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Apple Reportedly Shifted Billions of Dollars to Small Island of Jersey Amid Tax Crackdown [Updated]
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As I understand it, here's the simple answer: VAT (Value-Added Tax).
Specifically, the published or advertised price in £ includes the VAT (if this is wrong, please correct me).
Conversely, in the US, none of the advertised prices includes any sales tax. Partly this is because sales tax is a State tax, not a Federal tax, so the amount differs by state, and some states have no sales tax. The other part is custom (tradition), in which retail prices always exclude taxes. Thus, we see car ads in the US that say in fine print that sales tax, license fees, dealer prep fees, and other charges are not included in the stated price.
So given the difference in how prices are advertised, and supposing a nominal state sales tax of 7%, and using whatever VAT your country imposes, calculate the actual difference in price given ~1.30 to the £. It's going to be a break-even around 20+ percent, but that's off the top of my head, without doing an actual calculation.
Note that the income tax paid by Apple in the EU (which is what the "Isle of Jersey" story is about) has effectively nothing to do with the VAT paid by EU consumers. The VAT is collected by the retailer, and paid to the government at some govt-designated interval (weekly, monthly, quarterly). Sales tax collection in the US works the same: retailers collect it, and make payments to the state each month or quarter. Those same retail businesses also pay Federal income tax, and State income tax in states that have it (again, varies by state). The amount collected as sales tax goes straight to the state; retailers are not taxed on that, nor do they count it as revenue.
Thats kind of irrelevant to my point. They are not breaking any laws in any country. But by simply structuring their companies this way they can do this stuff. But its all ultimately owned by Apple parent company. The critical bit is this - you can only do this stuff if you are a huge multinational with the best accountants and lawyers. Small and medium size companies, sole traders etc cannot pull this stunt, thus distorting the market in favour of the giants. Its a competitive advantage by lowering the tax burden vs others.
That's not correct. The US has signed treaties with a vast number of countries to avoid double taxation.
The truth is, Apple would be obliged to pay the difference between the foreign tax (0,001%) and the US tax (somewhere between 0 and 35%, depending on which loopholes you can use)
So YOU decide what is "fair"??? I prefer rule of LAW to the rule of Falhófnir.
Western democracies are in debt because politicians are prefer short sighted over spending to ensure re-election to long term solutions for the public good that lose elections. Politicians are merely responding to the majority of uniformed voters that are easily by swayed things like "fair share" rhetoric that are actually meaningless.
Every dollar companies don't spend in taxes goes to A) employee income so they can pay more taxes B) investor income so they can pay more taxes or C) company expansion that creates jobs so that the new employees can pay more taxes.
Cook is doing his job. He is not in a popularity contest to be a man of integrity. His only job is to see that Apple maximizes shareholder profits.
I would agree that he is cynical though in that his SJW actions are not helping Apple and the shareholders.
Yeah, but blaming Apple or Google couldn't be more pointless. It's a systemic problem. If governments aren't stepping up tax legislation no company will ever voluntarily pony up revenue that they can hand to shareholders.
No doubt! And, thanks for the history lesson! I knew that was total BS, but didn't know the source of it or how recent it is.
BTW, I took an economics survey in grad school and the prof complained that most modern economists (and people doing economics in school) don't pay attention to the history and foundations much any longer. They have their ideas, formulas, and analytics but there isn't much questioning of the principals and foundations.
I suppose you could say it's turned into more of a 'science' than a 'social science' as they've sterilized the discipline from recognition that it's a human behavior study. And, to get a human behavior study right, you have to have a proper view of the state of humanity.
And, if you get that wrong, then yes, you get a soul-less entity that acts like a sociopath.
So is every other American company with overseas income. You can't do a one time penalty on one among hundreds that does this and expect others will start paying up. Demonizing one company instead of introducing stricter legislation is like lynching a thief instead of building a better police force.
Seriously? Those people are paying the tax, NOT Apple. Corporation taxes shouldn't be as high? They use more state resources than individuals do. Transporting stock, policing of stores and offices, able to hire educated and health staff.
Yes. That is the way Apple would be required to pay additional tax to bring foreign earnings back to the USA. If I was Apple I would keep it offshore too. Companies will bring offshore earnings back to the USA when that appalling tax provision is removed. Imagine all the the local investment that money would bring. But because the tax eaters want to loot it for their purposes, that money won’t be coming back anytime soon.
The *government* (not the people) may have been happy because they have been bought off.
The same government by the way that nearly ruined the country in the financial crisis and then took tens of billions from the EU to save their lower backs. As a thank you, they decided to screw the EU again by brokering more dodgy tax deals that would benefit them short-term, but that would undermine the very idea of solidarity that had saved them. I'm not surprised the EU is going after them for this.
I pay my taxes after taking advantage of every deduction, credit, and other legal "loop hole" my accounting firm and law firm find for me.
I wouldn't expect Apple to do it any differently.
Hardly surprising. Every penny that Apple wasn't paying to the Irish Exchequer was being reimbursed by subsidies from Brussels, all paid by the actual EU taxpayers. Ireland didn't lose out, unlike the rest of us.
In fact, the last tax holiday in 2004 brought back hundreds of billions.
The problem: the vast majority of it was paid in dividends to the shareholders or used to buy back shares and other companies. Investments didn't happen as promised. Actually many of the companies that benefited from the tax break went on and cut more jobs in the US, as they would have done anyway.
So whenever companies are pushing for a tax holiday, expect the exact same scenario. All that talk about local investments is a blatant lie.
Nice try, but that’s a false comparison. Burglars aren’t playing the game; they’re actively trying to break the rules.
I wasn't referring to the Panama Papers there... the rabbit hole goes ***MUCH*** deeper than that! Take a listen to a podcast called Congressional Dish to start to get a taste of the level of corruption. Then, pick up a podcast like No Agenda to get a taste of how much the MSM outright lies, or just passes on 'packages' of information they want the citizens to believe.
The irony, is that at the same time they are calling out Russia and their media outlets as propaganda and fake-news. There's plenty to go around!
Yes, and that's why it's critical when we're talking (as a nation) about corporate tax rates that we remove these entities from the discussion and deal with them separately. What really counts is the corporate tax rate to small-medium businesses, as they actually make up most of the economy... and the rates won't really apply to these multi-nationals anyway.
All these SJWs are like... don't lower the corporate tax rates... stick it to these ultra-rich, etc. But, they end up hurting the core of the economy with rates that are already among the highest in the world. If they really want to make an impact, then fix the government!
I look forward to seeing you both on the ballot and supporting your future tax reform bills...
What's that, not running?
Oh then, creating a grass roots movement to get actual tax reformers on the ballot...
Not that either?
Complaining about politicians won't change Washington, but that's all most people do.
Some vote for the slightly lesser of two evils every two (or four) years, but that won't change anything either.
Trickle down economics is as big a con as the nearest Ponzi scheme. Won't stop the unscrupulous pushing it as a panacea for all economic ills.
Exactly. Governments are responsible for the byzantine tax laws that enable Apple and other corporations to do this stuff.
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