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Apple CEO Tim Cook and CFO Peter Oppenheimer Testify In Front of Senate Committee on Tax Strategies [Hearing Over]
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The shareholders own the company. They are not running the company, the CEO does that, controlled by the board of directors. The company should do what is in the best interest of the shareholders, and it is usually correct to assume that shareholders want to maximise profit.
However, if you compare how companies have developed in the last ten years, short term profit maximisation isn't good for shareholders in the long term. That said, you can sue the company for anything you like, but they can obviously argue that avoiding taxes might have negative side effects. There are situations where avoiding taxes is just common sense, and others where I would judge it as dishonest, and most companies would say that doing things that are dishonest even though legal is not good for business.
Yep, John McCain - the dirty liberal. And how do YOU know what the founding fathers 'wanted'. There is nothing in the Constitution or Declaration or Articles that define anything that has to do with this.
What a shame...
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Oh the inherent misconceptions of those who would make such statements. I love it - further proof that they create the other side just to tear 'em down. What a complete waste of time...
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And we were effectively a feudal society. With the high progressive taxes, and a tax code that gave equally high tax breaks for reinvestment, the country prospered. Greater than at any other time in our history. Once we made the shift to pull dollars out of any incentive to reinvest, during the early 80s, we lost it and have been gliding downhill ever since. And now it's all this.
Amazing that people are making assumptions that it's liberals who called for this hearing. Look it up people: it was a BIPARTISAN Senate hearing which is why both Levin (D) AND McCain (D) were grilling Tim Cook.
And if you want to hold liberals responsible for the hearing fine. You should be thanking the liberals for shining a spotlight on this problem and bringing it to the front for discussion. Tim Cook came out looking brilliant and makes a convincing argument for lowering the corporate tax rate.
I'm a liberal and I agree that corporate taxes should be lowered (*shock*), though not 0%. It brings the money back into the country where it can be used to stimulate our own economy, hire more employees in the US, and if it's low enough, allows the US companies to remain competitive with foreign corporations like Samsung. Plus, if more of the money is utilized in the US, more taxes can be collected on it when it becomes income for other people (no, that's NOT double taxation). The question is, how low should it be?
South Korea has a corporate tax rate of 24.2%. Samsung pays an effective 14% tax rate. Apple also pays an effective 14% tax rate but only because they have the near 0% Ireland tax loophole.
Here's a list of worldwide corporate tax rates. Note that the OECD average (which I think we should emulate) is 25.2%. In addition to lowering it, loopholes should be closed.
And if you want to hold liberals responsible for the hearing fine. You should be thanking the liberals for shining a spotlight on this problem and bringing it to the front for discussion. Tim Cook came out looking brilliant and makes a convincing argument for lowering the corporate tax rate.
I'm a liberal and I agree that corporate taxes should be lowered (*shock*), though not 0%. It brings the money back into the country where it can be used to stimulate our own economy, hire more employees in the US, and if it's low enough, allows the US companies to remain competitive with foreign corporations like Samsung. Plus, if more of the money is utilized in the US, more taxes can be collected on it when it becomes income for other people (no, that's NOT double taxation). The question is, how low should it be?
South Korea has a corporate tax rate of 24.2%. Samsung pays an effective 14% tax rate. Apple also pays an effective 14% tax rate but only because they have the near 0% Ireland tax loophole.
Here's a list of worldwide corporate tax rates. Note that the OECD average (which I think we should emulate) is 25.2%. In addition to lowering it, loopholes should be closed.
No one likes paying taxes and taking legal steps to reduce taxes is perfectly accepted. However, there are a number of Large American companies operating in Europe, Starbucks, Google, Apple, Amazon to name a few who it will eventually be proven are breaking the law.
There are already a number of whistle blowers coming forward and this is going to get very nasty. I am talking here about European taxes as opposed to American taxes.
Apple has paid just .2 percent tax in one country and another of those mentioned above paid just 2 million taxes on Billions of dollars income. Starbucks who has been operating in England for some 15 years claim to have never made a profit.
The ***** has finally hit the Fan and expect to hear a lot more about this.
Ireland is at the centre of the storm in almost every case.
There are already a number of whistle blowers coming forward and this is going to get very nasty. I am talking here about European taxes as opposed to American taxes.
Apple has paid just .2 percent tax in one country and another of those mentioned above paid just 2 million taxes on Billions of dollars income. Starbucks who has been operating in England for some 15 years claim to have never made a profit.
The ***** has finally hit the Fan and expect to hear a lot more about this.
Ireland is at the centre of the storm in almost every case.
The money Apple holds in Ireland is post-tax income. They have already paid taxes on that income in the country that it was earned in.
The only thing that was discussed that Ireland is doing for Apple is allowing them to pool all their post-tax dollars in one place without paying a significant amount of additional tax to move the money there.
I have no doubt that there is something more sinister going on than "oh, they're just holding money there." If the Starbucks example is correct, does anyone really believe that they operated in England for 15 years and made no profit? Come on, no one would seriously believe that.
While some of their maneuvers might be "legal", I am of full belief that companies of this size do quite a bit of creative accounting to hide numbers and shift stuff around to avoid taxes. And I also have no doubt that they do plenty of illegal stuff, they've just got really smart people hiding it.
But you have no evidence to back this feeling.
As pointed out earlier, the dispute with Starbucks in the UK was about the amount of expenses they claimed in the UK in order to make it appear like they have made no money in the UK. Nobody has claimed that Apple is doing anything like that.
Sure, but that's based on your own cynicism and not any actual facts.
They also owe US taxes on profits made overseas. The US gives credit for taxes paid overseas, however, the law requires them to pay taxes. However, there is a stupid rule that allows US corporations to avoid paying taxes when the profits are made, but only requires payment upon repatriation to the US. Other countries tax the income when it is made. We should as well.
I'm pretty sure I made it clear that it was my opinion. I don't trust big corporations to be clean at all. If you do, that's your prerogative, probably also based on nothing more than your opinion. Because I'm pretty sure you don't have all the facts pointing to a clean operation. And you can say "innocent until proven guilty" all you want...that's for court, not for opinion.
I also wasn't saying that Apple was using that exact Starbucks trick, but that Starbucks is an example of the kinds of things that happen up there in the stratosphere, and yet again, why I don't trust big corporations. If you think Starbucks is the only one doing it, you're naive.
By the way...half of the crap about Obama's history are based on nothing more than feeling. No facts. I guess it goes both ways.
Yep. I was just making it clear that your opinion was based on cynicism and not fact.
Luckily, I never claimed they were innocent. Nor did I state an opinion about the cleanliness of their operation.
I get it. If somebody is doing it, that means Apple is doing it. Sparkling logic.
I agree completely. Not sure what you are implying here.
Of course! If it were fact, it wouldn't be opinion...
I get it. If somebody is doing it, that means Apple is doing it. Sparkling logic.
My logic simply concludes that more than likely, Apple isn't as straight-laced as they are preaching that they are. I don't believe any big corporation is. And judging by the amount of "their duty is to avoid taxes" comments within these threads, it seems a pretty popular opinion, whether you agree with it or not.
Am I saying that Apple IS being seedy? No. Do I THINK Apple is being seedy? Yes. My opinion, nothing more.
Nothing against you. Just pointing out that many things, including some that involve big investigations and news time, are based solely on someone's opinion without a shred of real evidence.
Of course! If it were fact, it wouldn't be opinion...
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I think the point being made is that your "opinion" is based on nothing. It's like saying "I believe that France is not in Europe. Just my opinion"
What are you basing your opinion on? Any evidence whatsoever that there is something sinister going on?
Actually, it's more like saying "I think Fox News tells the truth always" without looking more into the actual situations happening.
I'm basing it on companies like GE who somehow manipulate things to where they are making billions, yet paying nothing or getting credits. I'm basing it on first-hand accounts of business owners I have talked to who say that they make sure that their businesses "lose money" so that they don't have to pay taxes. One even bragged about how he pays himself through a loan from his company so that he doesn't actually have income and doesn't have to pay income taxes. Obviously, I have no idea how this actually works. I'm basing it on the very fact that tax havens exist, and the many people who support hiding money in them.
It's not based on heavy research and documented evidence, no. But, it's not a totally baseless opinion. But it's just as valid of an opinion as "They are straight on the up-and-up and are doing everything to the letter of the law."
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Minimizing your tax liability, as long as you do it through legal means, is not illegal. Never has been never will be. You do it too.
Apple is clearly not losing money, so your friend's situation doesn't apply. Nor are they not reporting income. Apple is making $1B a week almost. Profit.
They are doing everything to the letter of the law. Neither Apple, nor Google, or GM or any other company is being accused of tax evasion because they're not evading their taxes.
re: going down the tubes
BaldiMac: Absolutely true. This is actually a really important fact that's not getting that much discussion so far. Before we get all worked up if a company should be paying additional taxes, we should probably make a decision whether or not such tax collection is an overall "help" or a "hurt" to our economy!
The first basic thing I think people need to remember is that companies (like Apple) sell a product or a service (or both) which people VOLUNTEER to buy. If the service or product is too expensive, people say "Sorry, not worth it to me!" and they quit paying for it. The company either comes up with a better strategy or pricing, or they suffer and eventually go under.
The more tax you demand a business pays back to the government, the more it eats into the profits. Pretty much no company on earth is going to say, "Oh... our cost of doing business went up due to the taxes, so we'll just have to earn less or lose money in all those cases where we used to break even or turn very small profits." No! They raise prices and/or cut wages to compensate.
Put those two facts together, and you're essentially driving Apple to find ways to make their products cheaper or driving them to raise prices further, to cover the extra taxes paid out. Either way, a lot of people lose out. Now, let's be honest here. We're NOT really going to see Apple get taxed so high it drives them out of business. But it could easily drive them to outsource some of those more expensive American-based call center jobs answering their toll-free number .... or to find more sneaky ways to squeeze extra money from customers. (You know, like selling dongles for $30 each for all sorts of connections you want to make to one of their notebooks?)
Basically, if higher taxes collected doesn't result in real, improvements to the lifestyles of everyone affected, it isn't beneficial. I, for one, don't think the money they'd collect from Apple would ever get used by govt. for anything that would, say, help a person more than the hurt of losing a job doing phone support for them?
BaldiMac: Absolutely true. This is actually a really important fact that's not getting that much discussion so far. Before we get all worked up if a company should be paying additional taxes, we should probably make a decision whether or not such tax collection is an overall "help" or a "hurt" to our economy!
The first basic thing I think people need to remember is that companies (like Apple) sell a product or a service (or both) which people VOLUNTEER to buy. If the service or product is too expensive, people say "Sorry, not worth it to me!" and they quit paying for it. The company either comes up with a better strategy or pricing, or they suffer and eventually go under.
The more tax you demand a business pays back to the government, the more it eats into the profits. Pretty much no company on earth is going to say, "Oh... our cost of doing business went up due to the taxes, so we'll just have to earn less or lose money in all those cases where we used to break even or turn very small profits." No! They raise prices and/or cut wages to compensate.
Put those two facts together, and you're essentially driving Apple to find ways to make their products cheaper or driving them to raise prices further, to cover the extra taxes paid out. Either way, a lot of people lose out. Now, let's be honest here. We're NOT really going to see Apple get taxed so high it drives them out of business. But it could easily drive them to outsource some of those more expensive American-based call center jobs answering their toll-free number .... or to find more sneaky ways to squeeze extra money from customers. (You know, like selling dongles for $30 each for all sorts of connections you want to make to one of their notebooks?)
Basically, if higher taxes collected doesn't result in real, improvements to the lifestyles of everyone affected, it isn't beneficial. I, for one, don't think the money they'd collect from Apple would ever get used by govt. for anything that would, say, help a person more than the hurt of losing a job doing phone support for them?
I'd also add that the US economy isn't "going down the tubes" because companies aren't paying enough taxes.
Never said that minimizing your tax liability is illegal. But I have a very different view of those who figure out sneaky ways to claim stuff so that while technically legal, is kind of bunk. For instance, I have friends who work as movie crew...like the guys who pull power cable to lights. They write off every DVD they purchase as "research". Please. They aren't researching anything. It's entertainment. Possibly legal, but sneaky and underhanded.
Not a friend. Not at all. And that person doesn't actually lose money, he just uses numbers games to make it so on paper. This is by his own admission.
And I know the word "profit" is supposed to make me drop to my knees and raise my arms in celebration and reverence. Yawn.
I'm sure plenty of people said that about Bernie Madolf as well. Unless you actually are one of their tax accountants, this is pure speculation (just as is my opinion). And sorry, but I don't count using loopholes as "letter of the law". Do you think they aren't using any loopholes or any creative accounting at all?
I'd also add that the US economy isn't "going down the tubes" because companies aren't paying enough taxes.
I'd suggest that it's partly that, and partly that wages are too low nowadays and the average citizen can't spend to stimulate anything, and is also off the hook for income taxes...a double whammy.
The answer isn't just "guvment meddlin'"
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If it's just an ethical dilemma to you, then sure you're entitled to your opinion. From a legal stand point they're perfectly on the up and up.
Apple doesn't use the numbers game to make it look like they're losing money, either. So your example is still irrelevant.
Not at all. I said that to prove the point that apple is not "hiding" money. Everyone knows what they make.
It doesn't matter what people thought madoff was doing, he was clearly not following the law.
Employing creative accounting? Of course they are. And it's legal. Again, this seems to be an ethical issue for you and as such you are entitled to your opinion. Legally, apple (and Google) are following the letter of the law.
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That was kind of my point. He started his company in 1960. Concerns about his operation started arising in 1999. But it wasn't until 2008 that everything finally came crashing down after years of investigation. And I'm sure in 2003 there were people saying, "This is a witch hunt! He follows the letter of the law!"
I'm not accusing Apple or any of several other companies outright of anything (just saying I've got a feeling there is more than meets the eye), but how do you know that they are following the letter of the law? Just because they haven't been prosecuted? I think I also said that I didn't consider using loopholes as "the letter of the law". Legal? Yes. "Letter of the law"? No.
Of course! If it were fact, it wouldn't be opinion...
I think you missed the words "based on". An opinion not based on fact or reason is called a prejudice.
I see a big difference between that and "I also have no doubt that they do plenty of illegal stuff."
Only if you think the legal avoidance of taxes is dirty. I certainly claim as many deductions and credits as I can.
Yes. "I also have no doubt that they do plenty of illegal stuff"
Yep. I'm not sure why you think that's a good excuse.
Yep. I consider them anathema to a healthy public discourse.
It isn't only APPLE doing this. This happens with any major/large corporation, and all these tax stipulations do is keep pushing Economic strength away from North America. Reduce the repatriate tax, close the loop holes and get that money back in North America, and reinvest it.
If your going to lose 35% of your wealth because you want to move your money, would that seem logical to you. I would be willing to bet that just about every large corp shifts wealth out of the US because of this high tax rate, but to try and force any company to repatriate it's cash stash is insane. Then again with the dropping Euro they might have lost about 20% before repatriation.
If your going to lose 35% of your wealth because you want to move your money, would that seem logical to you. I would be willing to bet that just about every large corp shifts wealth out of the US because of this high tax rate, but to try and force any company to repatriate it's cash stash is insane. Then again with the dropping Euro they might have lost about 20% before repatriation.
No fanboy here, but one thing I would say is, it isn't the poor and needy that get thrown under the bus. It's the average Joe, who is busting his ass to make a freaking living. In Canada the ones on social services have it better then some people who are working at minimum wage or just above. And I know it can be the same in some states. I'm lucky I have been able to hold onto a decent job my entire adult life, but at the same time I pay more in taxes then some make. How is that even fair, I work harder to pay more tax. So where is the incentive to keep thriving for advancement. The whole system is *********, a flat TAX would be a better solution.
re: creative accounting
Just to address the creative accounting thing a minute?
I ran my own small business for years, doing on-site computer service and consulting work. A couple of my friends had similar businesses, and I worked for 2 others who did them before I started up my own.
The guys who start these businesses and brag about how much it saves them in taxes are very likely not explaining the whole thing. Yes, especially in the first few years of operation, it's very possible to play with all of the numbers, to show an overall loss instead of a profit -- thereby decreasing your total income earned and reducing your tax liability. Most business aren't really going to turn a profit for the first 2-3 years of operation anyway, so this would pretty much be the norm.
However, the IRS is well aware of how this works. They expect to see a new business start turning a profit after a few years of returns are filed, or it becomes a "red flag" to audit the business. (From the IRS point of view, it's a "hobby", NOT a "business", if it continues to lose money but a person keeps doing it anyway.)
And not only that ... but some people don't realize that many of the big purchases they take as itemized deductions for their business are items they've got to keep "on the books" the whole time the business is running. (EG. Someone with a new computer business might initially get all excited that he can buy a new Macbook Pro retina 15" for himself and "write it off as a business expense" ... BUT, he might also find himself 2-3 years later having to turn in an itemized report about how much money he received when he resold it, used, to buy the next thing. So all of a sudden, he didn't really get the whole thing "written off" after all; only the depreciated portion between the new cost and the money made reselling it. If the profit wasn't put right back into another machine to claim as used 100% for business purposes -- it's not such a great deal after all.)
Now, Hollywood and the "movie business"? There's an INCREDIBLE amount of tax cheating going on with that whole industry. I'd say the crew writing off DVD purchases as "research" are real "bottom feeders" compared to the people actually producing the movies! Do you realize how many blockbuster films out there claim to have LOST money on the books -- simply because they create numerous shell companies to handle various aspects of their production operations, and bill to themselves? I believe the author of the Forrest Gump novel refused to let them make a sequel based on his work after they screwed him out of royalties that way on the first movie. (Claimed it never made any money so there was basically nothing to pay him.)
Just to address the creative accounting thing a minute?
I ran my own small business for years, doing on-site computer service and consulting work. A couple of my friends had similar businesses, and I worked for 2 others who did them before I started up my own.
The guys who start these businesses and brag about how much it saves them in taxes are very likely not explaining the whole thing. Yes, especially in the first few years of operation, it's very possible to play with all of the numbers, to show an overall loss instead of a profit -- thereby decreasing your total income earned and reducing your tax liability. Most business aren't really going to turn a profit for the first 2-3 years of operation anyway, so this would pretty much be the norm.
However, the IRS is well aware of how this works. They expect to see a new business start turning a profit after a few years of returns are filed, or it becomes a "red flag" to audit the business. (From the IRS point of view, it's a "hobby", NOT a "business", if it continues to lose money but a person keeps doing it anyway.)
And not only that ... but some people don't realize that many of the big purchases they take as itemized deductions for their business are items they've got to keep "on the books" the whole time the business is running. (EG. Someone with a new computer business might initially get all excited that he can buy a new Macbook Pro retina 15" for himself and "write it off as a business expense" ... BUT, he might also find himself 2-3 years later having to turn in an itemized report about how much money he received when he resold it, used, to buy the next thing. So all of a sudden, he didn't really get the whole thing "written off" after all; only the depreciated portion between the new cost and the money made reselling it. If the profit wasn't put right back into another machine to claim as used 100% for business purposes -- it's not such a great deal after all.)
Now, Hollywood and the "movie business"? There's an INCREDIBLE amount of tax cheating going on with that whole industry. I'd say the crew writing off DVD purchases as "research" are real "bottom feeders" compared to the people actually producing the movies! Do you realize how many blockbuster films out there claim to have LOST money on the books -- simply because they create numerous shell companies to handle various aspects of their production operations, and bill to themselves? I believe the author of the Forrest Gump novel refused to let them make a sequel based on his work after they screwed him out of royalties that way on the first movie. (Claimed it never made any money so there was basically nothing to pay him.)