Here’s an interesting story. Apple is getting bipartisan heat because it has been exploiting tax loopholes to avoid paying taxes on the majority of its income. It seems that most of Apple’s money is being held by an Irish subsidiary that appears to be little more than a shell company. This money isn’t being taxed by the US, Ireland, or anyone else.
Color me unsurprised. The same Congresspeople refuse to close up any tax loopholes. I don’t disagree that Apple is a wretched company for avoiding all those taxes, but if they’ve done it legally, Congress has no one to blame but themselves.
They’ve followed the tax code, to the letter. If Congress doesn’t want those tax rules to be there, then they need to change them. Apple followed the rules.
That.
There’s one organization that’s responsible for writing the tax code, and Apple isn’t it. Taking advantage of poor rules to gain an advantage isn’t cheating. Though it may sometimes be unsportsmanlike.
I seem to recall a certain presidential candidate stating that it wouldn’t be very smart of him to pay more taxes than he has to.
I also think it very possible that Apple could have bent the rules to their favor a bit too much and crossed a line. I read something that some Apple assets aren’t merely “offshore” but essentially “no shore.” We shall see.
Why “wretched”? What’s their actual reward for paying those taxes? They’re doing what every single company tries to do, which is maximize their net profit which includes reducing the taxes they pay. If the tax code forces them (or allows them) to do non-intuitive things, then the tax code should probably be revised.
Was this the same one who did pay more taxes than he had to?
It was indeed.
It was stated more succinctly than I, although it applies to more than just taxes: “Don’t hate the player, hate the game”.
I think we can all agree that any such “oversights” have since been corrected.
The profits in question are those earned by sales abroad.
The United States stands alone in the industrialized world in attempting to tax the worldwide income of its citizens and corporations. So long as the United States continues to try to exert extra-territorial power to tax those who are taxed will organize their financial affairs to minimize taxes.
The net result is profits from overseas sales are not repatriated by many US corporations. That limits company growth within the US and encourages offshoring.
Hate the game. Not the player.
Not just earned, but usually taxed abroad. People keep talking about Apple not paying taxes on that money, but in most cases, they already have – just not to the US.
There’s some noise this morning about some Irish subsidiary that has no employees at all, but “earned money.” That may turn out to be something of legal substance, but the general outcry isn’t. And frankly, given the media’s reporting on this so far, I’ll wait to see if it turns out to be real or just something made up.
It’s also the usual: take something that all companies do: have maps with errors, not pay extra taxes, reduce the connection strength if you covert the antennas, get glare in photos if you shoot them into the sun, play music loudly, prohibit certain products from your stores, etc. – and make it sound like it’s the end of the world because it’s Apple doing it. The articles about how all these things turned out to be tempests in a teapot are never on the front page. I fully expect articles about how iPhones can be put in a bag and used as blunt weapons, and why hasn’t Apple done anything about it! (There actually HAVE been articles about how iPhones are getting stolen and it’s somehow Apple’s problem.)
An article I read on MacRumors stated that the IRS essentially said that everything Apple has been doing seems to be legal. Some Congresscritter was waving the “spirit of the law” stick.
So far it seems that Apple is Tax Savvy, not a cheat.
Plenty of big US companies take advantage of the Double Irish. Not sure how much longer it’s going to be tenable having such arrangements while the Irish people are crushed under austerity. The government tells us if we try to increase taxes the multinationals will leave taking the wee crumbs we get off the table with them.
The matter might be taken out of your hands. According to the article I linked to, both the Republicans and Obama agree that Apple shouldn’t be allowed to do this. If that’s true, then I expect that the loophole will probably get closed soon.
The U.S. does indeed have one of the mos onerous tax systems in the world. Because of the globalization of trade more and more companies are doing relatively more of their business outside of the U.S. Therefore, it makes sense for them to incorporate in a tax shelter in the first instance. If I were opening a company today I would probably register it in the BVI or Cayman Islands - not Delaware. Indeed, many American companies have already reincorporated in tax havens and others are strongly considering it (although there are significant legal hurdles to doing this).
Like it or not, increased globalization means that we need to have a competitive corporate tax rate or companies along with their jobs and innovation will go elsewhere.