As the article at hand points out, Apple does it better than any other company trailblazing the way. Now I understand what Tim Cook meant when he said that other companies should be inventive too. And, yes, tax code should be changed. And it would be if republicans were not lobbying so hard on behalf of different industries (and democrats are not blameless either).
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How Apple Minimizes its Corporate Tax Burden
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As the article at hand points out, Apple does it better than any other company trailblazing the way. Now I understand what Tim Cook meant when he said that other companies should be inventive too. And, yes, tax code should be changed. And it would be if republicans were not lobbying so hard on behalf of different industries (and democrats are not blameless either).
I got rid of my T.V. (5 years ago) and gained four hours a day (4 X 365 = 1460 hours per year).
Good for you! My wife claims we have a TV somewhere, but I've never seen it. She does not watch it, as far as I know. Last time I looked, TV was all crap. I work on my projects, instead. Positive, and liberatingQ
Good for you! My wife claims we have a TV somewhere, but I've never seen it. She does not watch it, as far as I know. Last time I looked, TV was all crap. I work on my projects, instead. Positive, and liberatingQ
Seriously? No offense or anything, but I find euphemisms like 'tax minimization' as pejorative as you find 'tax avoidance'. The fact that all the companies are doing it just means there is something seriously wrong. Rich bankers, lawyers and accountants trying to protect the money of rich investors. And before you raise the point about pensions and institutional investors that benefit us all, my pension took a massive hit based on the shenanigans of these rather wealthy class of people, but unlike the rich I have very little to cushion the impact.
I do not want to tax Apple or any company into the stone age, but I don't want publicly traded companies to become an engine of an ever-widening gap between rich and poor. I think the current system does this and it is not fair. I also worry that the seeds are being sown for a lot of social unrest and instability, which is inherently dangerous for everybody. I don't think wealthy people, who have the most power to influence change, see the threat because they are so removed from the average person they do not understand how bad it is getting. But that's just my opinion.
Great post. I'd like to think your post will allow common sense to prevail and quiet down some of the "THEY ARE NOT PAYING THEIR FAIR SHARE!!" rhetoric in this thread . . . . but I know better
Lol Apple does it better. It's ok if you do it as long as you do it worse then Apple? You have a lot to learn about business as this is the norm for any functioning company. Screaming immorality and unethical is so naive it's hilarious.
As a shareholder, I'm glad Apple does it and I'd be glad if any other company does it. Get off the high horse with the moralities clause.
Everyone wants to change the tax system and remove these loopholes so we can optimize our spending across all levels of government. Why can't it get done?
Partly because of lobbyists who prefer the status quo. Partly because we hide our insolvency with the Federal Reserve and QE. The right answer is to downsize government all together so lobbyists won't have any dollars to chase. But there are lobbyists there too like unions on the other side enjoying their share of the pot.
Unfortunately, we're going to have to declare bankruptcy as a country before things improve.
Fortunately, Apple will do fine because they actually produce something of value to society. Others won't.
Partly because of lobbyists who prefer the status quo. Partly because we hide our insolvency with the Federal Reserve and QE. The right answer is to downsize government all together so lobbyists won't have any dollars to chase. But there are lobbyists there too like unions on the other side enjoying their share of the pot.
Unfortunately, we're going to have to declare bankruptcy as a country before things improve.
Fortunately, Apple will do fine because they actually produce something of value to society. Others won't.
As much as I love Apple products, these legal maneuvers should not exist in order to avoid paying their fair share in taxes. Huge corporations not paying their taxes is one factor why the US and many other countries around the world is in the economic toilet.
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Full disclosure, I am currently holding a long position in AAPL.
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Full disclosure, I am currently holding a long position in AAPL.
Easier said than done. Lobbyists have much more power to prevent change than any of us as voters do to enact it.
another load of bollocks from the new york times. Why should money earnt overseas be taxed in the us?????? as a new zealander living in poland id be pretty pissed off if i also had to pay tax in nz while im working in poland. this has nothing to do with ethics, just ******** reporting. this really is pick on apple year isnt it. Yes i use apple products, but in no way am I a fanboy, I may even get the sgs3 to replace my iphone and a new macbook pro or air this year to replace my ageing macbook. just commenting how I see it.
Is this a common thing on these boards? Extrapolating things that were never said to prove a nonexistent point? Morality has nothing to do with a legal method to avoid some taxes. Like i said, if you owned a business you'd opt to pay more taxes when you are not legally obligated to just because it's the "right thing to do"? What a joke...if you start a company please let me know so i can avoid investing in it at all costs!
Multibillion corporations like apple are enslaving governments worldwide by being above the law in taxation, their enormous wealth is sadly going into the right pockets to ensure no worldwide reform ever occurs that would allow nations to forbid such practises. It's ridiculous when the whole of the European union is under such heavy recession with 25% and more unemployement rates, esp. in the south that apple manages to sell to the whole European continent and pay ridiculously low taxes via a residency in Luxembourg.
It's also shameful how at such insanely high profits they only pay 10% taxes. Had they been any other local company onion most parts of the world they would pay at least 30%.
It's also ridiculous that their response is the same bs about the jobs they create for ups people, and the people who make their lorries, as well as those who service them, and the gasoline station workers, and....
Apple if you want to sell in Europe quit this bs and have a local taxable entity for your iTunes store in each country and get taxed accordingly.
Congratulations to the new York times btw for the article, these companies need all the pressure they can get.
It's also shameful how at such insanely high profits they only pay 10% taxes. Had they been any other local company onion most parts of the world they would pay at least 30%.
It's also ridiculous that their response is the same bs about the jobs they create for ups people, and the people who make their lorries, as well as those who service them, and the gasoline station workers, and....
Apple if you want to sell in Europe quit this bs and have a local taxable entity for your iTunes store in each country and get taxed accordingly.
Congratulations to the new York times btw for the article, these companies need all the pressure they can get.
Thus, these tax laws are great employment opportunities for tax accountants, tax lawyers, and CPAs. That's what you get electing a bunch of mostly lawyers to the legislature. Full employment acts for their kind. At least some of their pay is staying in country.
From Underdog to Behemoth
It seems that Apple has joined the ranks of ITT, IBM, Wal-Mart, Microsoft, and Google. Companies that grew to a very large size (by providing desirable products) are suspect in the eyes of the NYT and various interest groups and must now be brought low.
We've witnessed the furor over Foxconn labor practices; Greenpeace is making a big deal over the power source at the NC data facility, and, of course, the broadside from the DOJ over agency book pricing. This article on taxes is just the latest hit piece. Nowhere does it state the Apple did anything illegal; instead it does a lot of handwringing and nudges the reader to the conclusion that this is somehow wrong.
Good for Apple for figuring this out and lowering its tax burden. It's good for the stockholders, employees, and yes, the customers. They all end up with more money. The company is worth more, the employees are better compensated, and the customers pay a lower price than would otherwise be the case.
The social benefit is that it leaves more resources in the hands of individuals, rather than the bureaucrats. You can make much better decisions for yourself than someone sitting at a desk in D.C. or Austin (or other fine state capital). Even Warren Buffet believes this. His recent loan to the Bank of America was structured as preferred stock, subject to a 15% tax rate, rather than a loan with the interest payments taxed at 35%.
If you have a beef with Apple's tax strategy, don't blame Apple. Instead, write your Congressman or Senator. These are the folks who passed the current set of tax laws.
It seems that Apple has joined the ranks of ITT, IBM, Wal-Mart, Microsoft, and Google. Companies that grew to a very large size (by providing desirable products) are suspect in the eyes of the NYT and various interest groups and must now be brought low.
We've witnessed the furor over Foxconn labor practices; Greenpeace is making a big deal over the power source at the NC data facility, and, of course, the broadside from the DOJ over agency book pricing. This article on taxes is just the latest hit piece. Nowhere does it state the Apple did anything illegal; instead it does a lot of handwringing and nudges the reader to the conclusion that this is somehow wrong.
Good for Apple for figuring this out and lowering its tax burden. It's good for the stockholders, employees, and yes, the customers. They all end up with more money. The company is worth more, the employees are better compensated, and the customers pay a lower price than would otherwise be the case.
The social benefit is that it leaves more resources in the hands of individuals, rather than the bureaucrats. You can make much better decisions for yourself than someone sitting at a desk in D.C. or Austin (or other fine state capital). Even Warren Buffet believes this. His recent loan to the Bank of America was structured as preferred stock, subject to a 15% tax rate, rather than a loan with the interest payments taxed at 35%.
If you have a beef with Apple's tax strategy, don't blame Apple. Instead, write your Congressman or Senator. These are the folks who passed the current set of tax laws.
Well as I'm coming to understand, **** Apple and all those that support them
My companies $50,000 yearly buying budget is going to be directed to companies who support local economies and pay taxes. Companies like Apple are now destroying western economies and hoarding billion of dollars.
Its got to a point where it directly effects pensions, healthcare, employee right and the overall economy.
My companies $50,000 yearly buying budget is going to be directed to companies who support local economies and pay taxes. Companies like Apple are now destroying western economies and hoarding billion of dollars.
Its got to a point where it directly effects pensions, healthcare, employee right and the overall economy.
As someone living in Poland you should be infuriated that apple isn't taxed at proper rates in your country of residence in iTunes so your country of residence can afford more in terms of public spending for your communal good, but they are instead dodging tax in Luxembourg. Instead you have need with the ny times...whatever... Some people never learn...wake up and smell the coffee that the world almost bankrupt itself to 1920 three years ago because international capital is so above the law...Wake up and smell the coffee that two whole continents, Europe and north America are in historically deep recessions precisely because some companies make 30 billion dollars yet via worldwide loopholes they end paying a mere 10% as tax...Yet your problem is the new York times...unbefrigginlievable...
One rule for developers another rule for Apple
When developers subscribe to Apple's iOS software distribution model (AKA The App Store). They are expected to adhere to a set of rules and conditions in order to continue to trade within Apple's commercial infrastructure. When some developers started to develop secondary income streams via in-app purchasing, Apple stepped in and regulated the practise in order to continued to collect a revenue to the same value as the main store. Apple are themselves trading within our own social platform that generations have given their lives to build and protect. But yet, somehow they think it's okay for them to play by their own set of rules. Well, it is not. If a terrorist group worked out a way of defrauding the American tax-payer of 10's of billions of dollars by exploiting a lawless fiefdom somewhere in East Africa, the US military would be on the scene quicker than you can say USS Nimitz. WTF!
When developers subscribe to Apple's iOS software distribution model (AKA The App Store). They are expected to adhere to a set of rules and conditions in order to continue to trade within Apple's commercial infrastructure. When some developers started to develop secondary income streams via in-app purchasing, Apple stepped in and regulated the practise in order to continued to collect a revenue to the same value as the main store. Apple are themselves trading within our own social platform that generations have given their lives to build and protect. But yet, somehow they think it's okay for them to play by their own set of rules. Well, it is not. If a terrorist group worked out a way of defrauding the American tax-payer of 10's of billions of dollars by exploiting a lawless fiefdom somewhere in East Africa, the US military would be on the scene quicker than you can say USS Nimitz. WTF!
If we look at the issue of paying sales taxes on internet purchases, it seems consumers have collectively spoken that avoiding taxes is morally ok (at least as long it is not publicly known that one avoids taxes).
No corporation in the entire WORLD "pays" taxes. Tax payments become a cost factored into the price of the goods or services the company sells. The consumer pays 100% of the corporation's tax burden. Always has, always will, everywhere, every time.
If a person wants to indulge in harshly judging the morality/ethics of corporations (decisions made by their management, boards, etc.), one would do better to discuss what said corporation does with their net profit. Do employee salaries go up? Do they donate to charity? Do they invest in R&D enough? Too much? CEO compensation reasonable, given performance? Do they give shareholders a return on investment?
Or one would do better to judge them by their overall environmental impact as it relates to the significance of the product being produced. Energy companies can disturb lands and occasionally cause environmental damage, but they provide the power necessary for industry, commerce, technology, agriculture, and personal use, so a reasonable balance must be struck.
If Apple's effective tax rate was 20% instead of slightly south of 10%, it is hardly likely that CEO compensation would be lessened, or even wages. Prices would probably go up. R&D expenditures might go down. Retail store expansion, along with all other capital expansion/improvements would be lessened. All of which would result in fewer new Apple retail employee positions (resulting in less payroll tax collected), fewer jobs for contracted labor (less payroll tax collected), fewer full-time research positions in the R&D department (less payroll tax collected and slower pace of technological innovation) and lower stock price (less capital gains tax collected from stockholders).
Sure, the federal and State governments get a bit more up front, from one large (vilified and "demagogued") source, but the economic impact of the taxes levied have detrimental effects on tax receipts long-term, not to mention that the pace of technological advancement, innovation, and new productivity-enhancing applications slows as a result as well. Some call this "trickle-down economics". Others just call it "Economics 101".
Private enterprises are far more agile in adapting to economic realities than a government is, and do not have the crutch of being able to print more money and devalue the currency when things get tight. They provide jobs and submit billions in payroll taxes to the federal government while keeping people employed, productive contributors to society, thereby lessening the overall burden of entitlement spending. If permitting large corporations--engines of innovation, job creators, product/service providers, and payroll tax harvesters--to retain more of the profits they earned through their success is "wrong," then I don't want to be "right."
If a person wants to indulge in harshly judging the morality/ethics of corporations (decisions made by their management, boards, etc.), one would do better to discuss what said corporation does with their net profit. Do employee salaries go up? Do they donate to charity? Do they invest in R&D enough? Too much? CEO compensation reasonable, given performance? Do they give shareholders a return on investment?
Or one would do better to judge them by their overall environmental impact as it relates to the significance of the product being produced. Energy companies can disturb lands and occasionally cause environmental damage, but they provide the power necessary for industry, commerce, technology, agriculture, and personal use, so a reasonable balance must be struck.
If Apple's effective tax rate was 20% instead of slightly south of 10%, it is hardly likely that CEO compensation would be lessened, or even wages. Prices would probably go up. R&D expenditures might go down. Retail store expansion, along with all other capital expansion/improvements would be lessened. All of which would result in fewer new Apple retail employee positions (resulting in less payroll tax collected), fewer jobs for contracted labor (less payroll tax collected), fewer full-time research positions in the R&D department (less payroll tax collected and slower pace of technological innovation) and lower stock price (less capital gains tax collected from stockholders).
Sure, the federal and State governments get a bit more up front, from one large (vilified and "demagogued") source, but the economic impact of the taxes levied have detrimental effects on tax receipts long-term, not to mention that the pace of technological advancement, innovation, and new productivity-enhancing applications slows as a result as well. Some call this "trickle-down economics". Others just call it "Economics 101".
Private enterprises are far more agile in adapting to economic realities than a government is, and do not have the crutch of being able to print more money and devalue the currency when things get tight. They provide jobs and submit billions in payroll taxes to the federal government while keeping people employed, productive contributors to society, thereby lessening the overall burden of entitlement spending. If permitting large corporations--engines of innovation, job creators, product/service providers, and payroll tax harvesters--to retain more of the profits they earned through their success is "wrong," then I don't want to be "right."
But are we ethically obligated to keep the laws in place that make this very effective tax minimisation possible?
If you really are an economics professor you should probably quit your job, no wonder economists nearly bankrupted the globe three years ago. What utter paucity of arguments. The customers end up paying less? Lol. And it's just the the evil bureaucrats out to get apple In the Doj book case, it's not that appple colluded with publishers and the customers ended up paying much more.
What a load of reactionary nonsense. Of course green peace should make a fuss about it? Why should a corporation with 30 billion yearly profit not have to care about the environment?
Unbelievable, even after what the world went through with the global financial meltdown to have people speak such neoliberal empty nonsense...
Seriously, I don't think you understand the definition of the word pejorative.
It means you think there's something wrong. Just like the use of a pejorative above, your claim is based in emotions rather than a reasoned argument.
Companies seek the way to pay to pay the minimal amount of taxes. Companies that have public stock are legally required to operate in a way that maximizes return for their investors.
More pejoratives! This is hardly a convincing argument.
Stocks went down. Stocks were back up this year. If you sold stocks when they had a lower value, you made an unwise decision.
Did the rich force you to do that?
Another massive pejorative! The statement really doesn't make rational sense, and it's laden with emotion.
What feeds this fire is the use of emotional statements that are not based in fact.
Thank you.
I believe will have to expand your rage to many other companies. I doubt you'll find a company to buy a computer, cell phone, or stapler from.
Will your company divest itself of its current computers?
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Not necessarily, Apple charges whatever it thinks the market can bear and what gives them a decent profit margin. What the market can bear is not affected by Apple's costs and with gross margins in the upper forties in percentage terms, moderate cost increases are unlikely to increase their prices much if anything.
I'm going to throw a curve ball from left field here that's likely to get a lot of a down votes, but I think it should be said anyways.
What if corporations weren't taxed (at least based on income)?
It's a crazy idea to many, I know, especially with the prevailing "companies are evil" mindset. I find the fact that corporations get taxed, and then the people working for the corporations get taxed, akin to double dipping the same pot. You're essentially taking the same revenue source and then taxing it twice; once for the profit the company makes, and then a second time when you pay the employee that helped earn that corporate profit. It's a bit absurd.
Hypothetically speaking, if a company were not taxed it would have more cash on hand to spend for a variety of purposes. Realistically that company would sit on the cash for some time before using it, but when they do use it, the following scenarios are possible:
1) They give their executives or employees more money; the IRS gets more income tax
2) They spend the money to expand the business through acquisition, equipment, whatnot. This makes the company more competitive, and thus in the long run, generates more revenue. The short term benefit is that they spent the money on another company, thus again gaining revenue for the IRS (eventually).
3) They give the money to the shareholders via dividends. Again, the IRS gets some money.
The reason US businesses are moving overseas (first down south) is because the cost of maintaining large sites in the US is turning borderline absurd, which is combination of federal, local, and state taxes. It's not just the labor differential; that gap is narrowing monthly. For example, Merck and Co. are building a billion dollar center in China, where they plan to move their entire R&D division. Is it because the labor is cheaper or more qualified? Nope. The combined corporate tax (federal income, local income, state income, state property, local property, school district tax, etc) is too high to make a large plant cost viable anymore, at least in certain parts of the country.
Most companies don't pay full taxes anyways. Why not remove corporate tax from all levels in order to make the US a more competitive environment (globally)?
As a disclaimer, I am not Republican, Democratic, or have any party affiliation. I also favor a flat tax and simplified tax system, a flat personal capital gains tax, and a flat dividends tax.
What if corporations weren't taxed (at least based on income)?
It's a crazy idea to many, I know, especially with the prevailing "companies are evil" mindset. I find the fact that corporations get taxed, and then the people working for the corporations get taxed, akin to double dipping the same pot. You're essentially taking the same revenue source and then taxing it twice; once for the profit the company makes, and then a second time when you pay the employee that helped earn that corporate profit. It's a bit absurd.
Hypothetically speaking, if a company were not taxed it would have more cash on hand to spend for a variety of purposes. Realistically that company would sit on the cash for some time before using it, but when they do use it, the following scenarios are possible:
1) They give their executives or employees more money; the IRS gets more income tax
2) They spend the money to expand the business through acquisition, equipment, whatnot. This makes the company more competitive, and thus in the long run, generates more revenue. The short term benefit is that they spent the money on another company, thus again gaining revenue for the IRS (eventually).
3) They give the money to the shareholders via dividends. Again, the IRS gets some money.
The reason US businesses are moving overseas (first down south) is because the cost of maintaining large sites in the US is turning borderline absurd, which is combination of federal, local, and state taxes. It's not just the labor differential; that gap is narrowing monthly. For example, Merck and Co. are building a billion dollar center in China, where they plan to move their entire R&D division. Is it because the labor is cheaper or more qualified? Nope. The combined corporate tax (federal income, local income, state income, state property, local property, school district tax, etc) is too high to make a large plant cost viable anymore, at least in certain parts of the country.
Most companies don't pay full taxes anyways. Why not remove corporate tax from all levels in order to make the US a more competitive environment (globally)?
As a disclaimer, I am not Republican, Democratic, or have any party affiliation. I also favor a flat tax and simplified tax system, a flat personal capital gains tax, and a flat dividends tax.
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