming the government(again). US corporations are paying very little tax.

GE (general electric) one of the biggest of them all pay around 1.6% tax. Apple, Google and most US corporations are paying similar amounts, no where near the tax they claim.

In the 1950's ( you know the good old conservative days) corporations used to pay 60% towards government revenue...AND they provided jobs for the masses. Today, corporations contribute 6% to government revenue and all the manufacturing is done off shore, mainly in China. So not only have their wages bill been slashed to next to nothing, they pay no tax too. Then the conservatives tell us its all the government's fault??...and debt is the result of all those liberal food stamps? What a joke. Its the biggest con going around.

Then you have these conservative frauds like Rand Paul and the tea party, pretending to be a libertarian when they are just bought and paid Koch brothers agents spreading disinformation and anti-government rhetoric for the sake of their corporate masters.

Americans are being conned. The US has been running with conservative policy since the 1980's, and even with all these corporate benefits, welfare and deregulation, the country is still going down the drain economically, that lead to a total collapse of the economy in 2008.

This happened in a country with a non-existant welfare system, no universal healthcare and corporations that don't have to pay tax. Meanwhile in other countries like in Europe, with a full welfare system and universal healthcare, debt levels, unemployment etc is in better shape in countries like Germany and france.

Whats the message out of the US?? Screw the masses even more, start taking away their social security, medicare etc etc. What a joke.

The problem is most Americans are ignorant of the rest of the world, and they get drip fed this right-wing propaganda that makes them think they have the best system in the world. Well you don't. No country on earth wants to emulate the US health system. No country on earth wants to emulate the US political system of the "corporate states of America" Where the corporations buy the politicians and the people come last.

As an example Americans are brainwashed to think private health is "freedom", even though millions cant afford it, and even if you can afford it, you could go broke if you get a terminal illness like cancer.
I live in a country with a universal healthcare system and a private healthcare system, working side by side. People have a choice which one they want to use. That's true freedom to me.

I support capitalism, but the US gives capitalism a bad name. Apple are sitting on BILLIONS of dollars they don't know what to do with but the conservatives think they need more help and breaks.Everyone has a responsibility and everyone needs rules. I hope the people wake up to the conservative lies and propaganda before its too late.




RE: crime
By BRB29 on 5/22/2013 11:28:24 AM , Rating: 2
I think the irony here is that the politicians were paid off to make all these laws and loopholes. Now it created so many problems and they blamed the same people that paid them. So who is to blame? It's easy to point your finger at a scapegoat but the reality is everyone is to blame.


RE: crime
By Dorkyman on 5/22/2013 11:36:44 AM , Rating: 2
I think what we have here is a "parallel-universe" thing going on. So many errors in fact and logic in one statement. I appreciate the earnestness of your point of view, but strongly suggest a broadened reading list.


RE: crime
By PontiusP on 5/22/2013 12:49:12 PM , Rating: 2
Europe is imploding on itself financially, so they are not a model to follow.

Before 2010, you couldn't get 5 minutes into a conversation with a smug progressive without hearing the words "But Europe does [insert welfare program here]".

After the true cost of their cradle to grave welfare state was laid bare for all to see, such comments became more and more scarce. Too funny.

Having to pay for free stuff for moochers isn't freedom, rather, it's slavery.


RE: crime
By half_duplex on 5/23/2013 10:34:01 AM , Rating: 2
Your nonsense doesn't even warrant a response, but I'll humor you.

How much in taxes do the millions of high paying jobs that these corporations create contribute to the US? If not for them, who would be paying for all the duck penis research?


Idiot
By DT_Reader on 5/23/2013 1:51:26 PM , Rating: 3
Rand Paul ought to apologize to the American people for wasting our tax dollars on his Tea Bagger anti-everything crusades. Pass a Jobs Bill, you slacker!




RE: Idiot
By Skywalker123 on 5/23/2013 4:18:37 PM , Rating: 2
you should apologize to the american people for wasting bandwidth with your idiotic post. Obama has been in office for 5 years, where is his "Jobs Bill"?


Refreshing
By StanO360 on 5/21/2013 6:29:09 PM , Rating: 2
I'm tired of the Administration and its stenographers in the press for vilifying success. People don't realize it, but our corporate tax rates are driving jobs out of the US in the tens of thousands.

Why would we tax foreign profits in the first place! They're bringing cash in to the US to spend, invest, save(=invest), use for research etc. That leads to prosperity, which leads to jobs, which leads to more revenue for the government (which already has burgeoning coffers).




RE: Refreshing
By Reclaimer77 on 5/21/13, Rating: -1
RE: Refreshing
By DukeN on 5/22/2013 10:14:48 AM , Rating: 2
LOL corporate tax rates are driving jobs out of the US?

Maybe, just maybe there's a 1% chance some of these jobs are leaving the US as you can hire workers in the third world for $1-$2 a day?


RE: Refreshing
By BRB29 on 5/22/2013 10:55:04 AM , Rating: 1
I'm pretty sure our tax system drove away many businesses. I'm also sure that more businesses are driven away by the high cost of labor, property, other expenses.

Let's be real. Our tax system is bad and it does not work well with the global market. It's a hot mess right now and trying to fix itself by making it more of a mess.

On the other hand, businesses have been dodging taxes forever. They are there to make profits. Even if it was lowered to 15% then there are still businesses that will dodge it. Why? because there are countries like the Phillipines who charge a flat rate of 8%. Businesses will do whatever it takes to make more money, that is why they exist.


What a disgrace
By Beenthere on 5/22/2013 3:09:50 PM , Rating: 2
IMO Tim Cook should be hung by his thumbs for a few months, then his $700 million annual salary can be distributed fairly to the 1 million slaves working at Foxconn who produce Apple Crap under torturous conditions. Apple's unscrupulous business practices would be considered criminal acts anywhere else in the world except China.




RE: What a disgrace
By vision33r on 5/22/2013 9:28:13 PM , Rating: 2
What about all those factories that produce Android phones? I think you forget that Android is 75% of world's smartphones. Apple is less than 25%


Editorial Mistake
By ebakke on 5/21/2013 5:56:29 PM , Rating: 2
quote:
Some conservatives joined in the fray. Sen. John McCain (R-Ariz.), a former Republican presidential nominee, remarked that, "Apple has violated the spirit of the law if not the letter of the law."
Sen John McCain's no conservative. He's a member of the GOP, but he's about as conservative as I am progressive.




China name plate co. ltd.
By cindywu on 5/22/2013 8:44:18 AM , Rating: 2
MILLIONS of shareholders worldwide!

I wouldn't be surprised to see YOU are one of the owners. Go check where your IRA is invested. You'd be amazed. Probably Sands hotel; some for-profit skoolz, CHINESE banks, OIL co's (like Halliburton), Wal*Mart AND McDonald's. BIG money-makers!

Dontcha just looooooove numbers? They're our friends!
http://goo.gl/OItwV




!!!!
By MariaStepp28 on 5/23/2013 9:55:13 PM , Rating: 2
just before I saw the receipt for $7616, I have faith that my friends brother woz like they say actually erning money in their spare time at their computer.. there friend brother has done this for under seven months and at present repaid the mortgage on their apartment and bought BMW. I went here, Bow6.comTAKE A LOOK




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