Ireland May End Apple Tax Residency Loophole

[TPadden]

Apple is the single largest tax payer in the US.

Nope, only third behind Exxon/ Mobile and Chevron (with an effective tax rate that is also waaay behind the oil giants):

1. ExxonMobil
Income tax expense: $31 billion
Net income: $45 billion
Effective tax rate: 39%

2. Chevron
Income tax expense: $20 billion
Net income: $26 billion
Effective tax rate: 43%

3. Apple
Income tax expense: $14.2 billion
Net income: $41.7 billion
Effective tax rate: 25%

In fact the oil companies seem to pay more than they are ever given credit for:

7. ConocoPhillips
Conoco paid the highest effective tax rate of any company on the list.
Income tax expense: $7.9 billion
Net income: $8.4 billion
Effective tax rate: 51.5%





http://www.forbes.com/pictures/mef45kghl/which-corporations-pay-the-highest-taxes/

 

[thekev]

I'd be fine with a consumption or flat tax. Bring it on. Get rid of the IRS and complicated tax laws. It seems most people like the idea. Except for, rich guys and companies that is. The nice thing about a consumption tax is that you get everyone since it's collected when they spend it. That means even drug dealers, shady businessmen, and whomever else has hidden income still has to pay. There'd be issues for sure but it could work.

That's not true at all. The idea of a consumption tax would probably not be applied to purchases of securities or intangible items. Your general living expenses as a percentage of income are likely to be lower if your income is multiplied by 10. They will go up. You buy better food. You buy whatever clothing or vehicle you want to use. It doesn't keep pace, but I don't care about that. What I would like to know is why would rich guys be against that? It's likely that it would work more in their favor.

 

[Belmont31R]

Nope, only third behind Exxon/ Mobile and Chevron (with an effective tax rate that is also waaay behind the oil giants):

1. ExxonMobil
Income tax expense: $31 billion
Net income: $45 billion
Effective tax rate: 39%

2. Chevron
Income tax expense: $20 billion
Net income: $26 billion
Effective tax rate: 43%

3. Apple
Income tax expense: $14.2 billion
Net income: $41.7 billion
Effective tax rate: 25%

In fact the oil companies seem to pay more than they are ever given credit for:

7. ConocoPhillips
Conoco paid the highest effective tax rate of any company on the list.
Income tax expense: $7.9 billion
Net income: $8.4 billion
Effective tax rate: 51.5%





http://www.forbes.com/pictures/mef45kghl/which-corporations-pay-the-highest-taxes/

Those numbers are world wide taxes paid not for just US taxes.

----------

That's not true at all. The idea of a consumption tax would probably not be applied to purchases of securities or intangible items. Your general living expenses as a percentage of income are likely to be lower if your income is multiplied by 10. They will go up. You buy better food. You buy whatever clothing or vehicle you want to use. It doesn't keep pace, but I don't care about that. What I would like to know is why would rich guys be against that? It's likely that it would work more in their favor.

Businesses take advantage of grants and subsidies just like everyone else. For instance, the Chevy Volt got a huge amount of breaks and grants to build. Tesla also got loans. A company like GM pays no taxes because of the same.

 

[lifeinhd]

Although people's wages don't necessarily go up to match anymore which is what causes a lot of people to be living in poverty.

I am not in poverty but personally have seen the effects of recession as went from getting good pay rises of 6-8% every year to our company having a blanket 1.5% no matter how hard you work or how good you are at your job.

Economic growth is slow right now. The increase in rGDP over last year is less than a percent, and inflation is even lower. A 1.5% raise still puts you ahead of the game.

 

[hexhibit]

It's easier to compete on tax rates when costs are lower. For example, each year:

• Ireland spends about $700 per citizen on defense and foreign aid
• The US spends about $2500 per citizen on defense and foreign aid.

I'm sure there are other countries that spend even less than Ireland, which have even lower corporate taxes.

I'm not saying such expenditures are good or bad. But they have to be paid for. It's not just a matter of making up a lower tax rate "to compete".

Ireland is currently under-taxed - part of the reason it's gone through an economic downturn - it put too many eggs in the one taxation basket (a construction/property boom).

However, Ireland spends more on foreign aid per citizen, than the US does (even allowing for the overhead of propping up military expenditure on Israel and Egypt annually). Ireland spent €623 million ($853 million) on direct foreign aid last year. Ireland actually contributes more than twice the Official Development Assistance that the USA does by GNI (0.48% vs 0.19%).

http://www.foreignpolicy.com/articles/2005/02/28/think_again_us_foreign_aid
http://www.oecd.org/dac/stats/oda2012-interactive.htm

Admittedly we commit comparatively little to military spending - having a small defence force, and limited alignment in military affairs we spend 0.6% of GNP on defence, as opposed to 4.4% in the US.

But the real issue here is not Ireland's corporate tax rate - which is low, but not madly different from the actual rate available in some other European states (France say - who hide very appealing low rates under convoluted exceptions, or the City of London, which employs it's own tax shelter mechanisms) - but the strategic avoidance mechanism that multinationals can incorporate Irish tax laws into. Ireland doesn't really benefit from Apple's Irish/Dutch avoidance mechanisms. Apple might well up and leave Ireland if they can't factor it into a revised tax avoidance strategy, but the loss would be 4,000 factory jobs, not a cash cow of tax income.

As to the whole tax = theft thing elsewhere in the thread. That Ayn Rand and her anti-social economic voodoo have some explaining to do.

 

[s2mikey]

That's not true at all. The idea of a consumption tax would probably not be applied to purchases of securities or intangible items. Your general living expenses as a percentage of income are likely to be lower if your income is multiplied by 10. They will go up. You buy better food. You buy whatever clothing or vehicle you want to use. It doesn't keep pace, but I don't care about that. What I would like to know is why would rich guys be against that? It's likely that it would work more in their favor.

It would have to be applied to everything though. Thats probably the only way it works. Thats what most of the problem is now - deductions, hiding stuff, avoiding stuff, etc. It needs to be a simple consumption tax as in you buy it, you pay the set % tax on it. From a pencil to a new Lamborghini Aventador and everything in between. Perhaps slightly higher or lower brackets could be created for items deemed more a neccessity like a primary residence, two cars per household, medicines, some food items or whatever. Then, things like mansions, boats, toys, fancy jewelry, luxury items could be a higher %. Thats where the rich guys get angry..they go buy their 9th helicopter or 4th mansion...PAY up, bro!

I still think though that you have to get ALL of it.

It also encourages some savings which would be nice

 

[thekev]

Businesses take advantage of grants and subsidies just like everyone else. For instance, the Chevy Volt got a huge amount of breaks and grants to build. Tesla also got loans. A company like GM pays no taxes because of the same.

That's very true. I don't think my own statement contradicted any of that.

It would have to be applied to everything though. Thats probably the only way it works.

That was kind of my point. It's unlikely that it would work if not applied to everything, yet if applied to everything it hits the lowest income earners the hardest. High interest rates also encourage saving rather than spending, as loans become much more expensive. It's not something you can summarize or analyze in a few sentences.

Keep in mind you also have somewhat of a consumption tax right now. Most states have some form of sales tax, os the current system uses a variety of mechanics with some exclusions. As an example, food is not subject to sales tax in California, unless it's prepared. There is an exception there for baked goods to allow the exemption to extend to bread.

 

[s2mikey]

That's very true. I don't think my own statement contradicted any of that.


That was kind of my point. It's unlikely that it would work if not applied to everything, yet if applied to everything it hits the lowest income earners the hardest. High interest rates also encourage saving rather than spending, as loans become much more expensive. It's not something you can summarize or analyze in a few sentences.

Keep in mind you also have somewhat of a consumption tax right now. Most states have some form of sales tax, os the current system uses a variety of mechanics with some exclusions. As an example, food is not subject to sales tax in California, unless it's prepared. There is an exception there for baked goods to allow the exemption to extend to bread.

Yeah - I see what you are saying. And, yes, sales taxes are sort of a consumption tax. The difference with a consumption tax system is that ALL income taxes are removed and you get your entire paycheck or net business earnings to do as you see fit. Imagine how easy accounting & payroll becomes for a business too?

Well, low income earners would usually qualify for the lowest rates since they'd be spending mostly on neccessities. They'd pay something but it'd likely be less than the income, federal, and sales taxes that they pay now which are burdensome for everyone.

The biggest consumption taxes would certainly hit those that spent the most which is the point. That means its a progressive tax which is what many people clamor for. The guy that buys a milin dollar house and has a 7-car stable is going to pay WAY more than the guy with an $80K starter home and a couple older cars.

I still like the idea that you get everyone with this type of system. No hiding, strange accounting, deducting, etc, etc. That stuff gets MILKED so badly right now its not even funny. Business owners writing off their entire house because one room gets used for some spreadsheet processing twice a week. Really.... cmon!

 

[thekev]

Yeah - I see what you are saying. And, yes, sales taxes are sort of a consumption tax. The difference with a consumption tax system is that ALL income taxes are removed and you get your entire paycheck or net business earnings to do as you see fit. Imagine how easy accounting & payroll becomes for a business too?

Bleh that is always annoying, and do keep in mind that these things are often tiered. You might still have to deal with state and local. Consider in the situation of a small business you typically have to be deal with local taxes, sales tax with whatever state agency, and federal. It's quite annoying.

Well, low income earners would usually qualify for the lowest rates since they'd be spending mostly on neccessities. They'd pay something but it'd likely be less than the income, federal, and sales taxes that they pay now which are burdensome for everyone.

I don't know that anyone has modeled this out with reasonable data.

The biggest consumption taxes would certainly hit those that spent the most which is the point. That means its a progressive tax which is what many people clamor for. The guy that buys a milin dollar house and has a 7-car stable is going to pay WAY more than the guy with an $80K starter home and a couple older cars.

That was something I glossed over before. If you make more, you spend more. You actually spend a lower percentage of income though. It is more likely to be a tax cut for the guys who don't really need it, although I'm not sure how it would work out at the extreme levels. There are other factors such as whether it would apply to commercial real estate. Consumption taxes are typically not modeled against investments of any kind. They are modeled against purchases by end users. It has to be that way because you would otherwise kill businesses that rely on slim margins (wholesalers come to mind) and introduce weird accounting into certain types of accrual.

You clearly don't live in California, given your theoretical housing prices.

I still like the idea that you get everyone with this type of system. No hiding, strange accounting, deducting, etc, etc. That stuff gets MILKED so badly right now its not even funny. Business owners writing off their entire house because one room gets used for some spreadsheet processing twice a week. Really.... cmon!

That is an important point. Many things sound good when they are unexamined. As for writing off their entire house, I would have to see actual paperwork. I can link you to the IRS pages on business use of your home if you like. It goes by square footage of the area used if and only if it is used solely for business. They can also disallow this if for a variety of weird reasons. I don't know where you got this idea, but it's unlikely that the person who claimed that would hold up under audit.

 

[s2mikey]

Bleh that is always annoying, and do keep in mind that these things are often tiered. You might still have to deal with state and local. Consider in the situation of a small business you typically have to be deal with local taxes, sales tax with whatever state agency, and federal. It's quite annoying.

I don't know that anyone has modeled this out with reasonable data.

That was something I glossed over before. If you make more, you spend more. You actually spend a lower percentage of income though. It is more likely to be a tax cut for the guys who don't really need it, although I'm not sure how it would work out at the extreme levels. There are other factors such as whether it would apply to commercial real estate. Consumption taxes are typically not modeled against investments of any kind. They are modeled against purchases by end users. It has to be that way because you would otherwise kill businesses that rely on slim margins (wholesalers come to mind) and introduce weird accounting into certain types of accrual.

You clearly don't live in California, given your theoretical housing prices.

That is an important point. Many things sound good when they are unexamined. As for writing off their entire house, I would have to see actual paperwork. I can link you to the IRS pages on business use of your home if you like. It goes by square footage of the area used if and only if it is used solely for business. They can also disallow this if for a variety of weird reasons. I don't know where you got this idea, but it's unlikely that the person who claimed that would hold up under audit.

Im in Upstate, NY - where you actually CAN buy a small starter home in certain areas for under $100K. I know in California $80K gets you a mailbox and thats about it

I was exagerrating about the house write-off but I know business owners and they self-admittedly "gloss things over" and "shmutz" it where they can. Anyone would - it is what it is. The point is that there really is a lot of "cheesey" maneuvers that occur with taxation that not all of us have the capability to use.

As for modeling out the costs for low-income people and consumption taxes? I have no such data. But, like i said, the bracketts for what they'd buy would be lower than the excessive items the wealthy would buy. Maybe it would be less of a percentage of overall income but its still more dollars. Way more, Id think.

 

[AidenShaw]

.... As an example, food is not subject to sales tax in California, unless it's prepared. There is an exception there for baked goods to allow the exemption to extend to bread.

Actually, the CA exemption is for food that is not eaten at the place of sale.

If you buy a sandwich or something from the deli to take home, no tax. If you buy it to eat at the small seating area in the store, it is taxed.

 

[Technarchy]

Are you for real? We have the lowest corporation tax rate in Europe. Don't add to a discussion when you don't know anything about it.

And what happens when firms start relocating?

Globalism and mobility are a great thing when governments start acting stupid.