How Apple Minimizes its Corporate Tax Burden

[charlituna]

Perfectly legal, but this is the kind of behaviour that should get alot of attention in order to bring badwill to the companies doing it.

Perfectly legal and done by pretty much every company out there. But because it's Apple it is getting press. Heck putting their offices in Delaware etc is SOP for credit card companies because of the taxes and other favorable laws.

Just like Apple gets the DOJs attention, after they went how long not caring about Amazon's games with ebooks and pricing or whether they were pulling illegal monopoly stunts

Just like no one cares if there are rats and roaches and non working toilets in the factories for the other 70 or so clients at Foxconn, or if they have 100% overtime abuses going on. Just what is happening at Apple (to the point that blogs will hit whore by name dropping Apple in every article about Foxconn without confirming that something was actually at a factory working on Apple products)

 

[WhoDaKat]

Businesses will continue to do whatever government allows them to do. Whether that be using kids in mine shafts because their smaller or upping the price of gas every five minutes while turning record breaking profits. Businesses are greedy, self serving profit whores. BUT in a way, they are supposed to be. Their whole existence, no matter what someone working their will tell you, is to make money. And since we live in a Capitalist society, that ugly pursuit of maximum profit floats are economy.

HOWEVER, just as government stepped in and took the kids out of mine shafts (at least in our country), they have to step in and control these profit-mongerers. Our problem in the US is that our government has been tainted by corporate bozos (or lobbyists, whatever you prefer). We are supposed to have a government by the people, and for the people, but somewhere along the line we got screwed. (Ok somewhere would be when people elected a whole bunch of obviously self serving politicians and they in turn put in judges who somehow come up with the brilliant notion that money is speech, so rich people are now afforded a voice that the other 250 million of us can't use. Yeah, free speech that ain't free!)

But the saddest part is that I don't blame greedy businesses, and I don't blame selfish politicians. Would you blame a shark for attacking its prey? I blame us! Who elected the fools, who in turn allow corporations to run amuck? The US has become a nation of fools. If any of you look at Romney, or Obama, or any of them, and think oh this is the best guy for the job than your nuts. We need to hit the reset button, and kick every incumbent out of office. No matter what party, they are all out! Now that is how you send a message to the deaf ears of our leaders! And if that doesn't start the change ball rolling, than in 2 years wipe the slate clean again, it won't matter whose in power. A couple of times like that and the self serving politicians will start to see they aren't serving themselves very well by not listening to us! Of course another way would be term limits (no re-elections) but asking the politicians to corral themselves is laughable.

 

[charlituna]

Couldn't agree more.

Taxes are created and collected for good reason, and companies/people who dodge them are cheating that system. This puts pressure on those who do pay taxes, and/or causes governments to have less funds to achieve their goals.

Bad Apple, bad.

Every company does this so lets drop the 'Bad Apple' like they are breaking the rules. They aren't. They are playing by them. If you want them and everyone else to stop then the rules must be changed. For this, for filing patents etc in states you don't have your head office in because the judges are more likely to side with you, so on and so on

 

[-Ken-]

Ireland is in a austerity nightmare yet the government still allows billions (possibly trillions) to funnel through it's shores and a huge discount. Even a .5% increase on the current corporate taxes would help out the ROI immensely

It's not just Apple doing it. Google and GE run the same tax structures.

I believe if companies want to utilize the outstanding corporate benefits allowed by the US government there should be an AMT-type of tax for corporations based on global revenue.

Stop putting all the burdens on the citizens and force corporations to a fairer share.

Or Ireland could reduce its spending.

I didn't see you suggest that at all.

 

[benspratling]

If anything, eliminating corporate taxes would level the playing field for small businesses to compete with the larger 'tax dodgers' and in the end, make our country more competitive.

Meanwhile strictly enforce personal income taxes and eliminate loopholes. THAT is what would be ethical.

I agree, eliminate corporate taxes entirely. They only artificially increase the price of goods in 2 ways: 1) raising the price of goods to fund the tax, 2) force the hire of people to do the paperwork (what do we call paper work in a digital age? form work? spread sheet work? sheet work... I like it ). They're only real use is for politicians getting elected by folks who don't understand basic economics, and do we want those people running show?

I'd love to see the look on those people's faces when eliminating the corporate taxes simultaneously raised their paychecks and reduced the prices of goods on the shelves

 

[charlituna]

If big business would pay tax the way we think they should, the healthcare issue would solve itself.

More taxes doesn't mean they would go to the right places. Businesses might pay more only to see it going into the salaries of the politicians that give themselves a raise they get even when they can't balance a budget. They could have 10 times the money to work with and we could still have no universal health care, under funded schools, a welfare system full of folks cheating the rules etc

 

[siddavis]

(Well, ok, maybe it's just me since we've got a bunch of people who don't understand basic economics on this forum.)

...and also voting regularly, unfortunately

 

[manu chao]

There is legality and then there are ethics...

Of course, the only problem is behaving unethical oneself and then accusing others of behaving unethical. For example, is it ethical to purchase from online retailers to avoid sales tax? (And that is often not even legal.)

If there is no moral stigma associated with avoiding sales tax, why should there be one for avoiding corporate taxes.

 

[VulchR]

In fact, I bet many of you have personal tax preparers just for the purposes of minimizing your tax burden and ensuring strict compliance with the law.

Ahem. Only the rich can afford that, which is why the average person loses in this game and the rich win. It has nothing to do with the cleverness or work-ethic of the rich.

I hope one day we will wise up and start the tax code from scratch. I'd also like to see economic embargoes on the countries that allow their banking systems to be used for tax evasion.

 

[JAT]

3.3b tax paid? Where is that from? Their last full year financial claims 8.3b income tax, which may not be paid, yet. But it would be their expected liability.

To add. The payment in FY2011 is probably related to an earlier year. So the "journalism" of comparing FY2011 EBITDA to FY2010 (or earlier) tax payments is far from ethical itself.

FY2010 tax is shown as $4.5b, or 24%. Even if it was reduced to the 3.3b shown in the story, that is a rate of 18%. FY2011 rate is also shown at 24%.

Journalism. Yeah. Afraid I trust Apple's SEC filings a bit more. At least they would have to answer for any lying done, unlike newspapers.

 

[Rennir]

Good for Apple. The more US companies that expose the idiocracy of our tax code the quicker things might change.

The US government has nobody to blame but themselves.

So who do you think helps create the tax code? You don't think corporations and their lobbyists or the money they donate to Republican/democrats reelection campaigns play any role?

 

[Lennholm]

Perfectly legal and done by pretty much every company out there. But because it's Apple it is getting press. Heck putting their offices in Delaware etc is SOP for credit card companies because of the taxes and other favorable laws.

Just like Apple gets the DOJs attention, after they went how long not caring about Amazon's games with ebooks and pricing or whether they were pulling illegal monopoly stunts

Just like no one cares if there are rats and roaches and non working toilets in the factories for the other 70 or so clients at Foxconn, or if they have 100% overtime abuses going on. Just what is happening at Apple (to the point that blogs will hit whore by name dropping Apple in every article about Foxconn without confirming that something was actually at a factory working on Apple products)

My post wasn't referring to Apple specifically. I think every single company that does things like this should be exposed for it. The customers should be made aware of it and then it's up to the customer to decide if they find it acceptable.

Every company does this so lets drop the 'Bad Apple' like they are breaking the rules. They aren't. They are playing by them. If you want them and everyone else to stop then the rules must be changed. For this, for filing patents etc in states you don't have your head office in because the judges are more likely to side with you, so on and so on

Loopholes certainly should be eliminated, but rules don't necessarily have to change to stop companies from doing things like this. We the consumers can show them that we don't find it acceptable, which would make it bad business for them to continue doing it.

 

[charlituna]

The clever getting richer. If US taxes weren't total garbage, this wouldn't be a problem.

True. Those with 7 figure bank accounts often have ways to cut their personal taxes down to nothing. While those of us with barely 5 figures will have to pay sometimes more than we can afford. And then there are the folks working for cash that pay no taxes but still get the benefits

There was a push at one point to go more the way of the UK and cut basically all the income based taxes and raise the sales tax on all non essential items. THe notion was that even pimps and drugs dealers have to buy stuff and then they would be paying the taxes they were getting around by being a cash business. I'm starting to think that that might be the better way to go.

And there might be a way to have a similar set up with businesses, especially ones like Apple that are dealing in actual items.

 

[lilo777]

Bastards

Eom

 

[cadillac1234]

Or Ireland could reduce its spending.

I didn't see you suggest that at all.

Wish they could....

They are paying the IMF for all the damage done by banking speculation which their government foolishly agreed to do. BTW these were the same pro-corporation lackeys that setup these overly-generous tax havens.

 

[charlituna]

3.3b tax paid? Where is that from? Their last full year financial claims 8.3b income tax, which may not be paid, yet. But it would be their expected liability.

More likely it is both. 8.3 billion in taxes from their employees and another 3.3 billion for various corporate taxes that are simply based on things like them running a business, having money in the bank etc

 

[JAT]

True. Those with 7 figure bank accounts often have ways to cut their personal taxes down to nothing. While those of us with barely 5 figures will have to pay sometimes more than we can afford.

I agree with your points overall, but this one comment is a fallacy. If you are truly making barely 5 figures, you will have zero income tax in the USA.

 

[benspratling]

Businesses will continue to do whatever government allows them to do. Whether that be using kids in mine shafts because their smaller or upping the price of gas every five minutes while turning record breaking profits. Businesses are greedy, self serving profit whores. BUT in a way, they are supposed to be. Their whole existence, no matter what someone working their will tell you, is to make money. And since we live in a Capitalist society, that ugly pursuit of maximum profit floats are economy.

HOWEVER, just as government stepped in and took the kids out of mine shafts (at least in our country), they have to step in and control these profit-mongerers. Our problem in the US is that our government has been tainted by corporate bozos (or lobbyists, whatever you prefer). We are supposed to have a government by the people, and for the people, but somewhere along the line we got screwed. (Ok somewhere would be when people elected a whole bunch of obviously self serving politicians and they in turn put in judges who somehow come up with the brilliant notion that money is speech, so rich people are now afforded a voice that the other 250 million of us can't use. Yeah, free speech that ain't free!)
...

LOL. Just funny listening to someone calling the folks who manufacture luxury "magical" computers "profit mongers". Gees. Jealous much?

FYI, profits are a numerical approximation of the benefit the customer finds to have been added to the customers.. you call them "society". Just look at the formula (profit = what a business added to society (as evaluated by the customer... ahem "society") - what a business took from society (as evaluated by other customers, right darn, "society")) . So when a business operates at the maximum profit level, they are operating at the maximum-contribute-to-society level, as evaluated by customers, I mean "society".

I mention this because, I think, maybe no one ever told you that the word "capitalism" is a marketing term that Karl Marx made up. The rest of us operate in a system called "free trade" in which we don't like it when our neighbors get jealous of our high productivity and threaten us with government force (fines, imprisonment, death) if we don't hand over the hard work of our hands for free. We're loving and compassionate people, not jealous people, which is why we don't just jail you all immediately for suggesting it, but we have limits.

 

[charlituna]

Here! Here! Right.

The NYT seems to like Apple bashing anyway. Even their smaller headlines occasionally cast Apple event with a negative light in contrast to the wording of other news sources.

They do that because they know that the die hard haters will come to comment their hate and the fans will come to comment against the haters. Classic hit whoring trick

 

[JAT]

More likely it is both. 8.3 billion in taxes from their employees and another 3.3 billion for various corporate taxes that are simply based on things like them running a business, having money in the bank etc

That's not what the 8.3 is. It is corporate income tax. The only employee-related tax that would show on a company's income statement is the payroll taxes, and only those paid by the company. FICA and unemployment. And those are generally not itemized on public financials.

Individuals' income tax is not related to the company.

 

[jaminunit]

Good, less tax the better.

Rich people dont hang on to money, they invest it in other things, they pay employees they start new ventures.

Government just force their crap services on to you from funds they steal from the productive class.

Tax = violence because if you dont pay you eventually get police with guns to your door.

We need less violence not more.

peace.

 

[3282868]

If I was making more than enough to get by and I saw a huge portion of my fellow citizens struggling I certainly would try to help.

I'm a dirty socialist though

Agreed. Having lived in E.U. and the U.K., it's a far different story regarding socialized democracy. In the U.S., politicians and political pundits are working for corporations such an G.E. and Fox, they pretty much have a burden to keep society in check with hot points such as "socialism", "marxism", "government is evil." These companies just get richer while we're too busy fighting each other like pawns in a corporate/political game of chess.

When a nation supports each other with better education and health, they are stronger. Other first world nations know this, and are fairing better than the U.S. (although the financial collapse in 2008 has everyone in dire straights, and that was a byproduct of people finding loopholes in the system, just as others are defending Apple for doing). It's Abraham Maslow's Hierarchy of Needs, from base needs of food and shelter to achieving Self-Actualization, society as a whole needs to achieve self-actualization to prosper. I'm not stating people should be given freebies, exactly the opposite, we need to focus our money on better educating our children to become employable citizens, and take better care of our health.

We're regressing, not moving forward. If I make enough money to help educate my fellow citizens who become employable, I'm helping to create a stronger nation, I wouldn't mind paying more. We should be taxed on how much we earn, as long as those taxes are put to strengthening our nation. When the most taxes are placed on the upper-middle class down while the wealthy have enough money and power to circumvent tax laws, how is this helping any of us??? We've cut back on education funding, healthcare, our police/civil servants, the roads we drive on, the sidewalks we walk on - they are all socialized!

We're becoming a nation of under-educated, unhealthy and ignorant citizens who want someone to blame for our predicament. The blame lies with US. We've become apathetic to the system, and angry towards others who don't agree with our belief system which is propagated by the media and the companies that own them. The U.S. government and the companies and lobbyists that own our politicians are one piece of a complex puzzle, a puzzle we fostered for the past forty years. We're only as strong as our weakest link. Now we're in too deep.

However, I'm shocked some defend these practices, especially with Apple. I've always been a supporter of Apple, but in this instance, they've failed me and fall into the same category as the banks, Walmarts, Targets, BestBuys that have driven small businesses out. Look in the mirror, we're too blame.

Good, less tax the better.

Rich people dont hang on to money, they invest it in other things, they pay employees they start new ventures.

I come from an affluent family, my father was an investment banker and we know many who may be considered "rich." I'll let you in on a little secret, rich people are cheap! They don't spend their money, they hold onto it, especially the older generations who worked hard. "Trickle Down Economics" is a failure of epic proportions, and simply made the rich wealthier.

 

[lilo777]

Read "Rich Dad, Poor Dad" , you will then understand two things:

1. Apple is just doing what they should be doing
2. People who are negative about this post are the poor / middle class who are too lazy to change themselves, but rather stay in a 9-5 day job and blaming the rich.

You thin you are smart, right? So, let's all change ourselves and get fancy jobs that pay a lot. Would not it be fun? But wait... who is going to teach our kids, or make our bread, or clean our streets or... Every society has certain needs and generally it does not need a lot (or at all) rich people but it does need a lot of working people. And no Apple should not be doing it. That's just spoiled rich brat mentality in you that thinks that this is what Apple should be doing.

 

[charlituna]

That's not what the 8.3 is. It is corporate income tax. The only employee-related tax that would show on a company's income statement is the payroll taxes, and only those paid by the company. FICA and unemployment. And those are generally not itemized on public financials.

Individuals' income tax is not related to the company.

I never said it was individuals' income tax. I said was from their employees. That's where corporate income taxes come from.

 

[guzhogi]

I agree, eliminate corporate taxes entirely. They only artificially increase the price of goods in 2 ways: 1) raising the price of goods to fund the tax, 2) force the hire of people to do the paperwork (what do we call paper work in a digital age? form work? spread sheet work? sheet work... I like it ). They're only real use is for politicians getting elected by folks who don't understand basic economics, and do we want those people running show?

I'd love to see the look on those people's faces when eliminating the corporate taxes simultaneously raised their paychecks and reduced the prices of goods on the shelves

The problem I see with eliminating corporate taxes is I seriously doubt the companies will lower their prices to compensate. I think they'd just keep the prices the same and increase their profits.

As some have said, taxes can be used for good things. One is infrastructure. I don't want to drive on roads with a lot of potholes. I admit, taxes can be and are wasted, but money is wasted everywhere, regardless of how it was gotten.

I do like some of the cases I hear about where cities/states offer tax breaks if Apple and other companies do something else for the public good. Kind of how they renovated that train station in Lincoln Park, Illinois. While I'm all for individual liberty and whatever, I'm a believer in the whole "TEAM: Together, Everyone Achieves More" thing. We can achieve a lot of people looked after everyone else rather than just themselves.